External business environment - government influence Flashcards
1
Q
Examples of government intervention
A
- fiscal policy
- monetary policy
- consumer protection legislation
- competition policy
- regional policy
2
Q
Fiscal policy - expansion
A
- income tax, increased = decreased demand
- VAT, increasing = forced to increase prices
- corporation tax, increased = reduced profit
3
Q
Monetary policy - expansion
A
- interest rates, increased = makes consumers more likely to save as their money
- interest rates, decreased = reduces cost of borrowing so increases ease of expansion
4
Q
Consumer protection legislation - expansion
A
consumer safety act
- need to ensure aware of legislation, if a customer buys a dangerous children’s toy, they are liable under consumer safety act
- adds extra training/research to product development
5
Q
Competition policy - expansion
A
- to prevent anti-competitive practices, various legislation is in place
- CMA attempt to ensure fair trading activity
- if companies are caught to breach, there can be hefty fines (up to 10% of worldwide turnover)
6
Q
Regional policy - expansion
A
Grants and extra funding given in certain areas to reduce unemployment
- reduces cost of building production facilities, as government money can be used
7
Q
Government two main roles
A
- regulator - measures to ensure equality and fairness
- promotor - measures to ensure business success
8
Q
Regulator examples
A
- CMA - competition and markets authority
- Regulatory bodies - organisations set up to oversee certain industries (Ofcom for TV)
- health and safety laws
- labour laws - minimum wage, discrimination
9
Q
Promoter examples
A
- small firms assistance - gaining access to loan capital, giving tax allowances and grants (Scottish enterprise)
- regional policy - giving assistance to set up in certain underdeveloped areas
- r and d - encourages innovation through direct grants
