component 3 context

Question 1

risk management

Answer 1

. Natural Disasters & Supply Chain Risk:
Example: Houthi attacks on Red Sea shipping routes (2024).

Context: Disruption of global logistics, increased insurance and fuel costs.
Application: Importance of contingency planning, supplier diversification.
2. Product Failures:
Example: Boeing 737 MAX 9 grounding (2024).

Context: Safety issue caused reputational damage and regulatory scrutiny.
Application: Importance of crisis management and transparent communication.
3. Economic Risk:
Example: UK interest rate rises to curb inflation (2023–2024).

Context: Increased borrowing costs affecting investment.
Application: Evaluating risk to expansion projects and cash flow planning.

Question 2

political

Answer 2

Example: UK windfall tax on oil/gas firms (2023)

Impact: Affected profits of BP and Shell; led to rethinking investment in UK.
Stakeholders: Shareholders vs government/public needing revenue

Government Taxes on Businesses
The UK government increased corporation tax from 19% to 25% (planned).
This means businesses pay more tax on profits, which can reduce money for investment or hiring.
2. Trade Deals and Brexit
New trade agreements (e.g., UK-Australia deal) mean some goods can be imported cheaper.
UK farmers may struggle to compete with cheaper imports, affecting their sales and profits.
3. Employment Laws
The government raised the National Minimum Wage.
Businesses have to pay workers more, increasing costs, especially for small firms.
4. Regulation of Online Businesses
New laws require social media companies to monitor harmful content.
These companies have to spend more on compliance, which costs money and affects profits.
5. Government Spending
Government investment in infrastructure projects like HS2 creates opportunities for construction companies.
These firms can win big contracts and grow their business.
6. Political Stability
Frequent changes in government leadership can make businesses unsure about future rules.
This uncertainty can delay decisions like opening new stores or investing in equipment.
7. Energy Policy and Price Caps
Government capped energy prices to protect consumers.
Energy companies might earn less profit and reduce investment in new projects.

Question 3

economic

Answer 3

Example: UK GDP near stagnation in 2024

Impact: Retailers like John Lewis reported lower consumer demand.
Link: Shows business cycle influence on strategy and forecastin
nflation and interest rates (2023–25): Persistent inflation led to high interest rates (base rate peaked at 5.25%). This dampened consumer spending and business investment, especially in sectors relying on credit like housing and retail.
UK GDP growth stagnation (2023–24): Flat growth rates signal weak demand and limited opportunities for expansion, affecting confidence and hiring plans.

Question 4

social

Answer 4

veganism and health trends: Growth in plant-based products (e.g., Greggs’ vegan menu) shows how consumer tastes shift industries.

. Demographic Changes
The UK has an aging population.
Businesses like healthcare providers and retirement homes see growing demand.
3. Workforce Diversity
More focus on equality and inclusion in hiring (gender, ethnicity, disability).
Businesses create more inclusive policies and training to attract talent and improve reputation.
4. Health and Lifestyle Trends
More people exercise and care about health.
Fitness companies and sportswear brands like Gymshark grow quickly.
5. Social Media Influence
Social media shapes brand reputation quickly.
Companies must engage positively online or risk boycotts (e.g., backlash against unethical brands).
6. Changing Work Preferences
Rise of remote work and flexible hours after COVID-19.
Businesses invest in digital tools and rethink office space.
7. Consumer Activism
Customers expect businesses to act ethically on issues like climate change and fair trade.
Brands like Patagonia highlight their environmental work to attract loyal customers.
Would you like examples linked to specific sectors or how these social factors impact business decisions?

Question 5

technological

Answer 5

Example: Amazon expanding use of warehouse robotics

Impact: Improved efficiency but reduced low-skill jobs.
Link: Tech reshapes labour demand and capital investment need

AI in business (e.g., ChatGPT, 2023–25): Firms like Microsoft and Google are investing in AI to improve customer service and operations. Retailers like Ocado use AI for warehouse automation, cutting costs but reducing manual jobs.
E-commerce growth: Continued rise of online platforms (e.g., TikTok Shop, Shein) disrupts traditional retailers and drives investment in logistics.

Question 6

ethical

Answer 6

Boohoo & unethical supply chains: Exposed for underpaying workers in Leicester (2020), leading to reputational damage, increased regulation, and lost sales.
Nestlé and palm oil: Faced pressure from Greenpeace and consumers over deforestation; responded with supply chain audits and sustainability pledges.
Conflict between ethics and profits
Ethical practices may raise costs (e.g., Fairtrade sourcing, better working conditions) but also attract conscious consumers (e.g., Tony’s Chocolonely, Ben & Jerry’s).

Question 7

legal

Answer 7

xample: UK minimum wage increase (April 2024)
Impact: Increased labour costs for hospitality/retail (e.g., Wetherspoons).
Stakeholder impact: Employees benefit, but price rises may affect consumer

Data protection (GDPR enforcement): Meta (Facebook) fined for privacy breaches; highlights the need for compliance with data laws.

Uber drivers (2021 ruling): Supreme Court ruled UK drivers are workers, not self-employed. Sets precedent for gig economy legal responsibilities (pay, holidays, etc.).

Question 8

environmental

Answer 8

Example: M&S ‘Plan A’ for sustainability
Context: Reducing carbon footprint and sourcing responsibly.
Stakeholder impact: Increased costs in short run; long-term brand value.

BP and Shell (green transition): Pushed to invest in renewables by shareholders and policy changes, despite high profits from fossil fuels.

Plastic ban (UK 2023): Ban on single-use plastic cutlery and plates – affects hospitality, supermarkets, and food delivery businesses (e.g., Just Eat moved to compostable packaging).

Tesco’s net-zero target: Investing in sustainable supply chains, e-vehicles and energy efficiency in stores.

Plastic Packaging Tax (2022) – £202 a tonne on any packaging < 30% recycled

Subsidies for Green Transition (e.g., for Electric Vehicles and Heat Pumps)

Question 9

international trade and globalisation

Answer 9

1. Brexit trade frictions:
   Example: Food exporters facing higher costs due to customs delays.

Impact: Disrupted supply chains, limited EU market access.
2. New UK–Australia FTA (2021–23):
Impact: Boost for some UK exports (e.g., Scotch whisky), competition for UK farmers.
Link: Businesses adapting by seeking global growth outside the EU.

Brexit customs frictions: UK exporters (e.g., seafood industry in Scotland) face delays and costs due to new EU checks, reducing competitiveness.

Australia–UK trade deal (2023): Cuts tariffs, but controversial for UK farmers due to cheaper imports.

China–UK tensions: UK firms reassessing reliance on China due to political risks and supply chain insecurity (e.g., fashion and electronic

Question 10

EU

Answer 10

Example: EU product safety and GDPR rules still affect UK firms exporting to EU
Impact: UK firms must comply even post-Brexit to access EU markets.

Link: Regulatory alignment is key for market access.
Friction in labour and goods movement: Shortage of EU workers post-Brexit impacted farming, hospitality, and care sectors.

Regulatory divergence: UK businesses needing to meet both UK and EU rules to export, increasing compliance costs (esp. in pharmaceuticals and food).

Financial services sector shift: Some banks moved jobs to EU cities like Frankfurt, reducing London’s dominance.

Question 11

MNC’s

Answer 11

✅ MNCs that Have Benefited Host Countries

1. Toyota – UK (Derbyshire) & USA
   Benefits to host country:
   Job creation: Thousands employed directly and via supply chain.
   Skills transfer: Introduced advanced manufacturing techniques.
   Investment in infrastructure: Boosted local economy in Burnaston (UK).
   R&D and innovation: Collaboration with UK universities.
   Stakeholders helped: Local workers, suppliers, government (via tax revenue).
2. Tata Group – India & UK (e.g. Jaguar Land Rover)
   Benefits to host country:
   Revived British car brands (Jaguar, Land Rover), securing jobs.
   Significant investment in R&D and green vehicle tech in UK.
   Profits reinvested into training and expansion.
   Stakeholders helped: Employees, local communities, national economies.
3. Nestlé – Brazil, Kenya, India
   Benefits to host country:
   Supports local farmers through sourcing programs.
   Provides clean water, nutrition, and education initiatives (e.g. Nestlé Cocoa Plan).
   Creates jobs and stable income in rural areas.
   Stakeholders helped: Farmers, families, local communities.
4. Samsung – Vietnam
   Benefits to host country:
   Vietnam became a global electronics hub.
   Samsung responsible for ~20% of Vietnam’s total exports.
   High employment and tech investment.
   Stakeholders helped: Government (GDP growth), workers, suppliers.
   ❌ MNCs that Have Not Benefited Host Countries (or have caused harm)
5. Shell – Nigeria
   Problems caused:
   Oil spills → severe environmental damage in the Niger Delta.
   Exploitation of natural resources with limited reinvestment locally.
   Accusations of corruption and involvement in local conflict.
   Stakeholders harmed: Local communities, environment, long-term development.
6. Amazon – Many countries including UK and USA
   Problems caused:
   Low corporation tax in several countries → limited benefit to public services.
   Poor working conditions reported in warehouses.
   Negative impact on local retailers and small businesses.
   Stakeholders harmed: Local competitors, some employees, governments.
7. Foxconn (supplies Apple) – China
   Problems caused:
   Reports of labour exploitation, long hours, poor working conditions.
   Little reinvestment in worker welfare.
   Stakeholders harmed: Factory workers, labour rights advocates.
8. McDonald’s – Various countries
   Mixed impact:
   Pros: Job creation, training, local sourcing in some markets.
   Cons: Criticised for low wages, unhealthy food, environmental impact (e.g. packaging waste).
   Stakeholders: Employees and communities have benefited somewhat, but health and environmental stakeholders may suffer.