Six economic factors
Six 1BS0 economic factors act through the firm's costs, its customers' spending power, or both: unemployment, consumer income, inflation, interest rates, taxation and exchange rates. Example: rising interest rates raise borrowing costs and leave mortgage-holders less to spend, so demand falls. Watch direction: an increase in employment (falling unemployment) raises income and demand — not the firm losing its own staff.
Stakeholders and their conflicts
A stakeholder is any group that affects or is affected by a business — wider than a shareholder (a share owner). Main groups: owners (profit, growth), customers (quality, fair price), employees (pay, security), plus suppliers, government and the community, each with its own aims. Objectives often conflict — cutting costs to lift owner profit can mean lower wages (vs employees) or cheaper materials (vs customers). Firms manage, not remove, them.
Technology and legislation
Two external forces reshape a firm's costs. Technology: e-commerce (selling online) widens the market and cuts shop costs; social media markets cheaply; payment systems speed transactions. Legislation: consumer law requires goods of satisfactory quality, fit for purpose and as described; employment law covers fair recruitment, minimum wage, hours and health and safety. Compliance adds cost; breaking it risks fines and reputational damage.
Drawn from real examiner reports.
E-commerce = selling, not advertising
E-commerce is selling online — the customer orders, pays and receives a product. Answers about "better brand image" or "advertising to more customers" describe social media marketing, not e-commerce, and score nothing. Anchor it to selling: a wider market, lower shop overheads and 24/7 trading. It mainly affects place in the marketing mix.
June 2024 Paper 1, Q3(d): answers about "better brand image" or "improved advertising" were not credited -- e-commerce means selling online, not advertising online.
More employment ≠ losing staff
An increase in employment (falling unemployment) works through demand: more people have jobs, so income and spending rise. Many instead read it as the business losing its own staff — a different scenario. Read the direction: higher employment → more disposable income → higher demand; higher unemployment → weaker demand (but cheaper hiring).
June 2024 Paper 1, Q3(c): about half wrongly read an increase in employment as the business losing employees rather than as rising disposable income and demand.
Taxation: whose figure is it?
Tax is often misunderstood: corporation tax cuts a firm's profit directly, while income tax lowers customers' take-home pay and so their spending. A further trap: a government figure in the extract (e.g. a national jobs target) is not the case firm's own recruitment plan — check whose number it is before using it.
June 2023 Paper 1, Q7(d): weak understanding of taxation made the justify item hard, and some misread a government sector target as the case firm's own recruitment plan.
Stakeholder ≠ shareholder
A stakeholder is any group that affects or is affected by the firm — customers, employees, suppliers, the community, government and owners. A shareholder owns shares in a company. Every shareholder is a stakeholder, but most stakeholders are not. Treating the two as identical loses the mark on a stakeholder question.
Reversing an argument ≠ evaluating
On an Evaluate about an economic factor, many write "if income falls demand drops, if income rises demand grows" — the argument both ways. This is not evaluation and caps the mark. Genuine evaluation weighs how much the factor matters for THIS firm — e.g. is a gym a necessity or a luxury to its members — then reaches a supported judgement.
June 2024 Paper 1, Q7(e): "reversing" the argument (high income then low) was not credited as evaluation and capped answers; genuine evaluation weighed how much members valued the gym.
Legal compliance is not an advantage
A common answer is "obeying the law increases trust and sales". It is not credited: compliance is a threshold almost every firm meets, so it is no differentiator. Credited instead: the cost of compliance (e.g. safety equipment) and the risk of non-compliance — fines, closure, compensation. Treat law as a constraint with cost and risk, not marketing.
June 2023 Paper 1, Q2(e): the naive "legal obligations increase customer trust" was not accepted; valid answers cited fines, pressure-group or trade-union conflict and staff welfare.
The 12-mark Evaluate
The final Evaluate is AO3-heavy: it rewards a supported judgement, not a balanced description. Apply each point to the named firm, build a cause-to-effect chain, then weigh the significance for this firm. End with a new evaluative comment, not a summary.
Develop the selling chain
E-commerce marks are often lost to one undeveloped strand. Develop it: selling online → customers beyond the local area → more orders → higher sales. Keep it about selling, not brand image (padding scores nothing). One developed strand beats two half-points.
Apply to the named business
In Sections B and C, every Outline, Analyse, Justify and Evaluate needs application to the named firm — its size, sector, customers or figures. The firm's name and words in the stem do not count as context; many lose marks by omitting it.
A stakeholder is any person or group that is affected by, or can affect, the business — broader than a shareholder (owner of shares).
| Stakeholder | Typical objective |
|---|---|
| Owners/shareholders | profit, growth, return on investment |
| Customers | quality, fair price, reliable supply |
| Employees | good pay, job security, safe working conditions |
| Suppliers | prompt payment, regular orders |
| Government | tax revenue, legal compliance, employment |
| Local community | local jobs, minimal noise/pollution |
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