Edexcel GCSE (9-1) Business (1BS0) · Spec 1.5.1, 1.5.2, 1.5.3, 1.5.4 and 1.5.5
Understanding external influences
Read the notes, then try the questions. Each one is marked the moment you press Check, and shows the right answer and why.
Key ideas
- Stakeholders are people affected by a business: owners, employees, customers, suppliers, the local community. Their aims can clash. For example, shareholders want dividends and employees want pay rises.
- Technology such as e-commerce and card payments changes how firms sell and operate.
- Legislation such as employment law (including the minimum wage), consumer law and health and safety law can raise costs and change how a business works.
- The economy matters. When interest rates rise, borrowing costs more and consumer spending tends to fall. A weaker pound makes imports dearer. Rising unemployment, falling consumer incomes, higher inflation and higher taxation can all cut spending.
- Good businesses respond to change: adding online booking, updating staff training or offering lower-priced products in a recession.
Key terms
- Stakeholder
- A person or group with an interest in, or affected by, what a business does.
- E-commerce
- Buying and selling goods and services over the internet.
- Interest rate
- The cost of borrowing money, or the reward for saving it.
- Exchange rate
- The value of one currency in terms of another.
- Recession
- A sustained fall in the overall level of economic activity.
Common mistakes
- Getting the direction of exchange rates wrong. A weaker pound means more pounds are needed to buy the same imports, so import costs rise.
- Saying a new law has no effect on a small firm. Small firms must obey too.
- Writing that 'customers are happy' without saying what it does for the business.
Exam tip
'Analyse' questions are chains: a fact, then the effect on this business, then what that does to sales, costs or profit. Each link depends on the one before, so do not skip a step.
Free practice questions
7 questions, 13 marks. Answer, then press Check. The marking guide explains how the marks are worked out. Nothing is saved.
- Question 1 · Matching[4 marks]
Match each stakeholder to their main interest in a business.
- Question 2 · Multiple choice[1 mark]
Which term describes the buying and selling of goods and services over the internet?
- Question 3 · Multiple choice[1 mark]
Which piece of legislation sets the lowest hourly rate an employer may legally pay an adult worker?
- Question 4 · Multiple choice[1 mark]
The Bank of England raises interest rates. Which of the following is the most likely effect on consumer spending?
- Question 5 · Multiple choice[1 mark]
The pound weakens against the dollar. What is the most likely effect on a UK business that imports raw materials priced in dollars?
- Question 6 · Matching[4 marks]
Match each external change to a suitable business response.
- Question 7 · Multiple choice[1 mark]
Customers now expect to book appointments online. Which response would help a hairdresser?