Technology
- E-commerce (selling online), digital communication (email, social media and video calls), new payment systems (contactless and apps) and automation all affect businesses.
- Benefits: reaching more customers, selling 24 hours a day, lower costs and better data. Drawbacks: the cost of new technology and training, cyber-security risks, and competition from online rivals.
Legislation
- Employment law covers the National Minimum Wage and National Living Wage, discrimination (the Equality Act 2010), health and safety (the Health and Safety at Work Act 1974), working hours and contracts.
- Consumer law (the Consumer Rights Act 2015) says goods must be of satisfactory quality, fit for purpose and as described.
- Laws can add costs, but they protect workers and customers and help a business's reputation.
The economy
- Unemployment: when more people are out of work, spending falls, but recruiting is easier. Consumer income: rising incomes increase demand, especially for luxuries.
- Inflation (a general rise in prices) increases costs. Interest rates, set by the Bank of England, affect the cost of borrowing and how much customers spend.
- Taxes such as income tax, VAT and corporation tax (a tax on company profits) affect costs and spending.
- Exchange rates: a strong pound makes imports cheaper and exports more expensive (SPICED: strong pound, imports cheap, exports dear).
Competition
- More competition puts pressure on prices and pushes businesses to improve quality and innovate.
Key terms
- E-commerce
- Buying and selling online.
- Legislation
- Laws passed by Parliament.
- National Minimum Wage
- The lowest hourly pay employers can legally pay.
- Inflation
- A general rise in prices over time.
- Interest rate
- The cost of borrowing money, shown as a percentage.
- Exchange rate
- The value of one currency in terms of another.
- Unemployment
- People who want to work but can't find a job.
- Corporation tax
- A tax on company profits.
- VAT
- Value added tax: a tax on most goods and services.