competition,protecting suppliers & workers (L17)

Question 1

SME

Answer 1

small & medium enterprise

Question 2

start-up

Answer 2

company initiated by an entrepreneur to develop a scalable business model, business that intends to grow large beyond the solo founder

Question 3

benefits of small businesses and start-ups

Answer 3

competition
jobs created
choice
source of exports 
innovation
react well to needs of customers

Question 4

problems start-ups and SMEs face

Answer 4

credit- banks view them as more risky
lack of business skills/experience
difficult to find competent staff

Question 5

how can the government support start-ups and SMEs

Answer 5

information on setting up markets
deregulation
streamline the process of setting up a business
training
educational reform to increase skills of the overall workforce
business mentoring (experienced give the less experienced advice)

Question 6

competitive tendering

Answer 6

private sector firms compete to win contracts on behalf of the government eg constructing a hospital and the gov chooses the firm they believe is the best for quality and cost

Question 7

rationale + benefits of competitive tendering

Answer 7

introduces profit motive assuming there’s a competitive market for gov contracts
the private sector is more responsible for allocating more resources in the economy-more quality & choice

Question 8

disadvantages of competitive tendering

Answer 8

if the government focuses heavily on price of contracts, firms may reduce quality
outsourcers are more adept when negotiating contracts due to their large size and experience, so taxpayers end up with poor value for money
lack of bidders limits competition

Question 9

privatisation

Answer 9

firm/industry goes from being run by public sector to private sector

Question 10

how does privatisation increase efficiency

Answer 10

profit motive
competition
reduced costs and improvements in quality to increase profit

Question 11

disadvantages of privatisation

Answer 11

poor regulation/natural monopoly conditions don’t help consumers
social costs are more likely to be ignored
loss of a source of gov revenue
public sector assets are sold off too cheaply

Question 12

advantages of privatisation

Answer 12

private companies have stronger incentive to cut costs
gov revenue from sale of assets
increased competition

Question 13

PFI

Answer 13

private finance initiative

competitive bids taken, gov buys a whole investment project package and pays back costs of it over a set period of time

Question 14

advantages of PFI

Answer 14

efficiency
extra investment
delivery-PFI firms pay tax, source of revenue, financial consequences if delivered late
dynamic efficiency

Question 15

disadvantages of PFI

Answer 15

debt costs has increased when financing the private sector since 2007
poor value for money- long service contracts can be costly to change
risk of private sector not doing any better than the public sector
costs of bidding process (administration)
gov may become dependent on PFI instead of gov borrowing for key projects

Question 16

aim of deregulation

Answer 16

makes entry and exit into the market easier to raise contestibility
incumbent firms are fearful of new entry and become more efficient

Question 17

advantages of deregulation

Answer 17

price-less inclined to profit maximise to stop hit and run entries
quality will rise due to pressure from new competition
innovation from start-ups

Question 18

disadvantages of deregulation

Answer 18

excessive risks + higher debts cause lack of market stability
public safety can be reduced