12 markseasy
Define'pressure group'
Business
14 questions · 70 marks · ≈ 70 min
Define'pressure group'
[case-study] WWN is a multinational company that produces electronic devices. Recently, the environmental pressure group 'Clean Future' has launched a campaign against WWN, criticising the company's use of non-recyclable materials in its products. The campaign has gained significant media attention and has started to affect WWN's reputation. Clean Future has organised protests outside WWN's main factories and has encouraged consumers to boycott the company's products. A spokesperson for WWN said: 'We are aware of the concerns raised and are considering our response options. We understand that pressure groups play an important role in holding businesses accountable.'
Outline two ways WWN could respond to Clean Future's campaign.
Define 'direct action'
Define 'lobbying'
Identify two ways pressure groups can influence business decisions.
Identify two ways pressure groups may use media to influence business decisions.
Identify two advantages to a business of responding to pressure group activity.
Do you think businesses should always respond to the actions of pressure groups? Justify your answer.
[case-study] TechCorp manufactures smartphones. The business has recently been criticised for unethical practices. The company employs 2500 workers across multiple factories. TechCorp sources 70% of its components from overseas suppliers. As internal users of accounts, the management team regularly reviews TechCorp's financial performance using liquidity ratios. The Chief Executive believes that maximising shareholder value is the primary objective of any business.
Explain one way pressure groups might respond to TechCorp's unethical practices and one impact this response could have on the business.
Do you think businesses are more affected by pressure groups than by other stakeholder groups? Justify your answer.
[case-study] BrightTech Ltd manufactures smartphones and tablets. The company has built a strong reputation over 15 years through quality products and excellent customer service. Recently, BrightTech received widespread criticism online after a popular tech influencer with 2 million followers posted a negative review about their latest smartphone model. The criticism has spread rapidly across social media platforms, with many customers expressing concerns about product quality and the company's response to complaints. BrightTech's management team is now considering how best to respond to this online criticism to protect their brand reputation and maintain customer loyalty.
Explain two responses BrightTech could choose to address the online criticism.
Do you think all businesses suffer when they come under the scrutiny of pressure groups? Justify your answer.
Extract:
RMT Clothing Ltd
RMT Clothing Ltd is a medium-sized clothing retailer based in Country X. It was founded in 1995 and has grown to 50 stores across the country, selling affordable fashion for men and women aged 18-35. RMT currently employs 800 people, and had annual revenue of $85 million last year.
The company is facing increasing competition from online retailers. RMT's CEO, Sarah Jones, is considering whether to close 10 underperforming stores and invest in expanding the company's e-commerce operations instead. This would involve making 100 store staff redundant but hiring 50 new employees to work on the website and in the distribution centre.
RMT's financial performance over the last 3 years is shown in table 1 below.
Table 1: RMT’s Financial Performance 2020 to 2022
| Year | Revenue ($m) | Profit ($m) | Online sales (%) |
|---|---|---|---|
| 2020 | 80 | 4.0 | 15 |
| 2021 | 82 | 3.8 | 18 |
| 2022 | 85 | 3.5 | 22 |
The company's main stakeholders have differing views on the proposed changes. Shareholders are concerned about falling profits and want to see a clear plan for growth. Employees are worried about potential job losses. Customers have been complaining that RMT's website is difficult to use compared to competitors.
RMT is also facing external challenges including rising energy and material costs, as well as changing consumer preferences towards more sustainable fashion. However, there are opportunities to expand into new international markets through e-commerce.
Sarah needs to decide on the best strategy to ensure RMT's long-term success in a rapidly changing retail environment.
Consider the potential responses of the following two pressure groups to RMT's proposed changes:
Analyse how each pressure group might respond to RMT's plans for redundancies and store closures. Which pressure group should RMT be most concerned about? Justify your answer.
Refer to the following insert when answering the question
Extract:
Vegetable Palace (VP)
VP was started 10 years ago in country Z. It is a public limited company. VP has a chain of 500 fast-food restaurants that operate across country Z. The VP brand is famous for its vegetarian food, this means none of its meals contain meat.
VP has a head office in Main City where all the directors and senior managers work. There are many barriers to communication. Each VP restaurant has a Manager, an Assistant Manager and 50 employees who cook and serve the meals. Restaurant Managers are often very busy and they are considering delegating some of their tasks to the Assistant Managers.
The ingredients for the restaurants are ordered in bulk by head office and then distributed from its warehouse to each of the restaurants. However, some senior managers think that Restaurant Managers should purchase their own ingredients from local suppliers. This would mean the ingredients would be fresher and would allow variations in the meals served.
VP wants to expand into another country. It will choose between the two countries shown in Appendix 2. VP will also need to decide how to enter a new market in another country. It has the option of forming a joint venture with another business or franchising the VP brand. The choice of finance will need to be considered for the expansion and the amount of finance will depend on the option chosen.
Appendix 1
Advertisement for VP's restaurants
Choose VP for the finest vegetarian meals. Our service is the fastest possible!
You will receive your meal in less than 5 minutes – guaranteed!
Delicious and varied meals for even the biggest of appetites and all at competitive prices.
New meals are being introduced all the time.
There is a VP restaurant near you – we look forward to serving you soon.
Appendix 2
Summary of the two possible countries that VP could choose to locate its new restaurants.
| Country A | Country B | |
|---|---|---|
| Raw materials | Average variable cost $6 per meal | Average variable cost $2 per meal |
| Labour | Low unemployment $10 per hour for each employee | High unemployment $5 per hour for each employee |
| Market | Many competitors Average price per meal = $20 | Few competitors Average price per meal = $10 |
Appendix 3
Email from VP’s Managing Director to VP’s Marketing Director
To: VP’s Marketing Director
From: VP’s Managing Director
Date: 31 March 2023
Re: Economic changes in country Z
Did you see the news this morning that interest rates will be raised from 3% to 5% later today? This will have several effects on our business in country Z.
The news also said that the exchange rate in country Z has depreciated. We will have to consider how this will affect our business, especially as we import 30% of our ingredients into country Z.
There are also new legal controls being introduced that mean we have to list all the ingredients used in each of our meals on the menu. We do reprint menus every time we change the meals, but it is something to consider.
Speak later today.
Consider the benefits and limitations of the following two ways VP can respond to pressure from health and environmental groups when entering a new market in another country.
Which approach should VP choose? Justify your answer.
Refer to the following insert when answering the question