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Buisness > 2.5- external influences > Flashcards

2.5- external influences Flashcards

1
Q

What is legislation

A

process of making/ enacting laws

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2
Q

Name the 4 aims of legisaltion

A

-regulates rights & duties of ppl carrying out business to ensure fairness

-ensure treatment of employees is a

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3
Q

What is employee protection

A

-aims to state & uphold minimum standards of treatment employees can expect from employer

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4
Q

What issues does employee protection cover

A

-fair pay
-sick leave
-maternity, paternoty leave
-employment contracts
-relationships with trade unions
-ability of businesses to get rid of staff
-responsibilities of businesses to employees whp are made redundant

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5
Q

what are the 5 areas covered by employee protection laws

A

-minimum wage

-right to contract of employment

-increased right to sick

-redundancy

-trade union rights

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6
Q

what are the two different laws for the environment

A

environmental protection act 1990

environment act 1995 (which established the environmental agency)

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7
Q

What is inflation

A

% rate which average prices rise during a year within the UK economy

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8
Q

Name the 3 circumstances in which inflation has a major effect

A

-when rates of inflation are significantly above 2%

-when prices are rising faster than average earnings

-when UK inflation is ^ than other countries

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9
Q

Name the 3 effects of inflation on businesses

A

-firm with long-term fixed price contract -> find if costs ^ whike contract is being completed -> fixed price doesnt cover ^ level of costs -> damaging profitability

-firms with long-term borrowing -> find real value of money they repay will be lower following period of high inflation

-if inflation = ^ in UK -> UK businesses may lose competitiveness to foreign rivals -> foreign firms can charge lower prices

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10
Q

What is an exchange rate

A

value of one currency expressed in another

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11
Q

Which businesses would be affected by the exchange rate of the pound

A

UK businesses

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12
Q

Give the acronym explaining the effect of a stronger pound

A

SPICED
-Strong
-Pound
-Imports
-Cheaper
-Exports
-Dearer

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13
Q

Explain what happens to importants and exports when the pound appreciates

A

-e.g -> £1 was $1.60 but now buys $1.80

exports -> UK exports get pricier -> sales vol fall

imports -> imports to UK get cheaper -> harder for UK firms to compete

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14
Q

Explain what happens to importants and exports when the pound depreciates

A

e.g. £1 was at $1.30 but now falls to $1.15

exports -> UK exports get cheaper -> sales vol rise

imports -> to UK -> more expensive -> UK firms can compete better

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15
Q

What are interest rates

A

amount charged by lender per year for borrowing money

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16
Q

Name 4 effects of an increase in interest rates on businesses

A

-consumers -> have less money to spend as payments -> mortgages will ^ -> reduce demand

-costs ^ -> price of borrowings ^ for business

-consumers less likely to ‘borrow to buy’ -> e.g. cars -> brought on credit -> will ^ -> demand falls

-businesses less likely to invest

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17
Q

Why do the government change levels of taxation and government spending

A

to manage the economy and keep it under control

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18
Q

What would occur in terms of government spending and taxation to reduce level of unemployment

A

government spending ^ -> extra spending on road building, health services

taxation down -> enables fams to have more money avaliable

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19
Q

Name the 3 effects of the business cycle on businesses

A

-if economy slows -> consumers reduce spending

-in boom periods -> consumer demand ^ rapid

-changes in consumer income result due to changes in wages/ unemployment

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20
Q

Explain the effect on inferior goods when real incomes increase & decrease

A

-incomes ^ -> demand decreases -> consumers stop buying cheaper products

-incomes decrease -> demand ^ -> consumers switch to cheaper goods -> save money

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21
Q

What is the point of laws within business

A

ensures businesses behave in an acceptable way

22
Q

What is the purpose of consumer protection legislation

A

ensures business actually deliver what they promise to the consumer

23
Q

Name the 2 major acts of parliament covering consumer protection

A

-sale of goods act

-trade descriptions act

24
Q

What is the purpose of employee protection

A

states the minimum standard of treatment employees can expect from their employer

25
Q

Name the issues employee protection covers

A

-fair pay
-sick leave
-maternity/ paternity leave
-employment contracts

26
Q

What might minimum wage as part of employment law lead to for firms

A

-^ labour costs

-more motivated staff -> fair wage satisfies basic needs

27
Q

What might right to contract of employment as part of employment law lead to for firms

A

-meets employees security needs

-reduces businesses flexibility in how they use staff

28
Q

What might increased right to sick, maternity leave as part of employment law lead to for firms

A

-^ cost of paying for cover staff

-staff may feel more valued -> reducing staff turnover -> decreases costs of recruiting new staff

29
Q

What might redundancy as part of employment law lead to for firms

A

-expensive -> could impact cash flow

30
Q

How has environmental legislation laws affected the way businesses run

A

-materials for products have changed

-recyclable materials

-landfill taxes

31
Q

Why do governments ensure there is competition in all markets

A

-as if markets didn’t have competition -> prices would be high, service standards poor, no innovation

32
Q

What are the government funded body Competition and Market Authority (CMA) responsible for

A

-investigating takeovers, mergers

-investigating allegations of anti-competitive practices

-taking legal action against those charging high prices within market

33
Q

What does the work of the CMA ensure

A

ensures:

-comapnies set competitive prices

-prevention of powerful mergers/ takeovers forming

34
Q

What is the purpose of the health and safety law

A

designed to protect employees & customers within workplace

35
Q

Name the 3 key aspects of the health and safety at work act 1974

A

-safe physical conditions

-precautions firms are required to take when planning their work

-way in which hazardous substances are treated within workplace

36
Q

Name 3 positives of the health and safety act on businesses

A

-prevents incidents that create negative publicity

-motivates employees -> feel safe

-avoids delayed production as a result of accidents

37
Q

Name 3 negatives of the health and safety act on businesses

A

-extra paperwork

-^ costs

38
Q

What is the competitive environment

A

refers to how other firms products are in competition and how fierce rivalries are

39
Q

Name the3 types of compeitition evident in markets

A

-one dominant business (market dominated by 1 business)

-competition between a few giants

-fireccely competitive market (markets characterised by many small businesses)

40
Q

What is competition dmoniated by one business bad for consumers

A

-consumers have little choice

-high prices

-little innovation

-little customer service

41
Q

What is a monopoly

A

single business that dominates supply in given market

42
Q

Name 3 barriers to entry sued by a business if they want to become an effective monopoly

A

-patents

-strong brands, high advertising budgets

-^ spending on infrastructure

43
Q

What is an oligopoly

A

market dominated by a few major suppliers

44
Q

Why do companies in an oligopoly rarely compete on price

A

fear a price war would start -> prices becoming lower & lower -> lower profit margins

this leads to non-price competition existing

45
Q

Explain the 5 aspects of non-price competition

A

-advertising

-product design

-product features

-branding

-technical innovations

46
Q

Describe the characteristics of a fiercely competitive market

A

-consist of many small businesses competing on basis of price

-keeps profit margins low

-consist of commodity products

47
Q

What is competition like within big markets

A

-fair degree of competition

-dominant producers recognise they must offer good service to prevent opening opportunity to rival

48
Q

What is competition like within small markets

A

-easier to build up barriers to entry

-due to fewer customers, lower sales

49
Q

What occurs in terms of competition for growing markets

A

growing markets -> attracts new entrants -> higher profits

50
Q

What occurs in terms of competition for shrinking markets

A

shrinking markets -> established firms exiting -> due to low profitability

51
Q

What is collusion

A

occurs when 2 or more rivals agree to fix supply/ prices within market

-illegal

Buisness (22 decks)

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