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Business > 7 Analysing the strategic position of a business (A-level only) > Flashcards

7 Analysing the strategic position of a business (A-level only) Flashcards

1
Q

the economic environment is

A

the impact of economic factors on the behaviour on individuals, economic agents, government and firms

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2
Q

two examples of economic agents are

A

banks and the government

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3
Q

the government policies the government impose for the economy are

A
  • price stability; for inflation to be kept at around 2%
  • economic growth
  • low unemployment
  • balanced exports and imports
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4
Q

the government use money supply, credit and interest rates to influence the economy. this is called..

A

monetary policy

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5
Q

fiscal policy is when

A

the government use spending and tax to influence the economy

for example in a recession they may cut taxes

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6
Q

gdp is

A

the total value of goods and services produced in an economy within a year

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7
Q

economic growth is

A

the percentage increase in gdp for an economy in a year

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8
Q

causes of economic growth include

A
  • consumption
  • investments
  • government spending
  • exports
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9
Q

businesses will benefit from economic growth because…

A
  • there will be new emergent gaps in the market
  • increased gov and consumer spending
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10
Q

what does real gdp take into account

A

the change in prices in the economy

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11
Q

the four states the economy can be in are

A
  • boom
  • recession
  • slump
  • recovery
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12
Q

in a boom and recovery what happens

A
  • high consumer and business confidence and spending
  • positive economic growth
  • low unemployment
  • high inflation due to supply and demand imbalance - firms are unable to match demand
  • imbalanced exports and imports - firms tend to import more than export to meet demand
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13
Q

in a recession and slump what happens

A
  • low consumer and business confidence and spending
  • negative economic growth
  • high unemployment
  • low inflation due to supply and demand balance - firms are able to match demand
  • balanced exports and imports
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14
Q

gdp impact on opportunities and threats for business

A
  • impact on confidence levels in businesses;
    affecting investments, cost of credits
  • impact of confidence levels in consumers
  • cost of production during both recession (low inflation/ expected wages) and boom (high inflation/ expected wages)
  • recruitment during recession; lower expected wages
  • competitiveness of markets (boom=loads of competition)
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15
Q

exchange rates are

A

the price of one currency in terms of another

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16
Q

exchange rates are determined by

A
  • demand of a currency
    which can be increased by more exports, high direct investments from foreign countries, and higher interest rates meaning more people are attracted to saving money in that currency
  • supply of a currency
    which can be increased by imports meaning more currency is circulated abroad, low direct investment and low interest rates
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17
Q

opportunities and threats caused by currency appreciation (SPICED)

A
  • more opportunities to invest abroad
  • more workers are attracted to work in uk
  • high competition from overseas as imports are cheaper
  • foreign customer base may decline due to exports being expensive
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18
Q

opportunities and threats caused by currency depreciation (WPIDEC)

A
  • less competition in the uk from foreign businesses
  • uk businesses more competitive abroad due to cheap exports
  • workers are not attracted to work in the uk
  • imported raw materials are expensive so may have to look for different suppliers
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19
Q

inflation is

A

rise in average prices over time measured by the cpi

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20
Q

the Bank of England target for inflation is at

A

2% with a -/+1 difference

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21
Q

what does the inflation target allow for

A

-stability
- businesses to slightly increase prices but households to stay confident in spending as they can plan ahead

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22
Q

what are the two causes of inflation

A
  • cost push inflation
    where the production costs of a business go up like wages
  • demand and supply inflation
    where supply cannot meet demand
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23
Q

when inflation is at its target the opportunities for businesses include

A
  • confident consumers, increased spending
  • businesses and individuals can plan their future finances
  • debt value eroding over time
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24
Q

when inflation isn’t at its target the threats imposed for businesses include

A
  • reduced confidence, decreased spending
  • reduced business investments
  • reduced international competitiveness
  • wage/price spirals
  • inflationary noise; where it is hard to decipher what is a ‘fair’ price is in a state of high inflation leading to inefficiency when making decisions
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25
Q

what is fiscal policy

A

use of tax and government spending to influence the economy

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26
Q

what does the government inject to the economy and withdraw from the economy

A

-inject gov spending
- withdraw taxation

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27
Q

the two types of taxation are

A

direct taxation- taxes on income like income tax

indirect taxtation- taxes on spending like VAT

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28
Q

a cut in direct tax poses which opportunities for businesses

A
  • more workers wanting to enter the workforce
  • more incentives for new businesses to enter the market
  • motivated workforce
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29
Q

budget deficit is when….

it is ….. for the economy

A

government spending is more than taxation

expansionary

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30
Q

budget surplus is when….

it is… for the economy

A

government spending is less than taxation

contractionary

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31
Q

monetary policy is when

A

the government uses interest rates to influence the economy

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32
Q

what do interest rates dictate

A

how much people spend or borrow

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33
Q

opportunities for rising interest include

A
  • inferior goods being added to product portfolio
  • target a saver demographic
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34
Q

threats for rising interest include

A
  • falling business and consumer confidence
    -exports becoming unpopular
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35
Q

opportunities for falling interest include

A
  • increased spending and investment
  • opportunity to increase gearing
  • export opportunities
36
Q

threats for falling interest include

A
  • increased competition
  • consumers having too much debt
37
Q

protectionism is when

A

domestic industries are shielded from international industries using economic measures

38
Q

what type of economic measures can be used for protectionism

A
  • quotas; limits on the amount of imported goods
  • tariffs; additional taxes on imported goods
39
Q

what is free trade

A

it is when there are no restrictions placed on transactions between two countries

40
Q

arguments for free trade include

A
  • allows for countries to specialise in certain industries allowing for countries to trade between specialisms
  • increased world output
  • increased competition; innovation, quality
    -increased choice
41
Q

arguments for protectionism

A
  • protects skills in countries
  • protects ‘infant industries’; industries that aren’t as developed
  • protects employment
  • increases sales in domestic country
42
Q

threats of protectionism to businesses and the economy are..

A
  • risk of retaliation
  • rise in cost for imported goods
  • damaged exports
43
Q

globalisation is

A

the worlds economies becoming more interdependent and integrated

44
Q

evidence of globalisation…

A
  • more international trade
  • rise in global brands
45
Q

causes of globalisation include

A

better
-transport
-communication
- technology
- payment systems
-living standards

  • reduced protectionism
  • more MNC’s
46
Q

importance of globalisation to

finance
marketing
operations
hr

A
  • increased revenue from oversea sales
  • decreased costs from falling imports
  • cheaper due to better tech
  • better transport systems
  • global supply chains
  • more people to employ from
47
Q

threats of globalisation to businesses

A
  • bad publicity in regards to CSR
  • domestic country impact (unemployment)
  • contagion (because everything is so integrated when one economy goes down so does everyone else)
  • higher competition
  • hard to manage MNCs
48
Q

what is an emerging economy

A

country going through a process of economic development

49
Q

opportunities for businesses in an emerging economy

A
  • young population for employment or for a customer base
  • first mover advantage
  • outsourcing opportunities
  • higher demand for international goods due to rise in middle classes
50
Q

threats for businesses in an emerging economy

A
  • legal protection on products is bad
  • loads of red tape
  • many low cost high quality competitors already in the country
51
Q

what is the competitive environment

A

nature of the market a business operates in, in terms of the relationship between suppliers and customers

52
Q

porters 5 forces analyses…

A

the nature of competition within a market, helping firms to set a viable strategy

53
Q

what are the five forces for porter

A
  • threat of new entrants
  • threat of substitutes
  • power of suppliers
  • power of buyers
  • intensity of rivalry
54
Q

in terms of porters five forces, if you have a good choice of suppliers you have…

A

more power over your suppliers and you are more competitive

55
Q

in terms of porters five forces, if you have less people buying from your business you have…

A

low power over your buyers and are less competitive

56
Q

in terms of porters five forces, if you have high barriers to entry you have

A

a low threat of new entrants and are more competitive

57
Q

the political environment is

A

the decisions and actions that are taken in relation to the governance of a sovereign nation

58
Q

what are the government policies

A
  • education and training
  • transport policies
  • health policies
  • public order
  • welfare policies
59
Q

what impact does the government policy of education and training have on businesses

A
  • impacts the skill level of the workforce, increasing international competitiveness
60
Q

what impact does the government policy of transport policies have on businesses

A
  • impact on cost of production
    and mobility of labour force and customers
61
Q

what impact does the government policy of public order have on businesses

A
  • impact on night time economy
62
Q

what impact does the government policy of health policies have on businesses

A
  • health of employees and consumers
63
Q

what impact does the government policy of welfare have on businesses

A
  • customer ability to spend
  • grants for businesses
64
Q

what is the importance of political stability

A
  • faith in government to maintain law and order
  • allows public sector businesses to run
  • political instability can lead to economic instability
65
Q

what is the European Union

A

a single market compromising of 28 members who cooperate on a legal, economic and political basis

66
Q

what are the benefits to businesses of being in the European Union

A
  • free trade
  • free movement of people
  • free access to specialist suppliers
67
Q

what are the drawbacks to businesses of being in the European Union

A
  • have to adhere to regulations
  • increases competition
  • increased costs to see to EU businesses
68
Q

what is enterprise policy

A

the decisions and actions taken by the government to protect SME’s

69
Q

SME’s are important to the UK economy because

A
  • they account for 60% of private sector employment
  • they account for almost 50% of private sector turnover
  • increase in competition and innovation
70
Q

enterprise policy aims to

A
  • encourage entrepreneurs
  • support them with advice
  • give them access to finance
71
Q

what are regulators

A

organisations that monitor specific markets to ensure businesses are acting the best interests of consumers

72
Q

what actions can regulators take

A
  • monitoring and reporting
  • setting standards for improvement
  • advising
73
Q

what impact do regulators have on businesses

A
  • impact on health and safety, price, training standards
  • legislation
  • can give advice
74
Q

what is infrastructure

A

the physical systems that enable the flow of people, goods and services, energy, water and information in the country

75
Q

government policy on infrastructure aims to

A

modernise, improve and update infrastructure regularly
- provide funding for infrastructure

76
Q

environmental policies are

A

the governments actions to managing the earths natural resources

77
Q

environmental policies are implemented through

A
  • flood system managements
  • litter and waste disposal
  • farming and fishing policies
78
Q

international trade is a measure of

A

the total value of imports and exports in a country

79
Q

benefits of a competitive environment include

A

more choice
better quality
lower price

80
Q

competition law prevents

A
  • predatory pricing
  • price fixing
  • unfair trading terms
  • limiting output
  • mergers that might affect competition
81
Q

competition law is overseen by the

A

CMA

82
Q

employment law is concerned with

A

the rights of employees and groups like trade unions

83
Q

employment law examples

A
  • equality act
  • health and safety laws
  • minimum wage
84
Q

the social environment refers to the

A

beliefs, customs, culture, concerns and common behaviours present in a particular community

85
Q

changes in the uk’s social environment include

A
  • aging population
  • younger people living with parents for longer
  • increasingly secular
  • increasing ethnic diversity
86
Q

what is urbanisation

A

migration from rural areas to towns and cities

87
Q

what are the four points of the blamed scorecard

A
  • financial perspective
  • learning and growth perspective
  • customer perspective
    -internal business process perspective

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