BUSINESS INFLUENCES 1

Changing Laws and Legislation: Increasing national minimum wage

• Positive impact

• Negative impact

Answer explanation

Negative. Organisations will have higher wage costs which in turn will result in lower profits.

Changing VAT rates: The government increase VAT to 25%

• Positive impact

• Negative impact

Answer explanation

Negative. By increasing VAT rates, this will increase a product or service's selling price. If the selling price increases, this can put customers off purchasing products which will reduce sales.

Changing Laws and Legislation: The government could introduce environmental protection laws that will give law abiding organisations positive CSR.

• Positive impact

• Negative impact

Answer explanation

Positive. Organisations that abide by such a law would be seen as behaving in an environmentally friendly way and in turn would gain positive Corporate Social Responsibility. This can attract potential customers to the business.

Public Spending on Infrastructure: Public spending improves certain areas. If you were a Falkirk based business, would you directly benefit from Edinburgh's improved infrastructure (tram network)?

• Yes

• No

Answer explanation

No, you wouldn't. An issue with public spending on infrastructure is that only the area that was improved will see the benefit.

REMEMBER: Opportunity cost means that the cost of spending money on one area is that it can't be spent in another.

Public spending on infrastructure: A new multi-storey car park is built in Aberdeen City Centre with low parking rates. What impact will this have on Aberdeen businesses?

• Positive impact

• Negative impact

Answer explanation

Positive. This will encourage people to come into the city centre more often and will benefit businesses in the area as they will experience higher footfall.

Changing corporation tax: The UK government reduce corporation tax to 17%

• Positive impact

• Negative impact

Answer explanation

Positive. By lowering the tax rate to 17%, organisations won't have to pay as much tax on the profits they make and in turn, would increase profit.

However, it may have a negative impact on publicly funded organisations like the NHS.

Which one(s) are influence(s) of an employee.

• They can provide good customer service to the customer

• They can take industrial action e.g. strike

• They want job satisfaction and good working conditions

• They can provide a poor service to the customer

Answer explanation

The level of customer service provided by the employee can impact on the customer's decision to return to the business.

Going on strike can mean that sales/orders are lost and can harm the reputation of the business.

Businesses have some control over Internal Factors

• True

• False

Which ones are examples of how finance can affect a business?

• Having lots of finance means new products can be developed

• Running low on finance means that employees may have to be made redundant

• Having lots of finance means having to cut costs

• Having lots of finance available means staff can be given pay rises

Businesses aim to be socially responsible. What does this mean?

• To do things in a way that won’t harm anyone or the environment.

• To make as much profit as possible.

• To have as many customers as possible.

• To employ only people who have been unemployed for longer than one year.