Legal Issues in Business' Using Customer Information

10224 words (41 pages) Dissertation

10th Dec 2019 Dissertation Reference this

Tags: Business LawData Protection

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Task 3

Introduction

Many problems can occur which are related to how companies and businesses use information, there are primarily 3 areas that need to be covered in order for a business to operate correctly, and these areas are: operational issues, ethical issues and legal issues. These specific issues may affect the way an organisation operates, for example they have to follow and operate within the law and that is a legal issue for a company. Furthermore, it also affects how companies produce their stock, for example it is considered unethical to cage and use caged chicken meat in Burgershed. Burgershed may have to also purchase free range chickens, so customers consider them as an ethically trading company and buy their lunch/dinner from them.

Legal Issues

In my opinion, every organisation needs to consider that legal issues are extremely important and need to be followed if companies want to safeguard themselves and their stakeholders e.g. customers. Personal information about consumers and any stakeholder of the company can be shared around and within the company however this information cannot be available to the e.g. general public due to legislation put in place by the government. There is legislation that all companies have to follow in regards to keeping and storing information, for example The Data Protection Act of 1998 contains seven principles that all companies holding information have to follow. Furthermore, another law that companies have to follow is The Freedom of Information Act of 2000, this act allows the public to gain access to information about them and companies have to comply by law.  These two pieces of legislation have been created to protect people and companies, if they are not followed, it can result in jail time, fines and also prosecution.

Data Protection Act of 1998

For companies that advertise their products online, for example PC World, deal with online sales and customers who place orders online via the internet, PC World have to comply to legislation and keep customers information safe and secure as well as report the information they store to the ICO (Information commissioner’s office), all companies have to comply with this as it is the law and they are holding customer information, companies like PC World may have to pay a fee to keep personal data on individuals around the country. Furthermore, the BCS (British Computer Society) have created eight principles that all businesses or any organisations have to follow if they do hold and obtain data about the public, failure to follow these principles can result in the company being sued and prosecution if a specific individual breaks these principles. The eight principles are:

  • “Personal data shall be processed fairly and lawfully” (Reference 1). This means that personal information should be used honestly and within the reason and limits of the law
  • “Personal data shall be obtained only for one or more specified and lawful purposes, and shall not be further processed in any manner incompatible with that purpose or those purposes.” (Reference 1). This means that data will only be collected for the reasons that have been specified and will not be used for anything else.
  • “Personal data shall be adequate, relevant and not excessive in relation to the purpose or purposes for which they are processed.” (Reference 1). This means that too much personal information will not be collected.
  • “Personal data shall be accurate and, where necessary, kept up to date.” (Reference 1). Data that is collected should be correct and exact and kept up to date
  • “Personal data processed for any purpose or purposes shall not be kept for longer than is necessary for that purpose or those purposes.” (Reference 1). Data that is collected should not be withheld for longer than the necessary purposes it has been collected for.
  • “Personal data shall be processed in accordance with the rights of data subjects under this Act.” (Reference 1). Data that is collected must be handled in within reason of the law
  • “Appropriate technical and organisational measures shall be taken against unauthorised or unlawful processing of personal data and against accidental loss or destruction of, or damage to, personal data.” (Reference 1). Data that is collected and moved illegally or damaged due to destruction or accidental reasons, action will be taken against them.
  • “Personal data shall not be transferred to a country or territory outside the European Economic Area unless that country or territory ensures an adequate level of protection for the rights and freedoms of data subjects in relation to the processing of personal data.” (Reference 1). Data collected should not be moved out the country or anywhere outside the European Union unless that data transferred is completely safe and secure.

However, the data protection act does have a disadvantage of the general public not knowing what their rights may be, therefore it a company doesn’t comply with the eight principles then they may not even know about it. Another disadvantage would be that large companies like Sainsbury’s would need to employ staff to ensure all the data meets the criteria of the eight principles and therefore this does add to expenditure as wages need to be paid. In addition, another disadvantage would be that as staff are employed, they would also need to be trained to ensure they handle data legally and safely and with compliance to the law, failure to do so may give the company bad reputation and may result in further consequences. However having the data protection act in place does have its advantages, for example there is security and protection of the data of consumers, the ICO ensures this and gives customers confidence to give their personal data to you. Another advantage is that businesses are able to be managed much more efficiently as the personal data collected needs to be kept safe and needs to comply within the law. Furthermore, businesses will also have to follow the eight principles of the data protection act and therefore evade fines. Burgershed will also have to comply with all eight pieces of legislation to be a legally trading company.

The Freedom of Information Act of 2000

The Freedom of Information act has been put in place by the UK government to allow the public to have access to their own information from businesses and companies if they request for it, failure to comply is against the law.  For example, companies like Burgershed will have information on their employees and an employee does have the right to ask or request the information being held on them. Once a request has been made, the company or business will have 20 days to comply, all organisations and businesses must comply with this legislation and if they do not, then they will receive the consequences of fines and potentially going to court and being prosecuted. There are also advantages and disadvantages to having the freedom of information act in place, for example it gives individuals the power of requesting information whenever they want and information that wasn’t made available to the public. Another advantage is that many people in the UK had believed that information was withheld by the government and by other bodies, however this act has now made us more aware and gives us the power to request information and therefore makes us feel relieved to know that information about us isn’t being hidden and withheld. Another benefit is that information can be accessed at any time, e.g. if a property becomes available to purchase, an individual can find out all the information about that property and the law allows him to do so, therefore this is convenient.

However, there are some disadvantages with this act, for example employees have to be paid to find information that has been requested and this can cost the government. Another disadvantage is that many people request information out of general interest and therefore this can strain the services provided to them as staff may not be able to keep up with so many requests for information and this can become a nuisance. Furthermore, contracts with companies can be requested to be seen via the freedom of information act and therefore it can give benefit to other rival companies.

The Computer Misuse Act 1990

The Computer Misuse Act of 1990 passed new laws and regulations to prevent crime via a computer, for example this legislation made it illegal to have:

  • “Unauthorised access to computer material” (Reference 4). This means that an individual cannot access a computer without any authorisation or permission from the owner of the hardware. An example of crime under this principle would be hacking into a computer and stealing data from it.
  • “Unauthorised access with intent to commit or facilitate commission of further offences” (Reference 4). This means that an individual cannot gain entry onto a computer with the intention of committing crimes. An example of a crime is to steal data.
  • “Unauthorised acts with intent to impair, or with recklessness as to impairing, operation of computer, etc” (Reference 4). A person would be guilty of this offence if he commits any crime using a computer, an example of this crime would be hacking.
  • “Unauthorised acts causing, or creating risk of, serious damage” (Reference 4). This means that an individual cannot perform illegal actions using a computer that may cause damage, e.g. hacking a company and ruining its infrastructure.
  • “Making, supplying or obtaining articles for use in offence” (Reference 4). This means that an individual cannot obtain news articles to be used or intended to be used for crime.

The computer misuse act was created and made to protect any users of a computer against intended crimes and theft using this hardware, examples of crime that come under this legislation would be hacking and stealing information. There are advantages to this act being put in place, one advantage would be that it made it illegal to commit crimes using computers and this made computers and networks become monitored, therefore it was easier to detect criminals and give them the appropriate sentencing and punishment. Another advantage was that citizens of the UK now felt safer that the legislation was put in place as it mean less cybercrime was taking place. Another advantage is that because businesses were being attacked online, this act meant that businesses keeping personal information would be safer and they would have the necessary security installed to fight cyber criminals.

Primary Electronic Communication Regulations 2003

The Primary Electronic Communications Regulations Act of 2003 does not permit any company or business to be constantly contacting the general public for the purpose of making sales directly via landline phones or mobiles without the consent of the person being contacted. Before this legislation came into place, it was quite common that companies would ring a numerous amount of landlines every day for direct marketing purposes, however this became quite a nuisance and an annoyance to the general public and then the British Government put this law into place. Advantages of this law is that unwanted calls aren’t placed, any calls that do take place have to be via consent otherwise it is against the law. Furthermore, another advantage for the company is that they do not have to make unnecessary phone calls to customers who do not want their products, Burgershed do not need to place phone calls to the public, they can distribute leaflets and TV advertisements to boost their profits, which is easier to do as well as cheaper, therefore saving money and increasing profits in the long term.  Another advantage is that as Burgershed saves money from direct marketing, they can use the money saved to build their brand even further and open more stores nationwide and become a national chain.

Codes of Practice

Companies and businesses follow a code of conduct or code of practice which makes certain that employees within the business follow a safe code of practice, to ensure their own safety and the safety of the public, for example Burgershed would require a code of conduct for when spillages occur and how to clean them properly and dispose of any glass or waste material or how to cook food properly and safely. Most companies establish their own code of conduct to practice their work safely however it can be adopted by other companies. Code of conducts also represents a whole business, for example Burgershed follows their code of conduct that represents their entire business and brand. Advantages of a code of practice would be that processes will be there will be set system that employees have to abide as they represent the company and the public will look onto their practices and if customers see that they do e.g. cleaning correctly, they may recommend them to other potential customers. Another advantage would be that it makes the business look professional and improves the company image as well as ensuring the safety of the staff members and the public.

Use of Email

Within a business, there is a code of conduct for every process that is used within that company, for example, companies will use a code of conduct for using email. Companies will follow a code of conduct to ensure all emails that have been sent aren’t inappropriate and do not contain illegal and content deemed to be unsuitable. If the general public was to find out that a company’s employees were using email inappropriately, then it would result in giving the company a bad image and this could potentially lead to a fall in sales as many customers may not want to shop there anymore and it may also tarnish the reputation of a company. However, some companies have a code of conduct which prevents this as emails are monitored as well as there being a limit in how many emails an employee can send a day using hardware from a business.

Use of Internet

As well as email, usage of the internet within a business will have a code of conduct, even within schools, pupils have to sign an agreement to not to misuse the internet an appropriate way, these code of conducts are put into place to prevent misuse, such as using illegal streaming sites and viewing inappropriate content. Businesses and schools will use software designed for filtration and block keywords that can be searched into a search engine, for example the word “games” can be searched and any link with “games” in the title, will not be able to be accessed. This software is designed to set a boundary of what people can access. The internet usage by an employee/pupil will also be monitored by the IT department, if they see that inappropriate content is accessed then this can result in sanctions, fines and also prosecution, depending on the severity of the situation.  Advantages of having filtration software is that it keeps students and employees focused on their day to day work and keeps them engaged on their work and less distractions occur. Another advantage of having a code of conduct is that once it is signed and agreed upon, it will keep employees vigilant that they have signed and acknowledged the consequences if they break this agreement, therefore they tend not to do it. However there are some disadvantages, for example there are websites that are unblocked and some students or employees may gain access to and this will distract them from their objective. Another disadvantage is that people may choose to disobey the rules and also when facing consequences, it could cost them their job for an action deemed appropriate, therefore the consequences can be quite harsh. Personally I think that the code of conduct for internet is fit for purpose, as it does keep employees within limit as well as students and I believe that they should be faced with consequences if they break the rules. All this will also be implemented into Burgershed, to keep employees focused on their day to day tasks.

How may it affect the company

If a code of conduct is implemented but not followed it can ruin the reputation and image of a company, this may also damage the rapport with any stakeholders with the company and may cause a lot of controversy. Damaging the reputation with stakeholders can lead to loss of customers, loss of profits and even loss of employees as the may not want to represent a brand or company that comes in the news quite often. For example, Sainsbury’s have a code of conduct for using the internet, for example one of the points in the code of conduct is “Gaining unauthorised access to other computer systems” (Reference 6), if this is rule is broken by an employee, it may result in a number of consequences for the employee as well as the company.

Organisational Policies

Polices that are made by organisations will affect how the company runs and how it runs its processes, there are mainly two types of organisations, which are classed as centralised and de-centralised. Centralised organisations have a senior management team that will make all the key decisions within the company and this information is conveyed down a hierarchy to the rest of the team representing that company, an example of a centralised organisation would be Sainsbury’s, head office and senior managers will make crucial decisions to adapt and change the store in order to impress customers and lessen the threat of competitors, this information is then passed down a hierarchy and conveyed to the rest of the staff. However, a de- centralised organisation give permission and power to those staff going down the hierarchy, an example of a de-centralised organisation would be the internet or the world wide web, no one controls the web and nobody owns it however there are loads of organisations who make rules and regulations about how to use it appropriately. De-centralised also means that the branches of a business have power and decisions to make rather than the head office.

Below I have created diagrams to represent a centralised and de-centralised organisation:

This is a simple example of a centralised organisation, it gives the power to the managers and each department reports back to the CEO or head office.

This is a simple example of a de – centralised organisation, the boxes represent the head office and branches, and the head office box is smaller as most of the work and decisions take place within the branches, however the branches will report back information to the head office. A good example would be fast food chains like McDonalds, each branch provides similar or completely different meals depending on where you are, and therefore this diagram can represent them.

There are also two types of de-centralisation, there is horizontal and vertical. Horizontal would mean that power is given and passed on down a hierarchy and this increases the decision making and speeds up the process and also gives people at the bottom of the hierarchy a chance to represent their opinions. Vertical hierarchy gives and delegates the obligations across the whole company, a good example of a vertical hierarchy, would be companies like Apple, once the try to develop a new product, the responsibility of each individual part is shared across different departments, so e.g. the screens and graphics would be two completely different departments and Apple delegates this power to them to create the new product.

How it may affect the company

Organisation policies may affect the way a company runs, especially if they have a hierarchal structure. Furthermore, having a hierarchal structure may affect the company in different ways, for example when a company introduces a new policy, as it needs to go down a hierarchy, it may not be accurate information as it reaches the end of the hierarchy, therefore confusing staff members as well as any stakeholders. However one advantage of a hierarchal company when delivering new policies is speed, communication speed is a definite advantage as the messaged is conveyed quickly and rapidly down a hierarchy, therefore it saves time conveying this information again and again. Another problem with hierarchal structures that information can be miscommunicated and misinterpreted, therefore this is another disadvantage and if they information isn’t conveyed properly, the practices of that company may be questioned by higher authority, for example if a person under the age of 18 sells alcohol without permission from a supervisor and didn’t receive information that he/she had to ask for permission, results in fines for him/her and even jail time as well as making the company image look bad and ruining the reputation as there was a lack of communication.

Ethical Issues

Ethical issues can be defined as problems one may have having to choose between decisions he/she thinks that are morally and socially wrong. It may also mean that it clashes with a person’s religious and political views, for example alcohol is forbidden for a Muslim to drink, and therefore drinking it against his will is an ethical issue as religiously it is forbidden and wrong for him/her.

Within a company, a code of conduct for ethical issues will also be created, which means that if an employee e.g. doesn’t feel comfortable handling alcohol due to religious reasons, they will not force him/her to do that. Ethical policies will be put into practice by companies and they are used to protect the rights of the employees as well as the company itself, a company would receive bad press if they didn’t have an ethical policy. An example of ethical policy used in companies like Boots, is that they do not test their products with animals any longer, as it breaches ethical issues, as well as receiving many complaints about testing eye drops on rabbits. If this is practiced and carried out again, the perpetrator would go to court and potentially receive a huge fine as he breached the code of conduct of the company. Advantages of having an ethical policy put in place, is that it attracts more customers, this is because customers like to know the source of their produce and how it was tested to make sure it’s safe, e.g. supermarkets sell free range eggs and they can ensure the chickens used to produce these eggs were kept in clean conditions and wasn’t caged. Another advantage of ethical policies within a company is that it makes employees feel good about their work life as they do nothing that contradicts with their e.g. religious or political views. However disadvantages of having an ethical policy in place is that companies are limited to what they can do and what they can order to employees, e.g. companies will be limited to test e.g. beauty products against and also for example a company cannot make an employee contradict his religious or political view therefore this can become an issue. Burgershed will also have an ethical code of conduct in place to attract more customers as well as trade ethically with morals, e.g. using free range chickens.

Whistle Blowing

Whistleblowing can be defined as an employee or worker raising concerns and issues to the public about their place of work and it is completely legal, whatever may be reported has to be concerning the public or any stakeholder of that company. A “whistle-blower” (Reference 7) is fully protected by the law and shouldn’t lose his/her’s job if they reveal any wrongdoings within a company. Examples of whistleblowing can be “criminal offences” (Reference 7), this could be from scamming, fraud and narcotics activity within a business. However some employees may start whistleblowing about actions like bullying however this does not come under whistle blowing and should be reported to the manager of the workplace.  A news article from May 2017 stated that “Whistle-blower sparks Hyundai and Kia recall of 240,000 cars” (Reference 8), this shows that whistleblowing does make a difference because all of those vehicles were recalled, they could have caused serious harm to many customers however it does tarnish the reputation of those companies, even if they make small mistakes. Also in current affairs, “whistle-blowers need to be protected” (Reference 9), this is because once they reveal the bad sides to a business or organisation, whistle-blowers may face threats from their colleagues and their employer and they need to know their rights regarding this.

Information Ownership

Businesses and organisations have to make sure that the information they use or publish isn’t copied from any other sources and if it is copied then it has to be referenced. If a company creates a product or creates a book with text from their own sources, it should be trademarked or patented to avoid other people copying their work. If however their work is copied or businesses do copy other individuals work, then this can result in legal action in court and also fines will be given out to the perpetrators, furthermore it could ruin the reputation of a business which then leads to loss of customers. An example of something that can be patented would be any new invention, e.g. a new dipping sauce for example. Employees within a workplace have to sign an agreement which states that they are not allowed to disclose information about the company to clients and customers, if this does occur it can lead to legal action such as prosecution. Once information is leaked, it can affect the business financially, for example if a new range of burgers was to be released in Burgershed on the 14th November 2017 and an employee disclosed this information, a competitor like Burger King could start their new range on the 13th of November and steal all their business, therefore leaving Burgershed at a loss.

Operational Issues

Operational issues are problems that are associated with business practices that are used within the organisation on a day to day basis. A company or business will need to make sure that all information it keeps on its employees, customers and other relevant stakeholders is kept securely and free from errors. They would also need to keep backups of information offsite if e.g. a fire occurred and destroyed the hardware containing the data, backups would become useful to use, therefore companies keep several backups of their data in different branches of the business or in the head office or anywhere generally offsite. Furthermore, the employees and staff working with this data would need to be suitably trained to maintain and update this information regularly, as well as follow the law on the eight principles of the data protection act, training would be provided by an employer; however this is a disadvantage as it could be time consuming to trainer data analysts. All individuals working with personal information must comply with the laws of their country, e.g. the UK has the Data Protection Act in place as well as the Freedom of Information Act, if a company fails to comply with these laws in the UK, and they could face a loss of reputation, as well as sales and could face prosecution. An example of a company breaking the law in the UK would be transferring data to outside the European Union, this may result in consequences for that individual and company. Furthermore, a company like Burgershed as well as other fast food chains will keep customer information for e.g. contact details, however if this information was lost and it wasn’t backed up, this would affect the sales of the company as consumers would not feel safe giving their personal details again and go elsewhere to competitors.

Information Security

Information is important to keep secure and there are many ways of doing this, for example installing firewalls on a network will prevent unauthorised access to information to hackers, however once information is stolen, there can be a number of issues that occur with the information stolen e.g. the information can be sold illegally and cause a business to lose sales as it won’t be trusted by the public any longer, this will also result in a loss of turnover/profit and a company may face prosecution for not protecting its data in the correct manner, and therefore tarnishing the reputation of the business. A good example would be the PlayStation hack, it was affected for over 27 days and 77 million accounts were compromised, this made the company look bad to its stakeholders and a lot of potential customers did not trust the company any longer. Another potential problem is that once e.g. credit card data is stolen, hard earned money by individuals will be spent by thieves and this will cause major issues as those credit or debit card companies will no longer be trusted, therefore they need to keep their data safe. As well as software issues with data, there can also be hardware issues too, for example using old hardware can corrupt data files, which means that they cannot be accessed anymore, therefore it is vital that data is kept on up to date machines. In addition, another added risk of withholding data is data corruption, a data management team need to have good hardware and software to eliminate the data becoming corrupted and lost, e.g. if they used old hardware and saved a lot of information, this would be slow to access as well as having a high risk of it being corrupted. If this was to happen at Burgershed, the impacts would be less significant as it is a smaller company however it could ruin the reputation of the business.

Vital pieces of information should be backed up offsite and security measures should be put in place, for example, installing a firewall to protect from any unauthorised access as well as installing anti-virus software. Information security means that all data and information they keep needs to be safely secured and protected and in most cases, this would be adhered by the IT department. However, all this information is kept by the IT department and kept within reason of the law, but it is the manager of that department or manager of that company who will be responsible and accountable for the usage of the information that is available as well as any issues that occur, e.g. unauthorised access or information leaks. A good way to keep information secure is to implement encryption, as well as passwords and other protective measures to keep data secure and away from thieves. Advantages of having encrypted information are that there are many combinations to passwords therefore it would be extremely difficult to access information without the codes. However a disadvantage is that there is a limited number of codes, therefore if a thief persists at retrieving these codes, it is possible. Compared to passwords, the combinations are infinite as it could be anything, it can be a combination of both letters and numbers for example. Another advantage of both these methods is that only a limited number of people will know both the codes and passwords, therefore it is a good idea to implement them. Passwords can log ins can be implemented on to the EPOS system in Burgershed, this way the person who is logged in is identified as making a transaction. If e.g. money was missing from the till, management would question the last person using the till system. This improves security within stores.

How it may affect the company

Information security is extremely important as it can affect the company in several ways, for example if information was compromised, stolen and then later released, competitors could use it against a rival company, which would lead to loss of sales and as well as loss of reputation for not handling personal information correctly. An example an individual compromising data would be not installing the necessary security measures to protect the data e.g. firewalls and passwords, if personal information is leaked, there would be a huge loss of reputation and a loss of sales, this would also make competitors more attractive as they can hold customer data securely. The information was not kept safe and secure, therefore it was compromised and many companies have suffered the consequences from this, a previous example is the PlayStation hack of 2011, if they had used better and more advanced hardware and software, it would not have compromised 77 million users’ data.

Theft of Data

Theft of data and it security is a huge issue around the world and many companies put measures in place to reduce the risk of data and identify theft, however it is still manageable. A prime example of theft of data would be Morrison’s supermarket personal data leak, “The High Court action is seeking to make the supermarket chain liable after a member of staff stole the data of nearly 100,000 employees in 2014.” (Reference 11). This example shows how a staff member stole data however “Morrison’s is responsible for breaches of privacy, confidence and data protection laws.” (Reference 11).

Backups

Backups are copies of information that are generally stored away from the main buildings of a business i.e. stored off site. Backups can provide information quickly when there is a network or systems failure, by keeping backups it allows storage of information if a situation occurs. Businesses like Burgershed will keep customer information backed up as well as employee information and other relevant data to the business, if this data was lost or corrupted, a backup could provide this data again immediately and save the business from many consequences. If the business however did lose their customer information, it shows that the business is unreliable and untrustworthy, therefore competitors like McDonalds or Burger King may take advantage of this opportunity if it reached the media and news. Another advantage for competitors would be that the business would lose its reputation therefore giving them advantage. A company needs to make backups regularly and this is because information is easily lost due to e.g. human error, therefore information is always and should be backed up.

Advantages for keeping backups would be that if there was a system failure, backups would reduce the time of the system failure and allow data to be re installed. Another advantage of keeping backups is that there is a lot of time and money saved by keeping backups, if backups weren’t kept then it may take a long amount of time to recover the data lost or it could never been found again, saving money would come in because an employer wouldn’t need to hire a team to recover his data. Storing or keeping backups also increases the security of the data as it is kept safe offsite and stops hackers from knowing its location. However disadvantages of keeping backups would be that backups may take up a lot of memory, therefore they need to be stored on devices with high memory capacity, which is more costly than storing all the data in one place. Furthermore, individual would need to be hired to maintain and back up this data regularly, which also adds to ongoing costs for a business.

To see if the backups are sufficient or work on the system if the system does fail, they can be tested to see if they meet the necessary requirements and all data is displayed.

Bibliography for Task 3

  1. https://www.legislation.gov.uk/ukpga/1998/29/schedule/1
  2. https://uk.answers.yahoo.com/question/index?qid=20130308101053AAY8sNg
  3. http://www.teach-ict.com/as_a2_ict_new/ocr/AS_G061/317_role_impact_ict/freedom_info_act/miniweb/pg5.htm
  4. https://www.legislation.gov.uk/ukpga/1990/18/contents
  5. https://www.business.gov.au/info/run/fair-trading/codes-of-practice
  6. https://help.sainsburys.co.uk/help/website/terms-conditions-web-conduct
  7. https://www.gov.uk/whistleblowing
  8. http://www.bbc.co.uk/news/business-39893111
  9. http://news.bbc.co.uk/1/hi/health/1344747.stm
  10. https://www.theguardian.com/technology/2011/apr/26/playstation-network-hackers-data
  11. http://www.bbc.co.uk/news/uk-england-41552911

Task 4

Benefits of collecting customer information

Collecting customer information can help identify who the target market is that you are looking for to sell your product or service however the market develops day by day and customers’ needs may change or increase therefore this can be hard to adapt to and predict as a business. You can however withhold customer information through surveys, interviews, forums and reviews and see what they love about your company and what can be improved to provide better customer service.

An example of organisations using customer information is email sales, this is when you may potentially make online orders from a particular fast food chain and they save your details in order to promote deals, based on what you have already purchased or what they think you are interested in purchasing, an example would be Subway, who use a loyalty card to monitor what you buy and therefore email you deals you can buy next time you visit them.

This is beneficial for companies as emailing does not cost any money whereas letters and leaflets will have consumable costs. It is also beneficial for the company as sales and deals will intrigue customers and they may purchase products using online services therefore sale targets for online are met. Another benefit is that some companies advertise items that are “online exclusive” therefore when people do order these items; businesses can record this information for potential future investors and use it to their advantage if online sales targets are met. However there are some disadvantages, from statistics I have found, it shows that “Only about 30% of US retail email list subscribers have actually made a purchase from the retailer whose email list they subscribed to” (Reference 1). This shows that using email to sell items may not apply to all potential customers out there, as they may want to view products first hand. Another disadvantage is that when subscribing to emails from businesses, it may become a nuisance receiving emails potentially every day from a company and therefore this may annoy customers and prevent them from using their services and buying their products. Another disadvantage is that, people need email addresses to subscribe to businesses to receive emails and deals, as well as needing an internet connection and many people may not have this, therefore it can be expensive to set up. I think email marketing isn’t fit for purpose as it does not achieve a lot of sales, this can be due to a number of reasons ranging from not seeing the item in person to not having an internet connection or email address.  Enhancements of using email to sell products could behave exclusive deals within stores, that way customers are notified and also they can see products first hand.

Other Communication methods

Businesses also use different methods to promote their brand, for example they advertise on television and they also may hand out leaflets and booklets about sale items, a good example would be Argos, they have their catalogue book, which they give out for free in their stores. Burgershed will also use leaflets and booklets to advertise and display their products. Businesses may also use online promotion of ads on websites like YouTube and Facebook. If businesses use these methods to send the important and appealing sale items then people will buy them as soon as they see them. The advantages of using e.g. television is that during popular times, advertisements can be displayed in between adverts and breaks which may catch the attention of millions of people across the UK, this can potentially intrigue the customer and therefore more sales are made. Furthermore, using television is an advantage because information can be collected to see what times do people watch television in the UK the most, therefore they allow businesses to air their adverts at specific times which they deem fit. However, the disadvantage of using television would be that people may not view the advert whilst changing channels during part times and also using television to advertise can be very expensive therefore only larger and more successful businesses will manage it. “TV ad revenue in the UK totalled £5.28 billion in 2016” (Reference 2), from this information, it is clear that TV adverts do make a difference to businesses Television advertising is fit for purpose because millions of potential customers will watch the adverts and that means there are potentially millions of people who will buy the latest products for example the latest Nike trainers.

Businesses also using catalogues and magazines are also beneficial to the company, advantages of this would be that it’s a more direct approach for advertising for those who find using online difficult to use and order from. Furthermore, it’s an advantage because most of the time, catalogues are free of charge, whereas using online or even using a TV will cost money to buy and install. Another advantage of catalogues is that when they are released, they have the most up to date items available, however when using online, individuals may come across old web pages and be deceived into thinking a specific product is still in stock. However catalogues also do have their disadvantages, for example they require the purchasing of consumables like ink and paper to print all the catalogue pages, furthermore it will require a team to put together the catalogue by taking pictures of each product individually as well as designing the layout of the catalogue, all of which is time consuming. Furthermore, customers may come across catalogues that are outdated with items that aren’t available anymore; therefore this would become an annoyance trying to search for a product, which has stopped being manufactured. I think catalogues aren’t fit for purpose anymore as in this day and age people mostly use online shopping and view products online, as we slowly enter a new generation full of technology, everybody at one point will be the internet to shop therefore it isn’t fit for purpose anymore.

Loyalty Card Schemes

Loyalty card schemes allow customers as they will receive vouchers and deals, this is both beneficial for the customer and the company as it allows the company to see their shopping pattern and see what they buy most often and see what items are popular, therefore they may make the decision to make them items cheaper as they may sell more. Loyalty cards will also allow customers to gain points to be able to spend and buy their favourite products at a discounted price or for free using points, which is an advantage. Another advantage is that loyalty cards will encourage customers to visit e.g. Boots again and be a loyal customer. In addition, another advantage is that using the loyalty card scheme, it develops better rapport with customers and it gives consumers a reason to return to the stores again as they were treated with excellent service. However, there are disadvantages in loyalty card schemes, for example there could be decreased returns in products that are always on offer to individuals that hold a loyalty card, which will affect the overall profits of the year. Furthermore, as shopping habits are tracked, people may be spammed with emails from those companies’ advertisements; this may become a nuisance for some people and put them off returning to that store again. I think loyalty cards are fit for purpose because it allows a business to target customers and monitor their shopping patterns therefore it allows them to know what is popular and what isn’t. This is another way of collecting information using an indirect approach, as most customers may not want to share what they buy. Possible enhancements of loyalty cards could be that offers should be placed to reward customers even if they sign up for a loyalty card, this way the demand for them will become higher and employers will know about what the general public buys more often therefore put more products on sale and this will attract more consumers. Burgershed can also be using loyalty card as it drives customers to come back and receive a deal like free fries with any burger meal for example.

Social Media

Social media is an excellent way to advertise a brand and business, for example Facebook has over 1 billion users and that creates a lot of potential customers, furthermore social media sites like Facebook use “sponsored” advertisements, which means that many people will see deals and offers depending on what they see and browse, this then will become sponsored on Facebook to appear on your home page and intrigue you into buying a product or service. Businesses collect information by using likes on their Facebook pages, which gives regular updates to individuals using the social media site and also from the “likes” they have, they can use this information to update potential customers on deals and offers. The advantage for a business to use social media to advertise is that it is free, it does not cost them anything to post updates and in return they get business. Furthermore, information that businesses advertise, the information is conveyed extremely quickly as social media is becoming ever so popular, therefore as well as being cost effective, it also advertises information to a large number of people all around the world, which results in higher profits. This is a specific advantage to Burgershed as it means that they can advertise to a vast majority of people extremely little expenditure and costs.

However, using social media as an advertising platform does have its disadvantages, for example posting and setting up social media may be free of charge however large companies will have to pay people to monitor, update and post the latest information therefore it does have a long term cost, which results in less profits overall. There is also the risk of individuals posting bad or fake reviews on business pages, which may ruin the reputation of that business, depending what social media site is used, these reviews or comments may not always be removable either. I think using social media to advertise is fit for purpose as businesses can use information, that they gain for free, to their advantage and potentially make much more sales with social media than without it however possible enhancements of using social media could be that not all people would like to see advertisements on their news feed and it may become an annoyance as they may not be interested in a particular product or service, therefore social media advertising should only be targeted to those people who take interest in the product or service that is being advertised. According to statistics, “Social media spending in the US alone is expected to increase $17.34 billion in 2019” (Reference 5). Although this is not a UK statistic, it gives a good insight into how much people use social media to buy items, this shows that social media advertising is definitely functioning correctly and is fit for purpose. Burgershed can also use sponsored adverts to drive their business suing social media as it is free of charge and also it has many users they can target.

Problem Solving

Many people will face problems with e.g. online orders, however if a business has the correct information to work with then it will be easier to resolve a customer’s issues, for example ASOS delivery services may have sent an item through the post using economy delivery service, however the customer paid extra for next day delivery, ASOS would then receive a complaint and they will refund the extra money he/she paid to rectify the issue, however if a company doesn’t have this information, it is difficult to know how their customers feel and having this information, will make service more efficient. From statistics in the United States, it shows that “82 percent of consumers in the United States said they stopped doing business with a company due to poor customer experience” (Reference 6). This shows how important it is for a business to have the correct information to help tackle issues and problems and without it, there could be a huge loss of customers if the service they receive is poor. However, Burgershed will not be participating on online orders, it is eat in and collection only.

Improving the Quality of Information

Quality and flow of information is important in a business, as the information conveyed needs to be done quickly as well as be of high quality and the quality and flow of information can always be improved. There are many criteria that need to be fulfilled to meet the standard of quality information, one of them being coming from a valid and reliable source, information is easy to find in the 21st century, and however, what people read on the internet may not necessarily be true. Furthermore, information collected needs to be of a suitable data type, e.g. Burgershed will use quantitiative informaiton within their branches like prices of their meals, however it qualititaitve data is colelcted, it will be of no use to work out a good profit margin. Also, qwuality informaiton will always be backed up by multiple sources, therefore it can always be checked to see if it is legitimate.

Validity

Validity is checking the information is of quality and factual, using valid figures and information, improves the quality of information. To check to see if information collected is valid, it can be compared and contrasted with other sources of information, to see if they match or are similar, this can be done e.g. by Burgershed to check if their suppliers actually deliver free range chickens, they can check this from a variety of sources and confirm whether the information is factual or not.

Type of Data/Information

There are a few types of data that are used within a business and this affects the quality of information, a business like Burgershed will need to choose the correct data type or format for the reason it is being used for. In my opinion, Burgershed will mostly use quantitative data rather than qualitative as fast food businesses use a lot more numerical data than qualitative data. Burgershed will also have to decide if the data they use is primary or secondary data, primary data is more reliable however in the long term it costs more to collect whereas secondary data is easier to collect however has less reliability. Personally I think Burgershed should use primary data as it is more reliable and therefore using quality information to improve services in stores as well as the food on offer, will attract more customers and improve the image of the company. Deciding between primary and secondary data will also improve the quality of information, choosing between primary and secondary will also decide how reliable the data is as well as how valid it is. If Burgershed was to use primary quantitative data it will provide higher quality information and more accurate numerical data, therefore it makes the data reliable. If Burgershed didn’t use the correct type of data in their stores it would cause a lot of miscommunication as well as errors as customers would be confused on e.g. prices, if they used the correct type of data it would be easier to understand as well as improve the functionality and practicality of the store.

Purpose

When information is collected from the general public, the purpose it is being used for needs to be clear as well as the purpose needs to be specific for the information to be classed as quality data. Having a reason why the data is being collected allows the Burgershed staff to understand and ensure why the data is being collected and what is going to be used for, it also allows the staff to understand if it is fit for purpose as well as it can let Burgershed make key decisions using the information collected via the purpose of it.

Source

Quality, reliable information needs to come from a verified source, primary collected data is the most reliable source as there is nothing between collecting the data directly, therefore it reduces bias and makes the information collected more valid and purposeful. The source or sources of information need to be verified and analysed before it can be used to improve the quality of information. For example, the research department at Burgershed will be using reliable sources of information to come to their conclusions about how to improve the quality of food and attract more customers, via primary and quality research and information. Secondary sources also provide quality information however secondary sources have less reliability therefore decreases the quality of information, if Burgershed used secondary sources then the sources should be triple checked to see if they are accurate and truthful as well as reliable and valid.

If Burgershed was to use information that was unreliable or use sources that are invalid and unreliable, it would e.g. ruin a research project into how to improve the taste of their beef burgers. This would then lead to further consequences as there would more expenditure into conducting more research to rectify their problems. If the research team of Burgershed checked the source of information they was using then this problem would not occur and money would be saved.

Improving the Flow of Information

In the diagram I had created to show the flow of information, it was clear that this needed improvement as information can be conveyed and transferred quicker and easier from the current system to make it more efficient. Improving the flow of information will convey information quicker to each department and allow each department to communicate more easily and efficiently, for example currently the supplier sends an invoice via post or fax, this can be improved  by using email as it quicker, as well as cheaper therefore cost efficient. This one example can save so much time, effort and money therefore increasing profit and decreasing expenditure, there are also several other ways information can flow much easier and quicker.

Most information can be conveyed through email, for example at Burgershed payroll can calculate how much employee is owed at the end of the month and email this information to the finance department to finalise. Email is a quick and efficient way of doing this, using the post or letters is time consuming, as well as expensive as consumables will need to be purchased like stamps, paper and ink. Also, at Burgershed different departments will communicate with each other in those ways they find easy and efficient, email could be one of those ways as well as verbal communication if the departments are all in the same building, these are cost effective methods. The type of information each department uses will also be different to other departments, e.g. the finance department will use numerical data and the research department will use qualitative data.

Each type of communication needs to be established between different departments who convey information to each other and once this is done, the information that is sent needs to be specific to each department and must not include an irrelevant information. This can be easily done by removing any information that isn’t of any use to that specific department, e.g. finance does not need to know the date of birth of an employee, and this is information for the HR department. Removing useless information will improve the flow of it as it is conveyed quicker. Once the information is conveyed to the recipient department, it can be broken down and could be tabulated to make it easier to understand and use. Information and data that is simplified will be easier to understand and infer therefore it makes it more effective to use.

A good example at Burgershed where the information flow can be greatly improved is between staff and management at each branch, if managers of a particular store do not convey the correct information to their staff, their staff will be making errors when e.g. making food, this will essentially make the business lose customers as they were not satisfied with what they have ordered.  This can be improved by having a meeting every week discussing the current issues and how they can be resolved, if any staff member still does not understand what he/she needs to do, they can ask for further information about their role, therefore improving the flow of information.

Another way information flow can be greatly improved is by using and implementing a management information system, this is where all financial data within Burgershed is computerised and this system will produce reports on a regular basis for each department. There are advantages and disadvantages to an MIS. An advantage would be that as it is a fully integrated system, each department can communicate with each other and convey their financial information easily and efficiently, this is because the MIS will use the same data framework as other department therefore information can be quickly conveyed to any department.  Another advantage is that as data is passed through an MIS and it is all saved within it, it can help make key decisions within a business, for example if the CEO at Burgershed notices that a branch does not sell enough beef burgers every week, he then could reduce the supply of beef burgers they receive every week, using the information he has received through this MIS, therefore improving and making better decisions within a company. However, it does also have its disadvantages, as all data in an MIS is manually uploaded; data could be mistyped and could have mistakes, therefore not giving a clear image of what the business is producing in terms of revenue each week. An example of making mistakes would be if a franchisee of Burgershed orders 50,000 beef burgers and actually only needed 5000, this is a huge error and will cost Burgershed and the franchisee thousands of pounds. Another issue is also security, hackers can steal data about employees such as bank details and addresses, a good idea would be to implement a firewall as well as passwords to an MIS with limited users within each department.

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