external influences on a business

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External influence on a business (Unit 14)

Introduction (Task 1)  

My name is Yathursan Devabalan. I am a sixth-form student at Woolwich Polytechnic School. I am currently studying Maths, Business and Economics.

 In business I am currently in the process of doing the coursework on ‘External Influences on a Business’. This coursework requires me to investigate the external influence which affects my business.

I have chosen to investigate Morrisons because I believe it is easier to get the information I need about them. They are very close to my school. Another reason why I chose to investigating Morrisons is that I know several people who work in Morrisons in various job roles so I can get some insight information regarding what sort of external influences affect them.

 In this coursework I will be investigating how the business reacts to the external influences including legal, economical, technical and environmental and also analyse and evaluate the changes the business has made to its practices and activities in reaction to the external influences.

Description of the business

Morrison Supermarkets plc is the fourth largest chain of supermarkets in the United Kingdom. Morrisons employs 123,223 staff, in 373 superstores in the United Kingdom. Most Morrisons stores operate from large superstore formats selling a wide range of products including the core groceries. As of October 2006, Morrisons has 367 superstores in the United Kingdom, including those it has retained following its purchase of Safeway plc . Until 2004, Morrisons superstores were largely concentrated in the English Midlands and the north of England, but had expanded southwards, beginning with a store at , Kent, which opened in 1998. Most Morrisons stores operate from large superstore formats selling a wide range of products including the core groceries. Most Morrisons superstores are typically between 28,500 sq ft and 36,000 sq ft, with an increasing number above 36,000 sq ft, offering food, home wares, some essential clothing (i.e. socks, underwear), cafés and petrol stations. The Morrisons I am going to investigate is right next to my school, it has several facilities such as café, salad bar, pharmacy, butchers, customer service desk and restaurant. Morrisons are in an oligopoly market but it is highly competitive among the major stores but the market is lead by Tesco.

These are the external constraints I will look at:

Economic factors - relate to changes in the wider economy. A growing economy provides greater opportunities for businesses to make profits, so businesses welcome rising living standards. So for example, an increase in interest rates will make it more expensive to borrow money from bank for example for investment. It is not just interest rates which affect Morrisons but after economics factors as well such as inflation, business cycle, employment and it is not just trends in the national economy which affects Morrisons but also the trends in the global economy.

 
Legal factors - relate to changes in laws and regulations. Businesses must be careful to keep within the law and to anticipate ways in which changes in laws will affect the way they must behave. Morrison has to comply with all the regulations relating to retailers and to employers. Morrisons also may have to slightly change the way it runs the business. For example, change in the national minimum wage, so Morrisons may have to pay higher wages to workers, so Morrisons may decided to reduce the number of workers they have or find a way to increase they sales and profit in order to pay the high wages.


Technological factors - provide opportunities for businesses to adopt new breakthroughs, innovations, and inventions to cut costs and develop new products. New machine for example can package food for example; half the time it is used to package so keeping up with technology will help Morrisons. So by technology Morrisons could improve its productivity as a company and become even larger. Also if Morrisons has access to the latest technology which its competitors have not then Morrisons could exploit that, so that may lead to greater market share.

Environmental factors - relate to impact of business has on the environment. Environmental factors include things like the control of pollution, waste reduction and any environmental legislation. Morrisons must meet the public expectations for good environmental management as well as comply with current environmental regulations. So for example if there is severe pressure from pressure groups about Morrisons plastic bags, then morrisons may need to change their plastic bag system to a recyclable carrier bags, this is because Morrisons do not want to get in the bad side of pressure groups as that will lead to bad publicity.  

Task 2

 

Firstly I am going to look at the consumer legislations which is going to affect Morrisons.

The Supply of Goods to Consumer Regulation, 2002 states that:

  • Retailers can be liable for manufacturers' misleading advertising or labelling
  • Consumers can require defective goods to be repaired or replaced
  • There are now minimum criteria for contractual guarantees

This legislation affects my chosen business because Morrisons have to make sure: that they don’t use misleading advertisement, repair or replace defective goods given by customers and also give customers guarantees. So if Morrisons breach any of these laws then Morrisons may be taken to court or even sued by the customers. One advantage of this regulation is that this protects the customers from being ill-treated by the firms. However, a disadvantage of this legislation is that it may increase the costs to Morrisons as for example, replacing the goods will increase their costs. So because of this law Morrisons needs to analyse again whether they current advertising campaign complies with the law. This process may take a while so the advertising campaign might be delayed which will cost Morrison of potential sales and revenue they would have got. I personally believe that Morrisons needs to check that their advertising campaigns being checked by ASA (Advertising Standards Authority). Morrisons can get staff to double check that their products are not defective and also give replacements to defected products that the customers give back and finally Morrisons needs that they give minimum guarantees to any electronic products they sell to customers.  

This Consumer Protection Act, 2002:

  • it allows for liability to the supply of defective goods;
  • it ensures consumer safety – meaning that goods supplied must be dependable and consistent;
  • it allows the Commission to make regulations pertaining to industry codes; e.g. for banking; insurance; etc.
  • it allows for the recall of goods, which are faulty and possibly dangerous.

This legislation affects Morrisons because now they cannot have misleading advertising, falsely accepting payment without intending to supply the goods, dual pricing, etc. So if Morrisons were found breaching this law they could be sued or taken to court. One advantage of this legislation is that it protects the customers from being mislead. However, a disadvantage of this legislation is that Morrisons will have to be more cautious about selling products to customers by making sure that they do not infringe the law. So in order for Morrisons to comply with the law they have to make sure Morrisons have all its products the kite mark and make sure all its products are checked at the high standards. However, Morrisons needs to employ more workers in order to make sure the products are up to the high standards and have kite mark. I personally believe that Morrisons should find a cheap way of making the products have high quality so that it complies with the law.

The Sale of Goods Act, 1994 acts gives consumers protection against faulty or unreliable goods. At the time of sale, goods must be as described, of satisfactory quality and fit for the purpose for which they were bought. If a product is faulty at the time of sale or shortly afterwards, the customer has a right to reject the product and claim a refund.

This legislation affects Morrisons because they have to make sure that they don’t sell any faulty products to customers and if they accidentally do then they have to give refunds to the customers otherwise they will be violating the law. If they were found doing his they will be sued or taken to court. One advantage of this law is that it protects the customers from being given faulty products. However, this legislation costs money to Morrisons because they have to refund customers when ever the products they sell to the customers are faulty, some customers can damage the product on purpose just to get the refunds, so Morrisons are losing out. So Morrisons will have to change some of its processes, so Morrisons need to do make sure all its product complies to the high standards. One thing Morrisons could do is to employ a person whose job is to make sure none of the products are faulty as by doing this will save them money from giving refunds for example. However, they would have to pay for his/her wages, then again Morrisons could just train their current staff to do that job, again training will cost money.

The children and young persons (protection from tobacco) 1991 act prohibits the sale of tobacco to children. This legislation affects my business because Morrisons sells cigarettes so it law implies that Morrisons should not sell cigarettes to children under the legal limit. So if Morrisons were found selling tobacco to under 16s then they are breaking the law so they could be taken to court. One advantage of this legislation is that it benefits the society as less people smoke. However, a disadvantage of this legislation is that Morrisons have to be careful when deciding who are under the legal limit age and who can buy the cigarettes, so this legislation would lose customers for Morrisons.

Join now!

I am going to look at the data protection acts such as data protection act 1998, freedom of information act 2000, environmental information regulation 2004 and piracy and electronic communication (EC directive) regulations 2003 which affects me.

Data Protection Act 1998 is the protection of individuals with regard to the processing of personal data and on the free movement of such data. This data affects Morrisons because Morrisons have to be careful that they don’t break the law by leaking personal information about customers for example, when they buy through the internet. So Morrisons could protect customer information ...

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