External Influences on Business Activity

External Factors Beyond a businesses control “Constraints” – limit decision making Create Opportunities (technological advancement)

Government and the Law Vicarious Liability Being responsible for any damage/injury caused to one person to another – even if the action is forbidden! The law says that they should take responsibility for who they employ So.. Insure against any potential risk!

Employment Practices (constraint) Laws that exist to control employer/employee relations WHY? Exploitation of workers Trade Unions – loss of output and national income

Recruitment, contracts and termination Written SIGNED contract – pay/hours/working conditions/disciplinary actions Entitlements: Minimum Wage Pension Entitlement Discrimination on Race/Colour/Religion is illegal How could this cause issues for some businesses? 2006 – Age discrimination now illegal (but, shift in recruitment of older/retired people)

Recruitment, contracts and termination Maternity/Paternity pay (EU) Large Scale Terminations – In EU – has to be passed in the courts to accept the legality of the action Individual redundancies – disputed in employment tribunal If worker wins = compensation and job offer made!

Recruitment, contracts and termination Unfair Dismissal in UK and EU For being pregnant Refusal to work on a “Holy Day” Refusal to work overtime (> 48hours/week) Incorrect dismissal procedures followed Being a member of a Trade Union Outside EU... Lower Wages Longer Hours Working age lower H&S slacker Affecting business locations!

Health and Safety Protection from discomfort and physical injury The strictness of the laws worldwide vary considerably EU and UK: Safe Equipment Toilet Facilities Protection from machinery Breaks and good temperatures to work in Health and Safety at Work Act 1974 DON'T DO !!!

Evaluating the impact of legal constraints on emp and H&S ...  Supervisory cost of procedures  Higher Wage Costs  Costs from maternity, paternity, pensions, holidays  More employees – to accommodate above!  Protective clothing for H&S reasons Hence, moving overseas for production!

Evaluating the impact of legal constraints on emp and H&S... Secure workers = valued = motivation = goal focus Reduced costs due to accidents/illness No fines/court cases Attract the best workers PR/Marketing benefits Culture: all equal = staff retention Sing a Long New Zealand Laws Research the MAIN ones – what do they expect Employers to do? Activity 6.1 (pg 85)

Consumer Protection Why do consumers need protecting by the government? Individuals are weak and powerless against big marketing and promotional campaigns Need of expertise – do we understand the technological and scientific claims being made? “kills 99% of known germs” !!! Pressured selling techniques – hard to resist  (finance deals) Globalisation – what are we being sold? Lower prices = better deal??? Or reduced quality?

Sales of Goods Act 1982 Are goods fit to sell? Do they have defects? Are they suitable for the purpose that they were bought? Will they perform in the way that they are described? Dangerous toys IPhone Ad 3G IPhone Article

Trade Description Act 1968 No misleading descriptions.... “Leather chair” cannot be made out of plastic! Food - it's not what it says it is! ebay lighters Sterling Silver? What would you expect to receive if you saw this advertised? A lot of 4 Lighters

Consumer Protection Act 1987 Payment for any damage caused by defective or dangerous products Misleading prices Recalled Products Prices

How can you EVALUATE the IMPACT of consumer protection laws on business? Increased costs: Redesigning products to meet legislative requirements Informative Advertising can be expensive Quality Control Costs Accurate weights and measures Changing the direction of the business could be difficult... Customer, not profit, focus! BUT... Benefits with abiding by the law... Loyalty for the product Returning customers = $$$$ EXAM... You will need to know how a business is affected by Consumer Law! You WON’T need to know the laws in detail