Std Grad BM - Unit Standard Grade Business Management Unit 4.2 (Unit 15 in Textbook) What influences the decisions?

Std Grad BM - Unit WHAT INFLUENCES THE DECISIONS? Key stakeholders in a business have considerable influence on the decisions made. These can be categorised as follows:  Owner/business needs  Customer needs

Std Grad BM - Unit How do Owners influence business decisions? OWNERS – their needs and desire for ‘returns’ from the business. Owner : contributed own money time and effort and therefore has a right to participate in decision making. Manager : controls day-to-day running of a business on behalf of owners. May also own or part-own the business, eg sole trader.

Std Grad BM - Unit How do Owners influence business decisions? Private Owned by small number of shareholders. Limited There will be a mix of owner and manager Company involved in running the business. Public Owned by public through publicly issued Limited shares and run by directors and managers. Company Shareholders control through AGM. Partner : is one of a few owners and jointly manages the business. However, shares profit/loss as well as responsibilities.

Std Grad BM - Unit How do Customer needs influence business decisions? A business needs to know: Their target market What influences customers decisions to buy, eg price, image, packaging, quality, availability, reliability, how often they buy the product. Where customers want to buy, eg mail order What add-on services are important, eg free delivery How to create goodwill, eg social responsibility How to use desk and field research to answer these questions.

Std Grad BM - Unit How do Competitors actions influence business decisions? High level of competition forces prices to be kept low - must keep down costs Little competition (even monopoly) means higher prices and lower quality of service Substitute products ensure competitive pricing and quality - supermarket own brands If a business does not consider competitors and compete on price, quality and availability, the business will not survive!

Std Grad BM - Unit How do Competitors actions influence business decisions?  be creative  take risks  be proactiveLead the market - actively seek to improve the present position rather than reactivewhere you react to a situation and make decisions in response “If you only give people what they already want, someone else will give them what they never dreamed possible.” (Saatchi & Saatchie)

Std Grad BM - Unit How does the Law influence business decisions? Employees : Minimum wage Working time directive Anti-discrimination laws Health & Safety and Work 1974 Equal Pay Act 1970 Data Protection Maternity pay and leave Organisations must adhere to laws in place to protect employees, customers and the environment.

Std Grad BM - Unit How does the Law influence business decisions? Customers : Sale of Goods Act 1994 Fair Trading Act 1973 Competition Act 1980 Trade Descriptions Act Consumer Credit Act 1974 Data Protection Consumer Associations protect interest of consumers Advertising Standards Authority monitors advertising

Std Grad BM - Unit How does Environmental issues influence business decisions? Environment : Planning permission required for new buildings and extensions Waste disposal laws Emissions from factories etc controlled

Std Grad BM - Unit Age distribution of the population Changing work patterns, eg part-time Importance of recycling Activities of pressure groups Consumers’ desire for social responsibility Organisations ignore social issues and their impact on business activity at their peril. How does the social environment influence business decisions? Local and Central Government must consider social costs and benefits.

Std Grad BM - Unit How does the Economic environment influence business decisions? Inflation Recession Unemployment Opportunity cost - cost of building a maternity hospital might be building a new leisure centre : Types of Economy: Centrally Planned Free Market Mixed Economy

Std Grad BM - Unit How does the Political environment influence business decisions? Taxation Changes - on company profit, VAT Interest Rate changes Exchange Rate changes Uncertainty re adopting the Euro European Union All Constraints in this unit - internal and external - must be considered when making decisions. The external Constraints (PEST) are outwith the control of individual organisations.