3.1.3 Understanding that businesses operate within an external environment

Question 1

9 what is competition

Answer 1

causes a business to create better products
causes lower prices and more risk of lost sales and more complaints

Question 2

9 what is good about competition?

Answer 2

motivation
better prices for customers

Question 3

9 what is bad about competition

Answer 3

customers may shop else where
harder to create a USP

Question 4

9 what determines competitiveness

Answer 4

how many other business in a market
target market
location, economy
prices, size
brand and reputation
competitive environment

Question 5

9 what is enterprise

Answer 5

taking a risk and branching out

Question 6

9 how is investing in new technology competitive?
competition?
demand?
costs?

Answer 6

replacing human jobs with machines
competition- improved speed, reduced costs
demand- up as cost savings
costs- up short term, down long term

Question 7

9 how is improved operational procedures competitive?
competition?
demand?
costs?

Answer 7

better organisation
competition- improved speed, reduced costs
demand- up as cost savings
costs- up short term, down long term

Question 8

9 how is effectiveness of marketing mix competitive?
competition?
demand?
costs?

Answer 8

price, place, promotion and product work
competition- better meeting needs
demand- up, meet needs better than others
costs- up

Question 9

9 how is innovation through R and D competitive?
competition?
demand?
costs?

Answer 9

market research and meetings customer needs
competition- better meeting needs
demand- up, meet needs better than others
costs- up

Question 10

9 how is incentive schemes for staff competitive?
competition?
demand?
costs?

Answer 10

bonuses, share schemes etc
competition- up, staff offer better service
demand- up, improve service level
costs- up

Question 10

9 how is financial planning and control competitive?
competition?
demand?
costs?

Answer 10

tight spending control
competition- up, use savings to fund training
demand- up, if price down
costs- down

Question 11

9 how is quality procedures competitive?
competition?
demand?
costs?

Answer 11

control and improve quality
competition- up, reputation is reliable
demand- up, USP is improved
costs- up in short, down in long

Question 12

9 how is staff skills, education & training competitive?
competition?
demand?
costs?

Answer 12

train staff to do jobs better
competition- up, superior service offers more
demand- up if price down
costs- up in short, down in long

Question 13

9 how is enterprise competitive?
competition?
demand?
costs?

Answer 13

entrepreneurial skills and management
competition- up, gap in the market
demand- up, spot opportunity and use it
costs- depends on idea

Question 14

9 should organisations be private?
NO

Answer 14

equitable access
accountability to government and population
economies of scale

Question 15

9 should organisations be private?
YES

Answer 15

funding
profit motive creates efficiency
better services
define fairness
want it, work for it

Question 16

9 what is demand

Answer 16

amount of a product or service that customers are willing and able to buy at any given price over a period of time
can be measured in volume or value

Question 17

9 what is price

Answer 17

price up = demand down (opposite is true)
consumers think more carefully about if it’s required

Question 18

9 what is tastes and fashion

Answer 18

overtime, fashion and peoples tastes change
clothes swing in and out of fashion regularly
change in lifestyle options too

Question 19

9 why does the price of other goods matter

Answer 19

demand can be influenced by something else entirely, increase due to a variety of products, buy together so rise and fall together
substitutes- DvD or download
compliments- fish and chips

Question 20

9 why does marketing and advertising matter

Answer 20

successfully done, major impact on demand for a good or service and it creates awareness for a product

Question 21

9 why do seasonal factors matter to demand

Answer 21

significant period of demand in a year
porridge in winter, ice cream in summer
fluctuations in demand

Question 22

9 why is government action relevant to demand

Answer 22

encourage demand by subsidising products
discourage demand through taxation
introduce own campaigns
minium wage and legislation etc

Question 23

9 what is subsidy/subsidising

Answer 23

payment by the government to suppliers that allows prices to be reduced for consumers
done through tax breaks too

Question 24

9 demands are normally up because?

Answer 24

people afford more
depends on the type of good

Question 25

9 costs demand fluctuates because

Answer 25

up as wages rise in line with competition
depends on capital intensive labour or machine intensive

Question 26

9 what are consumer goods

Answer 26

goods purchased to satisfy the needs of customers
baked beans
income falls = demand falls

Question 27

9 what are consumer durables

Answer 27

goods not instantly consumed, but used for a long time
washing machines
income falls = demand depends

Question 28

9 what are consumer non-durables

Answer 28

good consumed at the point of use
washing up liquid
income falls = demand depends

Question 29

9 what are capital goods

Answer 29

investments goods are items purchased by a firm because they are used in the production of other goods
machinery
income falls = demand depends

Question 30

9 what are inferior goods

Answer 30

goods for which demand will reduce as income rises
people buy cars so buses get used less
income falls = demand rises

Question 31

9 what are luxury goods

Answer 31

superior goods, demand rises as income rises and they can be afforded
switch from tescos value to tescos finest
income falls = demand remains

Question 32

9 what are factors affecting demand?

Answer 32

prices
incomes
tastes and fashions
prices of other goods
competitors actions
marketing and advertising
socials and demographic
seasonal
government actions

Question 33

9 why does competitors actions matter to demand

Answer 33

competition means demand can rise so low prices
or the opposite

Question 34

9 why does social demographic matter to demand

Answer 34

what the population wants to buy is in relation to areas, regions, tastes and fashion, socio-economic groupings

Question 35

9 what are interest rates

Answer 35

reward of saving, cost of borrowing
the percentage rate charged on a loan or paid on savings
bank of England sets them as a base rate

Question 36

9 who is effected by interest rates

Answer 36

everyone
borrowers, bankers, savers

Question 37

9 what are bonds

Answer 37

gambling against interest rates

Question 38

9 what do higher interest rates mean

Answer 38

borrowing is more expensive
savings get a higher return
spending reduced

Question 39

9 if interest rates fall, what does it mean

Answer 39

borrowing is cheaper
saving isn’t as valuable
spending is increased
disposable income rises
investments increase

Question 40

9 if interest falls what is the effect on business costs

Answer 40

fall in costs
long term loans are cheaper
unit costs fall
profit margin rises

Question 41

9 if interest rises what is the effect on business costs

Answer 41

rise in costs
prices must rise to make a profit
unit cost rises
less competitive

Question 42

9 if interest falls what is the effect on business demands

Answer 42

decreased saving money
mortgage repayments will fall
cheaper to purchase on credit
increased investments

Question 43

9 if interest rises what is the effect on business demands

Answer 43

increased money savings
mortgage repayments will rise
expensive to buy on credit
decreased investments