EXTERNAL INFLUENCES ON
BUSINESS ACTIVITY
CHAPTER 6
Pg 83
LEGAL CONSTRAINTS ON BUSINESS
MAIN CATEGORIES
 Employment practices
 Consumer rights
 Business competition
 Location of business
LAW AND EMPLOYMENT PRACTICES

1.
2.
Government pass laws to :
Prevent exploitation of workers
Prevent loss of industrial out put and national
income from union collective action
LEGAL CONSTRAINTS AND EMPLOYMENT
PRACTICES
 Recruitment
,employment contracts and termination
of employment
 Health and safety at work
 Minimum wages
 Trade union rights and responsibilities
HEALTH AND SAFETY LAWS
Safety equipment
 Adequate facilities
 Protection from dangerous machinery
 Breaks between works
 Work place temperature

EVALUATING THE IMPACT ON BUSINESS OF LEGAL
CONSTRAINTS ON EMPLOYMENT AND HEALTH AND
SAFETY
Silent reading page 86
THE LAWS AND CONSUMER RIGHTS
The UK government has passed many
pieces of legislation over the past 40 years
which aim to ensure that consumers are
protected from the negative aspects of the
operations of businesses.
UK LAWS INCLUDE
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The Sale of Goods Act, 1979: This states that goods must be of
merchantable quality, as described in their advertisements and fit
for their purpose.
The Trade Descriptions Act, 1968: This makes it illegal for a
business to provide false or misleading descriptions of their
products, services, accommodation and facilities.
The Consumer Protection Act, 1987: This states that it is an
offence for a business to give a false or misleading price indication
on its product(s) AND businesses are liable for any damage and
injury that their defective products cause to consumers.
THE LAW AND BUSINESS COMPETITION
Free trade benefits consumers.
 Prices low
 Improved quality
 External benefits
 Laws control monopolies
 Limit uncompetitive practices between firms

MONOPOLIES
 UK--One
firm has control of most of
at least 25 % of the market
 Theoretically means one supplier but
this is very rare.
HOW DO MONOPOLIES DEVELOP
Invention of new products or processes
 Merging or taking over
 By legal protection –postal service
 By existing barriers to entry. e-g advanced
technology huge cost etc

HOW ARE CONSUMERS AFFECTED BY
MONOPOLIES
BENEFITS OF MONOPOLIES TO
CONSUMERS
 Low
price if large scale production
monopoly reduces average costs.
 Increased
expenditure on new product by
the monoplist.
DRAWBACKS OF MONOPOLIES TO
CONSUMERS
High prices
 Limited choice
 Less investment in new products as monopolist
complacent and feels risk of competition.
 No incentive for the firm to lower the costs and
improve efficiency.

UNCOMPETITIVE OR RESTRICTIVE
PRACTICES
Refusal to supply a retailer if they disagree on
prices.
 Full line forcing –to stock whole range of
products.
 Market sharing agreements and price fixing
agreements.
 Predatory pricing

IMPACT OF TECHNOLOGY ON BUSINESS
ACTIVITY
Information
technology
INFORMATION TECHNOLOGY
CAD
CAM
APPLYING TECHNOLOGY TO BUSINESS
POSSIBLE LIMITATIONS
 Costs
 Labour
relations
 Reliability
 Data protection
 Management
IT AND BUSINESS DECISION MAKING
 Table
pg 93
INTRODUCING TECHNOLOGY EFFECTIVELY
Analyse
 Involve
 Evaluate
 Plan
 Monitor

SOCIAL AND DEMOGRAPHIC INFLUENCES ON
BUSINESS ACTIVITY
Aging population
 Better provision of education
 Changing role of women
 Early retirement
 Rising divorce
 Job insecurity

AGING POPULATION
Changing patterns of demand and grey
consumers demand differently
 Age structure of the work force may change

PATTERNS OF EMPLOYMENT

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Labor replaced by capital
Transfer of labour from old established industries e-g steel to hi
tech industries e-g computer game design
Increase in woman workforce
Increase in part time employment
Increase in student employment
Temporary and flexi contract
Flexible hours are more common
Aging population
Women are tending to stay in full time jobs
Multicultural countries
EVALUATING AFFECT ON BUSINESS OF
CHANGING EMPLOYMENT PATTERNS OF
EMPLOYMENT.
ENVIRONMENTAL CONSTRAINTS ON
BUSINESS ACTIVITY

The environment and corporate social
responsibility
ARGUMENT FOR AND AGAINST ADOPTING
ENVIRONMENTALLY FRIENDLY BUSINESS PRACTICES
Page 98 group activity
ARGUMENTS FOR ADOPTING BUSINESS
STRATEGIES WHICH ARE ENVIRONMENTALLY
SOUND:
a) Businesses that reduce pollution by using latest recycled or green
equipment can have real marketing & promotional advantage. Companies
that damage the environment can suffer adverse consumer reaction. This
adverse reaction caused by extensive pressure group activity.
b) Law-polluting production will reduce the chances of businesses breaking
laws. They can avoid bad publicity & court fines.
c) Businesses that switch to an environmentally friendly strategy often
report an improvement in the number & quality of applications they receive
from potential employees.d) Long-term financial benefits. E.g.: Generating
electricity by using solar panels would gain substantial cost savings if the
cost of energy generated by oil & gas increases. There is also no external
costs.
ARGUMENT AGAINST ADOPTING BUSINESS
STRATEGIES WHICH ARE ENVIRONMENTALLY
SOUND:
a)Marketing advantage from keeping costs as low as possible.
Society benefit from cheaper goods produced.
b) Profits will be reduced if the latest methods of production is
purchased.c) Many countries legal protection of the
environment is weak. As a result, be little risk of legal action
or heavy fines against business activity.d) Developing
countries it is argued that economic development is more
important than protecting the environment.
ENVIRONMENTAL AUDITS
Assess the impact of business`s activities on the
environment.
 Independent check
 Few firms publish it to increase sales as a result
of consumer reaction.
 Workers and managers work together as a team.
 Better qualified applicants are attracted

SOCIAL AUDIT
A report on the impact a business has on society .This can
cover pollution levels, health and safety record, sources of
supplies, consumer satisfaction and contribution to the
community.
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Social audit can include environmental audit
H&S e-g number of accidents and fatalities
contribution to the community—charity events
Employee benefit schemes
Sources of supplies ethical or not?
Feedback from customers and suppliers on how they
perceive the ethical nature of business activities.
EVALUATION OF ENVIRONMENTAL AND SOCIAL
AUDIT
Environmental audits is an investigate process
to determine if an existing facility is in
compliance with applicable environmental
laws & regulations.
 · An environmental audit would check the
pollution levels, wastage levels & recycling
rates of the business & compare them with
previous years.· These audits are entirely
voluntary.

ENVIRONMENTAL AND ETHICAL ISSUES –-THE ROLE OF PRESSURE GROUPS-- How
do they operate?
Pressure group is an organisation with a
common interest who put pressure on
businesses & government to change policies
so that the objective is reached.
WAYS OF ACHIEVING GOALS –
PRESSURE GROUPS- Publicity
through media coverage
 Influencing consumer behaviour
 Lobbying of government