Business studies

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  • Created on: 12-06-18 16:08

Causes of a business change

There are two types of changes: gradual and rapid.

Causes of a rapid change are:

Introduction of new technology 

Changes in working practice 

New legislation 

Changes in consumer tastes 

Change in business ownership 

Change in economical conditions 

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Internal causes of change

Changes in mangament style: If a business was to change managment style from autocratic to laissez-faire this will have a big impact on the business, for example, employees will go from having no involvment to having no input from the leader. 

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Storey's 4 methods of implementing change

Negotiated total package: Managment and worers negotiate on how a major change in the way a business functions will be implemented. 

Negotiated piecemeal initiatives: Managment and workers will consult and agree on various chnages as they become necessary.

Impoased piecemeal initiatives: Managers plan and implement changes such as a move to flexitime or the development of quality circles in order to solve partiular propblems. 

Imposed total package: Senior managment plan and introduce a major chnage all at once without consultation with workers. 

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Resistance to change

Suppliter resistance is when suppliers may be reluctant to adapt to changes made by their customers. Manufactureres should involve their suppliers when making changaes as smaller suppliers may not have a choice but to accept the situation. 

Owners resistance is where sharholders may need convincing that perating in a new martket will not damage their dividends. It is a short term sacrifice for a long-term gain. 

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Lewin's 3 step process of change

1. Unfreezing 

2. Change or transition 

3. Refreezing 

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Insurable and uninsurable risk

Insurable risk is a quantifiable risk like machinery breaking down. 

Uninsurable risk are when insurance companies are unable to price the risk such as war or the weather. 

One was with dealing with risks is by risk assessments.

Risk assessment understand and minimise what might do wrong by identifying and analysising the risk and likelihood of the risk occuring and looks at what action canbe taken to prevent this. 

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Contingency plan

Is to be followed in the event of an emergency or crisis occuring with thretens to detroy or significantly disrupte the continued. 

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Political factors

Instability is to provide a stable economic and legal framework within which businesses can operate and grow and individuals thrive. 

National security is increasingly important issus for many countires as terrorist attacks have become more common across the world. 

Major trading partners- the UK have decided to remove itself from the EU which makes uncertainty. This impacts the financial markets and creating considerable uncertainty in the European single market. 

Changes in government may well have a mroe or less positive attitude towards business activity. This may cause cost increases for business and imapct future profibility.

Pressure groups can have a significant impact upon political decision making. 

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Economic factors

Governments can affect business decisoin-making using fiscal policy. This involves both changing taxation and government spending to influence the economy. 

Fiscal policy can be used to target political economic or social objectives so expenditure or increased taxation is sometimes targeted at specific industry sectors or alternatively subsides can be paid to industries. 

The purpose of this is to stimulate economic growth in recssion. 

Monetary policy involves altering base interest rates. 

Inflation is the rate at which the general level of prices rising. This is measured by the 'basket of goods'. 

Inflation is casued by either cost-push factors (related to cost of production) or demand-pull factors (factors which enable bussinsess to increase prices becuase demand is increasing) 

The effect of inflation will discourage investment, increase menu costs, reduce the real cos of repaying loans. 

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Economic factors

The measureof economic output is gross domestic product (GDP), which is the measure of annual output of an economy. 

Boom: Economy is growing quickly and demand is high and employment is high. 

Downturn: Growth starts to slow down and customer spending begins to fall.

Recession: Is a continued downturn and demand is low. 

Recovery: GDP starts to rise again and customer spending increses. 

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Economic factors

Exchange rates are a value of curecny expressed in tems of another curency.

S- strong 

P- pound 

I- imports

C- cheaper

E- exports

D- dearer

For importers a fall in the value of the £ makes imports expensive. For exporters it will be cheaper to purchase. 

For importers a rise in the value of the £ makes imports less expensive to buy and for exporters it will be more expensive to purchase. 

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Social factors

Demographic change-demographics measure the changing structure of the population. If the populaation increases then the size of the market will increase and they will be able to sell more goods. 

Lifestyle changes will provide the business with opportunities and threats. Cultural changes might have an impact on business behaviour and he products they produce. Fitness is a lifestyle change, so there will be an increase in the demand for gyms and low calorie foods. 

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Technological factors

Some businesses have grasped these new techinologies to the maximum extent. 

Automation used ti simply mean robots carrying out repetetive tasks in manufaturing industry . 

For retailers automation has become one of the key issues in business efficiency.

Bank clerks are disapprearing to be replaced by machines. 

Staff functions are being replaced by robots that can do more and more tasks.

Online services 

Smart meters canreplase manual meters reading. 

Advantages are that there are lower employee costs, increased productivty and less management time. 

Disadvantages are that there are greater enviornmental impact, social costs and less fllexability. 

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Technological factors

CAD and CAM 

Computer aided design (CAD) is capable of generating, storing and using geometric and computer graphics. It assists design engineers i solving problems.

Computer-aided manufacture (CAM) can be used to control machinery. They produce the sam quality, day in and day out. 

Advantages are that the internet can privide comparisions and much more information through review sites and make lower prices. 

Disadvantages are that online shopping and banking can lead to fruad. 

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Ethical issues

An ethical business is one that considers the needs ofall stakeholders when making business decisons. An ethical business, when setting objectives and considering strategy, takes into consideration its social responsibilities. They consider the mornal rights and wrongs. 

Businesses should treat employees as their most valuable asset, this means taking care of their health and safety and conditions of work and also paying a living wage. 

Suppliers should also be treated fairly, this means sticking to agreed contracts, and not forcing recognition upon suppliers. 

Customers was a quality product or service at a fair price. 

Enviornmental pressure groups have become increasingly effective in influencing business decision makers. 

Animal welfare is a major issue for those retailers with claims to be ethical.

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Corporate social responsibility (CSR)

Businesses have a responsibility that goes beyond making profits for their shareholders. 

The difference between CSR and ethicals is that CSR considers stakeholders, not just shareholders and ethics are a mornal priniple. 

Businesses need to monitor and take responsibility for the impact they have on both oial wefare and the enviornment. 

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Legal factors

These laws are designed to protect individuals, customers, employees and the enviornement. 

Consumer protention is the Sale of goods Act which enables consumers to only return items if they are faulty. 

Minimum wage is rates that bussinssses have to comply with, this mean that more moey will be spent in the economy. 

Competition policy is controlling the abuse of market power of a big business. CMA moitor this. 

Intellectual property law is when a business label and give a logo to their deisgns- aldi and lidl 

Data protection is how personal data is used and kept secure which can result in large fines if the business don't stick to the legislation. 

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Environmental costs of a business


Air pollution from vehicles, air transport and factories. 

Noise pollution from bars/clubs, engery companies, building companies and quarrying.

Litter, plastic.

Water pollution 

Climate change .

Congestions from theme pakr and stadiums. 

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The role of government and pressure groups

The climate chnage levy: is tax on engery used by non-domestic (non house hold) users. This is designed to provide an incentive to reduce energy consumption. 

The lanfill tax: charge on wast going into landfill. 

Pressure groups influence decisions makers such as the government. 

Lobbying is accepted as one of the most effective ways for pressure groups to achieve their et objectives. 


Sustainable is meeting the needs of today whilst ensuring we meet the needs of fture generations. 

Reduce: packaging in the supermarkets.

Reuse: reusable plastic bags.

Recycle: recycling bins. 

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International trade

The reasons countires do not produce all their own goods to satisfy the needs and wants of there population is becuase different countries have different natural, human and capital resources. 

Balance of payments are the difference between exports and imports in therms of revenue. Surplus is a plus and deficit is a negative. 

A quota is a limit and a tariff is a tax. 

Factors behind expansion of trade: consumer expectations, world trade organisation, techinological changes, falling costs of transporting goods and cross-border deregulation. 

Free trade area is one where there are no tariffs or taxes or quotas on goods and/or services from one country entering another,. 

A single market is like a free trade area in that there are no tariffs, quotas or taxes on trade but also where there is free movement of goods, services, capital and people, and a common external tariff on goods entering the single market. 

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Protectionism is an economic policy of restraining trade between counties though the imposition of barries to tradem such as tariffs or quotas. 

Protectionism can allo occur becuase a country may iwsh to preserve a way of life, such as preventing depopulation of remote rural areas heavily dependaent upon a articular agricultural products. 

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Is the process that enables product, financial and investment markets to operate across the globe. 

There have been winner from globalisation are consumers who have a greater choice and cheaper goods. For developing countries can increase their wealth bu producing goods for export. 

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The EU and the single market

The EU is a political and economic grouping that currently has 28 member countries. 

Main features of the single market are that there are no barriers to entry between member states, which means no quotas on imports and exports, there are no tariffs on goods or services traded within the single market.

Advantages of a singe market for the business is that there are increased levels of deman results from accsess to a larger marketplace and there are lower costs through increased economies of scale. 

Advantages of the single market fro consumers and workers are that there is increased cunsumer choice and greater employement opportunities. 

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