Title 1. A2 Business - Notes.pdf ✅

A2 – BUSINESS (9609) [SECTION 1] Topics Lectures = 9 Topic 1: External Influences 1,2 Topic 2: Economic Influences 3,4 Topic 3: Business Strategy 5,6,7,8,9 [2024 Edition]
A2 / Level – Business (9609) – SECTION 1 AATIK TASNEEM | O/A-LEVEL | BUSINESS & ECONOMICS | 0304-1122845 1 TOPIC 1: EXTERNAL INFLUENCES Lecture 1 (1) PRIVATIZATION Definition: Privatization is regarded as selling a state-owned asset to investors in the private sector. Advantages Disadvantages (1) Since profit is the motive, private sector makes a serious effort to maintain high quality standards. (2) It leads to competition and brings prices down. Failing businesses will die whereas successful ones will flourish. (3) Earns revenue for the government which can be used to spend on providing merit goods to the masses. (1) Can lead to unemployment due to the motive of cutting down costs. (2) Many strategic industries might start operating as private monopolies which can exploit the consumer with high prices. (3) Services not producing profit, even if they are important, might be shut down. Definition | Nationalization: Transfer of privately owned business to government ownership. (Opposite of privatization) (2) LABOR PROTECTION Definition: These are laws that protect the rights of workers in an economy. These laws include, minimum wage law, protection against unfair discrimination, health and safety standards, work time regulation, anti-discrimination laws etc. These laws can have both a positive or a negative impact on the business. Advantage Disadvantage (1) Attract better employees and keep the existing one motivated. This will tend to enhance their productivity which will lead to better quality product and greater output. (2) The company can avoid expensive law suits in damage recovery and government fines by following the law. The business can also get govt. benefits in the form of tax holidays. (3) A safe working environment will reduce risks of accidents and time off work for ill health or injury. (1) Increase the cost of business as firm needs to hire proper teams for the recruitment and selection process. (2) High minimum wage and non-financial benefits will increase the cost to maintain the workers. (3) Less productive workers might be protected as it would be difficult to replace them with strict laws.
A2 / Level – Business (9609) – SECTION 1 AATIK TASNEEM | O/A-LEVEL | BUSINESS & ECONOMICS | 0304-1122845 2 (3) CONSUMER PROTECTION Definition: These are laws that protect the consumer against overpricing, unfair trading practices, false advertisement etc. Advantage Disadvantage (1) This can also act as an investment towards customer and brand building and give the brand a competitive edge. (2) Good laws can help businesses act in a more market- oriented way and offer better products and superior customer service, generation profits in the long-term. (3) Treating consumers fairly and responding to complaints quickly may also reduce the risk of court action and fines. (1) The business costs can go up since new products needed to be designed in order to meet new health and safety laws. (2) Companies might need to design new advertisement strategies based on the changes in the ASA rules. (3) Senior managers might resist the change as it requires change of objectives and can even damage the profitability of the firm. (4) BUSINESS COMPETITION Definition: These laws aim to ensure free and fair competition between businesses. This allows wider choice of goods and services, lower prices and improved quality. These include preventing mergers and limit and outlawing uncompetitive practices. Advantage Disadvantage (1) Consumer Trust and Loyalty as when businesses compete fairly, consumers can trust that they are getting the best products and services at competitive prices. This builds customer loyalty and confidence in the marketplace. (2) Since practices like predatory pricing is removed it allows the companies to become more product oriented rather than starting a price war which helps to boost profits. (3) Competition laws incentivize businesses to innovate and improve their offerings to gain a competitive edge. This drive for innovation benefits consumers by leading to better products and services over time. (1) It makes expansion difficult for businesses as taking over other companies is difficult. (2) It might be difficult to overcome competition from smaller businesses as practices like predatory pricing is not allowed. (3) They may need to invest time and resources in legal counsel, internal training, and audits to meet regulatory requirements.
A2 / Level – Business (9609) – SECTION 1 AATIK TASNEEM | O/A-LEVEL | BUSINESS & ECONOMICS | 0304-1122845 3 Lecture 2 (5) CORPORATE SOCIAL RESPONSIBILITY (CSR) Definition | CSR: These businesses consider that consider the interests of their stakeholders and not only their shareholders when taking decisions. Firms tend to achieve this by getting ethical suppliers, putting employees before profit, use environmentally friendly raw material etc. Advantages Disadvantages (1) Paying higher wages, improving working conditions, motivates employees to work harder and creates loyalty and helps to attract good quality workers. (2) Better waste management and less polluting methods will reduce the cost of the firm by avoiding government fines. (3) Earn a better repute in the eyes of the customers and stakeholders. This helps the business to create a USP and gain market share. (4) Since company is ethical it will not window dress its accounts. Hence chances of investment in the business will increase. (1) Environmentally friendly production methods are costly and might in expensive products. The company passes on these higher prices to their customers, resulting in low sales and hence lower profits. (2) In developing countries where law and order is weak and customers are not concerned about the environmental friendly products, which can cause loss of sales. (3) Businesses might engage in CSR initiatives primarily for marketing purposes, without genuinely committing to making a positive impact. This practice, known as "greenwashing," can lead to public backlash and damage the company's reputation. Corporate social reports Definition: Firms issue corporate social reports which are documents setting out a business’s targets for meeting its social obligations and the extent to which previous social targets have been achieved. Social Audits Definition: Social audits are reports on the impact a business has on society. This can cover pollution levels, health and safety record, sources of supplies, customer satisfaction and contribution to the community. The benefit is that it helps the business to identify what responsibilities a business is meeting [however] it takes time and money to conduct these activities which might add to extra cost. Pressure Groups Definition: Pressure groups are organization who work towards a common interest to put pressure on the businesses and governments to change policies so that an objective is reached. Example: Greenpeace (Environment) These pressure groups effect the three main decision: (1) Firstly, the they put pressure to change put pressure on the businesses to adopt for environmentally friendly production methods or protest against labor layoffs. (2) These pressure groups might also force consumers to change their purchasing habits to more environmentally friendly brands. (3) Put pressure on governments to change laws. The achieve this by Publicity through media coverage, influencing consumer behavior and Lobbying of government.