3.7.4 Flashcards
What does the “P” in PESTLE stand for, and what does it focus on?
The “P” in PESTLE stands for Political, and it focuses on the potential political risks that businesses need to consider when analyzing the external environment.
What types of financial support does the UK government offer to promote enterprise?
The UK government offers financial support such as the Enterprise allowance (a grant of up to £1,284) and Funding for lending (a scheme that allows banks to borrow money at a cheaper rate from the Bank of England to lend to businesses).
How does the UK government support innovation in businesses?
The UK government supports innovation by reducing the number of regulations that constrain business activity and through non-financial support, such as helping businesses innovate.
How does the EU support small and medium-sized businesses?
The European Commission works with EU countries to develop policies that support start-ups, small, and medium-sized businesses, which helps them expand, invest in research and development, and increase competition.
What is the role of regulators in the UK economy?
Regulators in the UK economy aim to ensure businesses comply with rules, promote free and fair competition, and support businesses’ growth. Examples include windfall taxes, controlling prices, and the Financial Conduct Authority (FCA).
What are some negative impacts of legal controls on businesses?
Negative impacts of legal controls on businesses include increased costs due to compliance, unfair advantages for countries outside the EU, restrictions from planning laws, and the need to change product designs to meet new safety requirements.
What are the positive impacts of legal controls on businesses?
Positive impacts of legal controls include improved industrial relations from employment laws, reduced accidents and absenteeism from health and safety regulations, and increased consumer spending from consumer protection laws.
What are the two strategies businesses can choose in response to tighter legal controls?
Exceed the minimum legal requirements, such as paying more than the minimum wage and reducing pollution beyond legal requirements.
Locate abroad to avoid strict legal controls, reducing costs but potentially facing bad publicity and consumer resistance.
How does government policy impact competition in the market?
Government policies such as windfall taxes, price controls, and competition laws (e.g., the Competition Act and the Enterprise Act) help ensure free and fair competition in the market by preventing anti-competitive practices like cartel activity and the abuse of dominant market positions.
What is the potential threat of regulations for businesses?
Regulations can be a threat as they may limit businesses’ ability to charge high prices, maximize profits, and increase the risk of adverse publicity if fined by regulators for non-compliance.
What role does infrastructure play in business opportunities?
Infrastructure, such as transport and communication networks, enables businesses to distribute products and services more effectively. Investment in infrastructure provides opportunities for businesses, though new developments (e.g., new transport systems) may reduce the business of existing ones.
How does environmental legislation impact businesses?
Environmental legislation requires businesses to comply with laws aimed at protecting the environment, such as the Environmental Protection Act and the Environment Act. This may lead to increased costs but is necessary to maintain a business’s reputation and ensure future operational viability.
What is the role of international trade policies in supporting businesses?
International trade policies, such as those supported by UKTI and the WTO, reduce trade barriers, making it easier for businesses to trade internationally, increase sales, and boost profits. However, the UK’s exit from the EU could affect its ability to trade freely within the region.
How can labor market laws positively affect businesses?
Labor market laws, such as the National Minimum Wage Act and the Trade Union Act, can improve industrial relations, increase worker motivation through fair wages, and ensure safer working conditions, which can boost productivity and reduce absenteeism.
