2.5 External Influences Flashcards
1
Q
What will Businesses do if Inflation is High
A
- Increase price (pass on cost to consumers)
- Reduce internal costs (protect profits)
2
Q
What might businesses do if there is low inflation
A
- May look to invest/grow
- Fell confident due to stability
3
Q
what might businesses do during Deflation
A
- struggle to pay debts
- low demand (lead to redundancies and rationalisation
4
Q
what happens with High interest rates
A
- Consumer/business spending fall
- Inflation falls
- stronger Pound
5
Q
What happens when interest rates are low
A
- consumer/business spending rise
- inflation may rise
- Weaker £
6
Q
What does SPICED stand for
A
Strong Pound
Imports Cheaper
Exports Dearer (expensive)
7
Q
pros of competition on a business
A
- Improved efficiency/motivation
- increased Innovation/quality
8
Q
Cons of Business in a Competitive market
A
- Lower prices (lower profit margins)
- increased costs of promotion
9
Q
pros of being in a large market
A
- wider customer Base
- Less volatility (dynamic) than small markets
10
Q
Cons of being in a large market
A
- More regulation/scrutiny
- Potential for international competition
11
Q
Pros of being in small markets
A
- Less Competition
- Opportunities for expansion
- Easier to build loyalty
12
Q
Cons of being in a small market
A
- Threat of New Entrants
- Very little Econ of Scale
