external influence Flashcards
competitive market
large number of firms, produce similar products. large market size. competition based on price.
monopoly market
only one provider of product, firm can control the market. usually illegal
monopolistic competition
large number of firms, large market. do not compete on price. usually branded items
oligopoly
dominated by few large firms, smaller businesses follow. illegal to price match. same amount of cust but less revenue if spread
market
any situation where buyers/sellers are in contact in order to establish a price
physical market
face to face. + fewer returns, get products as soon as purchase. - higher costs/ overheads as store is expensive, time consuming to go there
non-physical market (+/-)
online/ digital. + cheaper as lass overheads, 24h service, less staff needed. - more returns, not same experience, worse customer service, pass-word sharing
benefits of competition
forces business to keep costs low and prices down for customers. encourages innovation. emphasis on meeting customer needs
drawbacks of competition
small business don’t get economies of scale- struggle to grow. cutting costs may mean lower wages/ redundancy. dividends cut.
impacts of competition on local scale
more footfall(+) may need to decrease prices(-).
impacts of competition on national scale
may insight them to improve quality(+) wide product portfolio may not have same overall quality(-)
impacts of competition on global scale
pushed to be innovative(+) other competitors may be more time efficient with shipping(-)
barriers of entry into the market
large start up cost, matching marketing budgets will be hard, cannot gain economies of scale, price wars
barriers to exiting the market
difficult to sell off expenses, high redundancy costs, contracts with suppliers
market dominance
when a business has over 50% of shares in the market
mergers
a type of inorganic growth by the fusion of two companies to expand
acquisitions
when another business buys a business
organic growth
using your own resources to grow
how is dominance restricted in the UK
abuses of market power and regulated by a competition act
globalisation
the increase in interconnectivity in companies and governments worldwide
determinants of demand
product/ service price
buyers income
prices of substitutes
consumer preference
expectation for change in price
determinants of supply
changes in production cost
climate conditions
global strategy
focuses of global standard and treats the world as one unit
opportunities of globalisation
more connections
efficient transport of goods
increased trade
form better connections with other countries
LEDC’s experience growth
more customers
threats of globalisation
increased competition
unemployment in developed countries that move businesses overseas
global branding
one recognised brand that is around the whole world
international trade
the trade of capital, goods, and services across the borders of different countries. this is good - adds variety, economic efficiency, specialisation
barriers to international trade - quotas
number of goods you can allow to be imported from different countries
barriers to trade - tariffs
tax on goods that are imported
factors to consider when trading internationally
tailor to the language
understanding different cultures
legal requirements
transport logistics
currency/ exchange rates
exchange rate
the change in currency of money and how much a currency is worth. the bank of england will set and buy currencies to prevent damaging exchange rates. too high = sell pounds. too low = buy pounds
eg) £1 = 20 lira
formula for exchange rate
£1.50 = $1
£150 = $100
equilibrium
state at which market supply and demand balance each-other out
outward shift in demand
to the right.
more is demanded at each price level
caused by higher income levels
inward shift in demand
decrease in demand.
to the left.
less demand at each price level
outward shift in supply
to the right.
make more supply.
caused by producer costs falling so they can make more
supply is how much they make
inward shift in supply
shifts left
decrease in supply
caused by increased price on raw materials
pros of multinationals
incoming company bring in investment, jobs, and trading
news/ideas spread quickly
increased consumer choice
improved quality of life foe ledc
cons of multinationals
benefits felt by developed countries
lack of legal framework
loss of jobs in developed countries
multinational strategies
responsive to different regions by differentiating to suit customers in that area.
political factors
decisions made by the govt that affect businesses
political uncertainty
impacts how a business conducts themselves and how attractive a country is to trade with.
fiscal policies
government spending and taxes
CMA
stop market dominance,mergers,takeovers et
privatisation
taking a business out of the public sector ownership
trade bloc
a group of countries within and geographical region to protect from imports outside of the union - e.g. EU
eliminating trade barriers
single market
where a group of countries trade all resources freely within a common set of regulations.
pros of single market/trade blocs
free trade - no taxes on goods.
cheaper products
more choice for consumers.
can help protect local businesses - widen their target market
economies of scale / access to money from foreign banks
cons of single market/trade blocs
govt miss out of money they could get from tax goods
may hinder trade from countries not in the bloc
easy for domestic firms to be taken over by foreign countries
must abide by all the rules in the trade bloc
hot money
money flowing through countries and currencies to find the best interest rates to make the most money.
if the b.o.e wants exchange rates to rise they could put up interest rates.
analysis of fall in exchange rates - cheaper exports
cheaper to export goods and people will pay more for them if their currency is worth more then ours > this depends on where the majority of sales are coming from. either outside or in.
analysis of fall in exchange rates - imports
if business imports raw materials it means production tends to be more expensive > due to al fall in exchange rates however it depends if this is temporary or not if it’ll have a big impact. may lead to the reduction in the amount of imported raw materials
spiced
stronger pounds - import cheaper, exports dearer
GDP
amount of money spent. a measure of the economy as a whole
inflation
sustained rise in general price level
deflation
a fall in general price level. value of money up.
disinflation
price up more slowly than in the past.
SPICED
stronger pound imports cheaper exports dearer
