Std Grade BM - Unit 3.5 (CB)1 Standard grade Business Management Unit 3.5/4.1 THE CHALLENGES FACING BUSINESSES

Std Grade BM - Unit 3.5 (CB)2 WHAT IS A BUSINESS CHALLENGE? Morrisons’ aim to maximise profit is challenged by Asda opening for 24 hours/day. Mario’s fish and chip shop’s aim to maximise profit is challenged by an increase in the cost of fish and potatoes. SRI aim to provide the best possible patient care is challenged by a shortage of trained staff. Oxfam’s aim to raise money for charity is challenged by the fact that unemployment has risen in the UK

Std Grade BM - Unit 3.5 (CB)3 CHALLENGES FACED BY BUSINESS INTERNAL – »Limited Resources EXTERNAL – »Competitive Environment »Government Legislation »Environmental and social factors »Improvements in Technology

Std Grade BM - Unit 3.5 (CB)4 Financial Control over day to day running costs Control over expenses - workers want pay rise, whereas Finance Dept seeks to cut costs - conflict Finance to expand the business Finance to purchase new ICT software & hardware Human Resources Lack of skilled workers Staff stress Trade Unions LAND.. LABOUR..CAPITAL.. ENTERPRISE Challenges caused by shortage of Resources

Std Grade BM - Unit 3.5 (CB)5 EXTERNAL PRESSURES P E S T POLITICAL ECONOMIC SOCIAL TECHNOLOGICAL

Std Grade BM - Unit 3.5 (CB)6 Legal Restrictions Laws governing health, pollution and the environment health, pollution and the environment employee/employer relations employee/employer relations Employment Relations Act Equal Pay Acts Health and Safety at Work Acts Race Relations Acts Sex Discrimination Acts “Red Tape” Advertising Standards Authority  bureaucracy and form filling

Std Grade BM - Unit 3.5 (CB)7 Other legal constraints which organisations need to pay attention to: Sale of Goods Act - goods must be of “merchantable quality” and “fit for purpose” Fair Trading Act - competition must be fair Trade Descriptions Act - businesses cannot falsely describe their product (eg anti-baldness or anti-wrinkle creams) Weights and Measures Act - to make sure that standards are observed Consumer Credit Act - protects customers buying on credit Consumer Associations protect the interests of consumers by testing goods and services and reporting the result.

Std Grade BM - Unit 3.5 (CB)8 HOW DO THE DECISIONS OF POLITICIANS CHALLENGE BUSINESSES? Govt raises tax on petrol Increase in tax on profit Govt spending reduced Monopolies/Mergers Challenge

Std Grade BM - Unit 3.5 (CB)9 HOW DO THE DECISIONS OF POLITICIANS CHALLENGE BUSINESSES? Legislation to protect workers: –Working hours –H & S –Min wage Consumer Protection Challenge

Std Grade BM - Unit 3.5 (CB)10 Why is Competition from other firms a challenge? The aim of a business to increase its profit and expand may be affected by competition from other firms at local, national or global level. Businesses try to gain a competitive advantage in many ways: Research the market Through changing 4 Ps Increasing range of products Improving quality Unique Selling Point Reputation Customer service Develop ICT

Std Grade BM - Unit 3.5 (CB)11 HOW DO THE ECONOMIC CHANGES CHALLENGE BUSINESSES? Recession Inflation Change in exchange rates Challenge

Std Grade BM - Unit 3.5 (CB)12 HOW DO THE ECONOMIC CHANGES CHALLENGE BUSINESSES? Globalisation due to ICT Changes in age structure of population Rise in interest rates Challenge

Std Grade BM - Unit 3.5 (CB)13 HOW DO THE ENVIRONMENTAL AND SOCIAL ISSUES CHALLENGE BUSINESSES ? Legislation re disposal of waste Customers concerned about effect of actions of business on environment –Packaging –Recycling Challenge

Std Grade BM - Unit 3.5 (CB)14 HOW DO THE ENVIRONMENTAL AND SOCIAL ISSUES CHALLENGE BUSINESSES ? Changing lifestyles –Eg working women require longer shopping hours Customers concerned about effect of actions of business on third world Challenge

Std Grade BM - Unit 3.5 (CB)15 IMPORTANCE OF ADVANCES IN TECHNOLOGY FOR BUSINESS TODAY? Substantial sums of money needed, eg Robotics Costs of maintenance and upgrading ICT offers huge opportunities for –business and –consumers Challenge