2.5.2/3- Legislation

Question 1

Def business legislation

Answer 1

Is a set of rules and regulations that a business has to comply to which may be constraint on action or a threat

Question 2

5 types of legislation

Answer 2

Consumer protection, employee protection, environmental protection, competition policy, health and safety

Question 3

Goal of consumer protection

Answer 3

To ensure business actually deliveres on what they promise to the consumer

Question 4

The driving force behind consumer protection

Answer 4

To ensure no business can gain an unfair advantage over its rivals

Question 5

Two major acts of parliament covering consumer protection

Answer 5

• sale of goods act

- trade descriptions act

Question 6

Aim of employee protection law

Answer 6

Aims to state and uphold minimum standards of treatment that employees can expect from our employer

Question 7

5 major issues covered by employee protection law

Answer 7

• minimum wage
• right to contract of employment
• increased right to sick, maternity and paternity leave
• redundancy
• trade union rights

Question 8

Why do businesses fight against human rights for workers

Answer 8

Increased costs, making it harder for them to compete with international rivals

Question 9

Implications for firms of minimum wage

Answer 9

• Increased labour costs, increased automation in longer term
• employees may be more motivated by fair wage

Question 10

Implications for firms of right to a contact of employment

Answer 10

Meets employees security needs but can reduce employers flexibility in how they use their staff

Question 11

Implications for firms of increased right to sick, maternity and paternity leave

Answer 11

Increased cost of paying for cover for these staff

Staff feel more valued as they feel treated by employers, reducing staff turnover levels

Question 12

Implications of firms of redundancy

Answer 12

Reducing capacity could mean closing a factory of office that has a negative impact on cash flow in the short term

Question 13

Implications for firms of trade union rights

Answer 13

Employers forced to deal with trade union if enough staff are members, bringing negative and benefits

Question 14

Major areas of environmental protection

Answer 14

• materials that firms must use for certain products
• processes firms are allowed to use to make certain products
• need to use recyclable materials
• landfill tax

Question 15

Effects of environmental protection

Answer 15

Likely to increase costs that business faces de to disposing of waste properly
Long and expensive process and may force some business to change their production process completely

Question 16

Aims of competition policy

Answer 16

Wider consumer choice in markets, technological innovation promoting gain in dynamic efficiency, effective price competition between suppliers

Question 17

What are CMA responsible for

Answer 17

• investigating proposed takeovers and mergers
• investigating allegations of anti-competitive practices
• taking legal action against those who collude to maintain high prices within a market

Question 18

The work of CMA ensure (3)

Answer 18

• companies have to set competitive prices
• companies don’t collide with others in their market to the detriment of consumers
• mergers and takeover that sulk create overly powerful firms are prevented

Question 19

Def cartel

Answer 19

A group of companies operating in the same market who make agreements to control supply and this prices

Question 20

Aim of health and safety law

Answer 20

To protect employees and customers in the workplace

Question 21

3 aspects of health and safety law

Answer 21

• safe physical conditions
• precautions that firm are required to take when planning their work
• the way in which hazardous substances should be treated in the workplace

Question 22

Positive effects of business on health and safety

Answer 22

• should prevent incidents that create negative publicity
• should help to motivate employees who feel safe
• accidents can delay or halt production - avoided

Question 23

Negative effects on business of health and safety

Answer 23

• extra paperwork
• need to pay for extra safety equipment
• need to pay to adjust physical work conditions

Question 24

Def competitive environment

Answer 24

Refers to how fiercely business compete with the products that another business makes

Question 25

Def monopoly

Answer 25

Is a single business that dominates supply in a given market

Question 26

Why is a monopoly bad for consumers

Answer 26

• consumers have little choice
• prices tend to be high
• little incentive for dominant firm to innovate or provide great customer service

Question 27

Possible barriers to entry to prevent new firms entering market

Answer 27

• patents and technological breakthroughs
• incredibly strong brands and high advertising budgets
• heavy spending on infrastructure

Question 28

Def oligopoly

Answer 28

Name given to a market dominated by just a few major suppliers

Question 29

Examples of mom price competition

Answer 29

• branding
• product features
• product design
• advertising
• technical innovations

Question 30

How do companies in oligopoly compete

Answer 30

Mostly price but fear price war because would lead to lower profit margins for all of industry

Question 31

How small businesses compete in fiercely competitive market

Answer 31

Differentiation and keeping costs low in hope of undercutting rivals prices

Question 32

Features of a big market

Answer 32

• lots of competition

- maintenance of dominant producers

Question 33

Features of small markets

Answer 33

• fewer customers, fewer total sales

- easier to build barriers to entry

Question 34

3 business responses to tougher competitive environment

Answer 34

Price cutting, increased product differentiation and collusion

Question 35

5 methods of product differentiation

Answer 35

• branding
• product features
• product design
• advertising
• technical innovations

Question 36

Def collusion

Answer 36

Occurs when two or more rival businesses agree to did supply or prices within their market, illegal