business 2.5 Flashcards
How can taxation affect a business?
Can affect business decision making e.g increased taxation will reduce profit after tax which can affect strategic investment decisions.
What is exchange rates?
The value of one currency expressed in terms of another currency
How can changing exchange rates have a affect on a business?
Changes in the exchange rates can affect the decision-making process of a business which imports from or exports to a country with a different currency.
What is inflation?
Inflation refers to the general increase in price levels and the reduction in the real value of money.
What are government policies?
Fiscal policy refers to the use of government expenditure and taxation to influence demand.
Monetary policy refers to the controlling of money supply and interest rates to control economic activity.
What is trade?
Open trade and protectionism refer to the ability of countries to trade either with or without barriers to trade.
What is the definition of a recession?
A recession is defined as “two or more consecutive quarters of negative real GDP growth”
What constitutes a recovery?
A recovery gathers momentum and turns into a full expansion: as investment increases, real GDP grows. Unemployment falls as jobs are created and workers are needed to produce goods and services.
What constitutes a Boom?
Workers are working overtime and wages are rising.
Inwards migration may rise, attracted by the work
Demand for luxury goods is high.
The government gets more tax revenue and is spending less on benefits, so the fiscal deficit reduces.
In a political environment what is the purpose of a regulator in terms of affecting business decision making
Regulators exist to ensure businesses are following industry rules so that consumers are not taken advantage of
What are two political factors that affect business decision making?
Enterprise is a political factor which involves national and local schemes to support new, start-up businesses.
International trade is a political factor and refers to the trading of goods and services internationally.
At what levels can political and legal changes have an affect on a business?
Political and legal changes can affect decision making at the corporate level and functional or departmental level.
What are some external Environmental factors that affect a business’ costs and demands
Competition, Market condition, Consumer Income
How can competition affect a business’ costs and demands?
Competition can affect a business’ costs and demands as the presence of competitors may reduce demand for a business’ product or service.
The presence of a competitor can also increase business costs as a business may increase its spending on promotion and advertising or may invest in research and development to improve the products offered for sale.
How can market conditions affect a business’ costs and demands?
Market conditions can affect a business’ costs and demands. If a market is increasing in size, a business must ensure it competes against other competitors to secure its own share of the increasing market, and this increases costs
