Influences on business
Technology, ethics and the environment, the economic climate, globalisation and legislation, and how businesses respond.
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Influences on business, explained point by point
Everything the GCSE specification expects you to be able to do, and how to actually do it - the same lesson a signed-in student studies from.
Explain how technology and e-commerce influence business activity
Technology changes what businesses sell and how: e-commerce lets a small shop reach customers worldwide, open , with lower overheads than a high-street unit - but it also brings website costs, delivery logistics and global competitors. Digital communication (social media, email) transforms marketing and customer service. In an answer, spell out the chain: e-commerce → wider market → more sales revenue → but also new costs - chains of consequence are what analysis marks reward.
Discuss ethical and environmental considerations for businesses
Ethical behaviour means doing what is right beyond what the law demands - paying fair wages, sourcing responsibly, treating suppliers decently; environmental considerations cover pollution, waste, packaging and carbon footprint. There is usually a trade-off: ethical sourcing raises costs, which squeezes profit or raises prices - but it can also attract customers and win loyalty. The strongest answers present the trade-off from both directions before judging what this particular business should do.
Explain how the economic climate affects businesses - interest rates, unemployment and taxation
When interest rates rise, borrowing costs more - so businesses delay investment, and customers with mortgages have less to spend. Higher unemployment means less consumer spending but easier recruitment. Tax changes work through both costs and demand: a VAT rise nudges prices up; income tax changes alter what customers keep. The exam skill is tracing the effect TO the business in the question: a luxury-goods firm suffers more in a downturn than a discount supermarket - some businesses actually gain.
Explain globalisation and the role of multinationals
Globalisation is the growing interconnection of world markets: businesses source, produce and sell across borders. For a UK business it cuts both ways - new markets and cheaper suppliers abroad, but competition arriving from everywhere too. Multinationals operate in many countries, bringing jobs and investment where they go, alongside concerns about local competition and where profits (and taxes) end up. Exchange rates matter here: a weaker pound helps UK exporters and hurts importers.
Explain the impact of legislation on businesses
Employment law (minimum wage, anti-discrimination), consumer law (goods must be as described and of satisfactory quality), and health and safety law all set the rules of the game. Compliance costs money - training, equipment, higher wages - but the costs of breaking the law are worse: fines, compensation and reputational damage. A balanced point worth making: legislation also protects good businesses, by stopping rivals undercutting them with unsafe or unfair practices.
Apply outside influences to the business in the question (AO2)
Influence questions almost never ask "what is an interest rate?" - they ask how a rate rise affects THIS gym, THIS builder, THIS online retailer. Anchor every point in the case study: a builder relies on customers borrowing to fund extensions, so rate rises hit demand hard; a food retailer barely notices. Use the case study's own numbers and details in your sentences. Same fact, different impact, different answer - that is application, and it is where most marks are won and lost.
Practice
Try a Influences on business question
A GCSE-style original task from this topic. Sketch a quick plan of your own before you open what a strong answer covers.
Read the following case study. Oakline Furniture Ltd makes sofas and beds in the UK. Most customers buy on credit, paying monthly over two years, and the business itself has a large variable-rate bank loan that it used to buy machinery. The Bank of England has just raised interest rates, and further rises are expected. Analyse the impact of rising interest rates on Oakline Furniture Ltd. [6 marks]
Show what a strong answer covers
The marking points an examiner looks for. Not a model answer - a checklist to plan against.
- AO1: knowledge of what a rise in interest rates means - borrowing becomes more expensive for both consumers and businesses, and saving becomes more attractive, reducing spending
- AO2: applies this to Oakline’s specific situation - its customers buy sofas and beds on credit, so their monthly repayments rise, and the business has a variable-rate loan whose repayments also rise
- AO3: develops the chain of consequences, e.g. fewer customers can afford credit purchases so revenue is likely to drop at the same time as loan costs rise, squeezing profit and possibly forcing Oakline to cut costs or delay investment