External/Global Business Environment

Question 1

What is the difference between Uncertainty and Risk?

Answer 1

Risk is a potential future negative among a number of outcomes which can be measured to some extent. Meanwhile, Uncertainty is uncontrollable and happens due to events outside of business control.

Question 2

In which four ways do governments usually attempt to control the economy?

Answer 2

Growth (annual % GDP), Inflation (rate of price rise), Employment, and Balance of Payments (imports vs exports)

Question 3

If a country’s imports exceeds its exports, what is this balance of payments referred to?

Answer 3

Trade deficit

Question 4

If a country’s exports exceed its imports, what is this balance of payments referred to?

Answer 4

Trade surplus

Question 5

What are the key principles of an effective tax system?

Answer 5

Fairness
Equity
Certainty
Convenience
Economy
Transparency

FECCET - Feck it acronym

Question 6

What are the four primary stages of the economic cycle?

Answer 6

Boom
Slowdown
Recession
Recovery

BSRR - Beser(k) acronym

Question 7

When is an individual classed as unemployed?

Answer 7

If they are ACTIVELY SEEKING employment but cannot find a job.

Question 8

What effect does a strong (£1:$10) currency have on international trades?

Answer 8

Imports are cheaper - Exports are more expensive

Question 9

What effect does a weak (£10:$1) currency have on international trades?

Answer 9

Imports are more expensive - Exports are cheaper

Question 10

Demand will increase as prices:
Demand will decrease as prices:

Answer 10

Fall
Rise

Question 11

Outline some of the risks of trading internationally

Answer 11

• Culturo-Linguistic Barriers
• Mulitple sets of different, foreign regulations
• Timezones
• Stretched logistic chains
• Potentially increased vulnerability to political instability
• Payment issues and cash flow

Question 12

Outline some of the benefits to trading internationally

Answer 12

• Market for goods and services is far larger
• Higher profit margins
• Providing goods and services which may be in scarce supply in some countries
• Larger pool of potential talented employees

Question 13

What is the difference between a direct and indirect tax?

Answer 13

A direct tax (corporation tax, inheritance tax, council tax) is unavoidable for the person being taxed, whereas an indirect tax can be passed to someone else (businesses charging higher prices to compensate for sugar or alcohol duties)