Influences on Business — AQA GCSE Business
Businesses operate in a changing external environment. They must respond to technology, ethics, the economy and globalisation.
Technology
Technology influences business through e-commerce (selling online), digital communication (social media marketing, email), and automated production. Benefits include wider markets, lower costs and convenience; drawbacks include set-up costs, security risks and the need to train staff.
Ethical and environmental considerations
Customers increasingly expect businesses to behave ethically and sustainably:
- Ethical practices — fair treatment of workers and suppliers (e.g. Fairtrade), honest marketing.
- Environmental practices — reducing pollution, waste and carbon footprint, recycling.
These can increase costs but may improve reputation, attract customers and provide a competitive advantage. There can be a trade-off between ethics/environment and profit.
The economic climate
Businesses are affected by economic conditions:
- Unemployment — affects demand and the availability of labour.
- Inflation — rising prices increase costs and may reduce demand.
- Interest rates — affect the cost of borrowing and consumer spending.
- Taxation and government spending.
- Consumer income — affects how much people can spend.
Globalisation
Globalisation is the growing connection between economies and markets worldwide. It gives businesses access to larger markets and cheaper resources, but increases competition. Imports and exports, exchange rates and multinational/transnational companies all play a role. Trade barriers (e.g. tariffs) and trade blocs influence international trade.
Exam tips
- Explain how technology and e-commerce change how businesses operate.
- Discuss the trade-off between ethics/environment and costs/profit.
- Learn how unemployment, inflation, interest rates and income affect business.
- Define globalisation and the role of exchange rates and trade.