external factors

Question 1

describe the political factor

Answer 1

decisions made and actions taken by the government either at local or national level which affect organisations (eg. changes in legislation, alternations to a governments fiscal policy, etc)

Question 2

why do the government promote competition (CMA)

Answer 2

-to keep prices low for customers
-healthy markets can attract foreign investment
-customer service is good
-products and services are high quality
-entire markets improve and grow, creating jobs and raising GDP

Question 3

impacts of competition policy on a organisation - cartels

Answer 3

organisations cannot participate in cartels as they mean to collude with other organisations in order to fix prices to make higher profits. If found guilty of cartels, owners and managers can be fined or sent to prison

Question 4

impacts of competition policy on a organisation - mergers

Answer 4

the CMA can block mergers if they are likely to lead to a substantial decrease of competition in a market. they can also impose conditions that must be met in order for a merger to happen (eg. ASDA and Sainsburys were forced to sell some of their stores to Morrisons by the CMA to ensure that there was still competition in several towns)

Question 5

impacts of competition policy on an organisation - customer protection

Answer 5

this means that customers have rights and are protected from unfair practices such as hidden charges and poor customer service.

Question 6

impacts of competition policy on an organisation - anti-competitive behaviour

Answer 6

this means that organisations cannot use their dominant position in the market to charge drastically low prices, pay lower prices to suppliers or control the supply of goods to the detriment of the market

Question 7

describe the economic factor

Answer 7

these are factors which arise from the state of the economy and encourage people to spend or save their money.

Question 8

what is the fiscal policy

Answer 8

a government’s fiscal policy impacts spending in an economy by altering tax rates and the levels of public spending

Question 9

what is the monetary policy

Answer 9

the governments ways in which it controls the supply of money into the economy and therefore affects spending, this can be done by varying interest rates

Question 10

what are interest rates

Answer 10

the percentage that is added when borrowing or saving money

Question 11

what is Gross Domestic Product (GDP)

Answer 11

a figure that sums up the amount of goods and services produced and consumed by a country (how much money it makes from the economy)