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Understanding Business Outcome 2

Understanding Business Outcome 2. 2012-13. Stakeholders. What is a Stakeholder?. Stakeholders are groups of individuals with an interest in or an influence on an organisation. The Oban Chocolate Company. Discuss: Background Info Here. Video Here (and downloaded).

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Understanding Business Outcome 2

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  1. Understanding BusinessOutcome 2 2012-13

  2. Stakeholders

  3. What is a Stakeholder? Stakeholders are groups of individuals with an interest in or an influence on an organisation.

  4. The Oban Chocolate Company Discuss: Background Info Here Video Here (and downloaded) • A family run business… an Award Winning business… making luxury chocolates: • Selection boxes • Wedding favours • Special Events eg Easter • Hampers • Wedding Cakes

  5. Who are the Stakeholders?

  6. Who are the Stakeholders? Local Council Local Community Customers Suppliers Scottish Government Argyll & Islands Enterprise Bank (RBS) PSYBT Employees Any Others?

  7. Who are Stakeholders? Watch the Video…and discuss as a class.

  8. What are Stakeholders Interests? Using the template worksheet… note down the interests and influences that different stakeholders have. See how many you can come up with before the slide is displayed…

  9. Owners/Shareholders INFLUENCES • Decide to buy/sell shares • Opportunity to vote at AGM (Ltd/plc) • Direct influence on decision-making (ST/PT) INTERESTS To receive a share of the profits made To see the business succeed and survive To see an increase in the value of shares For the company to operate in an ethical and socially responsible manner

  10. Employees INFLUENCES • Level of Productivity • Industrial Action INTERESTS Job Security Improved Salaries CareerOpportunities Working Conditions

  11. Management INFLUENCES • Key Decisions Made INTERESTS Job Security Profit Maximisation Improved Salaries and Bonuses CareerOpportunities Working Conditions Growthof the Business

  12. Banks INFLUENCES • Grant/Refuse Loan Application • Setting Interest Rates • Terms & Conditions of Loan INTERESTS Abilityto Pay Back Loans Profits/Growth – Additional Business for Bank

  13. Customers INFLUENCES • Whether to Buy the product/service • Repeat Purchasing INTERESTS Best Prices (Value for Money) High Quality Range of Products Customer Service Guarantees

  14. Suppliers INFLUENCES • Quality of Raw Materials • Set Raw Material Price • Set Credit Terms INTERESTS Continuing Custom Ability to Pay Invoices

  15. Local Community INFLUENCES • Ability to Persuade Businesses to carry out their wishes • Positive/Negative Publicity INTERESTS Environment Jobs Effect on other Businesses Infrastructure

  16. Pressure Groups INFLUENCES • Lobby Businesses – Positive/Negative Publicity INTERESTS Environment Jobs

  17. Local/National Government INFLUENCES • New Legislation • Levels of Taxation INTERESTS Attracting Jobs Collection of Taxes Improvement of Economy

  18. Competing Aims of Stakeholders • Different stakeholders can have competing aims eg: • Senior Management may wish to maximise profitwhereascustomers want low prices. • The Managing Director may wish to have an innovative atmospherewhereasemployees are looking for job security (innovation might include the introduction of automation leading to job losses)

  19. ‘Insert Your Team’ Football Club Thinking about your favourite football club (if you have one – otherwise you can support your teacher’s favourite!)…. Create a display which clearly shows the different stakeholders and their interests and influences on the club.

  20. Possible SolutionDid you think of any others?

  21. Optics plc Questions Using your knowledge gained so far answer the following questions…

  22. Extension Tasks GCSE Business: Asda Dividend GCSE Business: ReTyre GCSE Business: Powergen Times 100: Shell – Balancing Shareholder Needs

  23. Shell: Balancing Shareholder Needs identifythe various stakeholders in the business. what interest and impactdo they have on the business? how does Shell balancethe needs of various stakeholders in order to avoid conflict?

  24. Factors Affecting Businesses

  25. Business Challenges A business challenge is anything that prevents a business from fully achieving its aim(s). Examples of business challenges: • Morrison’s aim to maximise profits is challenged by Asda opening for 24-hours each day. • Enrico’s fish and chip shop’s aim to maximise profit is challenged by an increase in the cost of fish and potatoes. • The Roodland’s Hospital aim to provide the best possible patient care is challenged by there being a shortage of trained staff. • Cancer Research UK’s aim to raise more money for charity is challenged by the difficulty of obtaining finance to open new premises.

  26. Business Challenges In pairs list as many factors which you think would affect decisions that businesses, such as the Oban Chocolate Company, might make today or prevent them from successfully achieving their aims. eg the recession. Feedback to the class and categorise your findings into 2 columns Internal and External Factors.

  27. Internal or External? A fire broke out in the stockroom. The price of visitor parking in a neighbouring council-run car park has increased by 20% The rate of inflation rose, leading to a general rise in prices. There was a rise in customer complaints due to poor customer service. There was an upward trend in online shopping.

  28. Can we insure against some factors? Apart from crime, discuss as a class some external influences that an organisation could insure against.

  29. Looking at Internal Factors first in more detail… • Employees • inc management • Equipment • Finance • Shareholder Influence • Information

  30. Internal Factors • Employees (including Management): • quality of production; • skill/ability level; • work rate; • attitude; • motivation; • poor industrial relations; • staff leaving the company • What would be the impact of each of the above?

  31. Internal Factors • Equipment • Expense to install initially • Faults/maintenance • Finance • Is there capital available for changes to be implemented? • Shareholder Influences • What are their demands eg dividends vs reinvestment? • Information • High quality and relevance to decision being made? • What would be the impact of each of the above?

  32. SWOT Analysis Analyse the Crazy Music Case Study using these headings. Strengths (Internal) Weaknesses (Internal) Opportunities (External) Threats (External) Internal and External factors affecting a businesses success or failure can be analysed using a SWOT Diagram.

  33. Factors Affecting Success?Internal and External 'Crazy Music' is a local music shop which sells CDs, cassettes, videos, vinyl recordsand t-shirts. The business started 2 years ago when the owner, Dave, financed the business with money that he had inherited. Although he has a great knowledge of music his business sense leaves lot to be desired. Salesof CDs, cassettes and t-shirts were initially good but have steadily fallen since another record shop started up in business last year. The competitor – 'Trendy Music' – uses aggressive advertising campaigns on television and in the local newspapers. 'Crazy Music’spremises are small. The section of the shop which sells classical music is not particularly successful. 'Trendy Music' has recently invested in EPOS (Electronic Point of Sale) whereas Crazy Music is still using cash registers. It also appears that suppliers are charging 'Crazy Music' more for goodscompared to its competitors.

  34. Crazy Music Solutions… Strengths - knowledge of music Weaknesses - lack of business sense, no investment in new technology - cash registers, small premises, selection of classical stock which is not selling well, keeping track of stock levels. Opportunities - strong advertising using various media, eg newspapers, TV, change suppliers, invest in EPOS, remodernise or move to new premises, business course. Threats - 'Trendy Music', suppliers increasing prices, changing customer tastes.

  35. …and now The External Factors • Political • Economic • Social • Technological • (Environmental) • (Competitive)

  36. External Factors • Political – • legislation (eg environmental, employment, taxation) • Economic • Interest rates, exchange rates, stage of business cycle (eg recession) • Social • Trends and fashions (including environmental issues) • Technological • Improving technology (incegFacetime , Skype, CAD/CAM) • Competition • Innovative ideas from other companies • What would be the impact of each of the above?

  37. External Factors - Videos • Legislation Contact Lenses (5 mins 26 seconds) • How does the Economy affect business? (4 mins 44 seconds) • An ever-changing world (3 mins 34 seconds)

  38. CASE STUDYClass Challenge: Vue Cinemas Vue Cinemas are facing an ever increasing pace of change that could affect their profitability. In pairs, discuss the challenges that they may be facing (5 minutes)

  39. CASE STUDY EXAMPLE SOLUTIONSClass Challenge: Vue Cinemas Loss in popularity of cinema Cheap cost of DVDs to buy/rent – competition Streaming services egLoveFilm Sky/Cable TV Changing lifestyles Trying to please everyone Pirate DVDs Government legislation To survive Technological changes Location costs in city centres. GEN 2006Q5e

  40. Summary Task: Political, Economic and Social After reading the information provided, answer Task 1 and Task 2… Task 1 – Interest Rates Task 2 – Legislation How could technological factors affect Hislop’s Coach Tours? L&L Business Level 4 – p 44/45

  41. Research Task Using your research skills, find some recent examples of how businesses have been affected by factors outwith their control (ie external factors) Prepare a short report, and be willing to share your findings with the class.

  42. Next slides could be made into a match-it activity?

  43. Challenges that a business may face due to Government legislation

  44. Challenges that a business may face due to economic issues

  45. Challenges that a business may face due to economic issues

  46. Challenges that a business may face due to economic issues

  47. Challenges that a business may face due to environmental and social issues

  48. Challenges that a business may face due to environmental and social issues

  49. Challenges that a business may face due to environmental and social issues

  50. Challenges facing businesses due to developments in ICT

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