External Influences Flashcards
1
Q
International Trade
A
Selling across borders - exchange of goods and services between countries.
2
Q
Export insurance
A
UK gov offers insurance to UK exporters against risk non-payment by overseas buyers.
3
Q
The passport to export programme
A
Provided by gov to help small and medium size businesses who want to start exporting
- help with market research & target market selection
- plan for exporting
4
Q
Trading blocs
A
Group of countries within a particular region that have reduced or removed trade barriers for its member countries
+ access to markets
+ lower cost
+ EOS
- hinder trade with countries outside the bloc
- domestic businesses have too great of competition
5
Q
Sustainability
A
Preventing negative impacts from economic systems and production on the earth and its environment.
6
Q
European Union
A
The economic and political union of most European states aimed at reducing trade barriers and harmonising economic policy originally formed to prevent conflict
7
Q
Free trade
A
Agreement between countries to trade with each other without erecting barriers to trade
8
Q
Tariffs
A
A tax paid on imports
9
Q
Quotas
A
Limit on total quantity of a product can be supplied to a market
10
Q
Market dominance
A
High Market share compared to competitors
11
Q
Market power
A
Ability of firm to influence terms and conditions on which goods are bought and sold
12
Q
Acquisition
A
Control of another company by buying majority of its shares
13
Q
CMA (competition and markets authority)
A
Investigates mergers and acquisitions which could restrict competition
14
Q
Cartel offence
A
Where businesses act together instead of compete
- bid rigging
- market sharing
- price fixing
15
Q
Exchange rate
A
Value of one currency in terms of another
16
Q
Reasons for increased demand for £
A
- foreign investment in UK (factories)
- desire to buy UK exports
- hot money from high interest
17
Q
EU
A
Union of most European countries aimed at reducing trade barriers
18
Q
Free trade
A
Agreement between countries to trade with each other without tariffs and quotas
19
Q
+ - of EU
A
+
Larger pool of workers to recruit from
No tariffs or quotas
Greater exports
Minimal paperwork
One set of regulations
-
Decreased openness to flows of trade
have to follow EU regulations
Less trade deals with outside countries
Decreased domestic trade
20
Q
Sustainability
A
Preventing negative impacts on environment from economic production
21
Q
Standards of living
A
Amount of goods and services a person can buy with their income in a year
22
Q
Consumer price index (CPI)
A
Measure that examines average prices of basket of goods and services
23
Q
Balance of trade
A
Difference between value of imports an exports
24
Q
Indirect taxes
A
Taxes on spending
25
Direct taxes
Taxes on income and profits
26
Stamp duty
Indirect tax when you buy property or land over certain price
27
Supply side policies
Investment in education and training
Infrastructure spending
Reduce income tax
benefits
Subsidies
28
Emerging markets
Country achieving rapid economic growth
29
Opportunities that emerging markets present
lack of legal constraints
Cheaper land
cheaper labour
Access new markets with higher disposable incomes
30
Threats of emerging markets
Lower labour costs
Job losses in domestic markets
Fewer exports from developed economies
More competition
31
Globalisation
Countries and economies have become more interconnected
32
Multinational
Business has activities and operations in more than one country
33
Positive effects of multinationals
Provides employment opportunities
Skills
Investment in infrastructure
34
Negative effects of multinationals
Low wages
Low skilled
Unsafe working practices
Child labour
Local businesses driven out
Profit goes back to where multinational is based
35
Global strategy
A plan of action on a global scale
36
Global brand
Brand that’s recognised throughout much of the world
37
Digital Revolution
The shift from analogue and mechanical technology to digital technology
38
Information Age
A time when large amounts of information is widely available
39
Opportunities arisen from digital Revolution
Lower cost
Wider range of info
Easier market research
40
Threats from digital revolution
Expensive to ‘keep up’
Businesses will need to be more competitive
Adverse publicity spreads more easily
41
Intellectual property
Intangible things that are the result of creativity
Eg Logo, slogans, Software
42
Trademark
A company can register a trademark for its name slogans logos - stops anyone taking the idea
43
Copyright
Legal protection against copying for authors, composers and artists - automatic
44
Planing permission
Seeking permission before buying something new or extension
45
3 main principles of consumer rights act
Of satisfactory quality
Fit for purpose
As described
46
Contract law
Outlines legal obligations each business owes to another
47
Weights and measures act
All products should give amounts
48
Data protection act
Employee or customer information is not spread
49
Health and safety act
Business has “a duty to take reasonable care” of employees
50
Smoking in the workplace 2007
Smoke free environments
51
Environmental laws
Clean air act
Climate change act
52
Ethnic diversity
Increase in diversity in a country
53
Political stability
Limited gov changes
54
Benefits of being member of EU
Larger pool of workers
No tariffs on imports
Greater demand for exports
Minimal paperwork
One set of regulations
55
Demand
Quantity of good/service customers are willing and bale to buy at given price
56
Supply
Amount of good/service sellers are willing and able to sell at given price
57
Demand factors
Wealth
Income
Advertising
Trends
Demographic changes
Government action
Substitutes
Complements
58
Supply factors
Price
Cost
Taxes
Subsidies
Price of other products
Weather
Availability of factors of production
59
Elasticity of demand
How sensitive/responsive demand is to change in price
60
Inelastic demand
Demand not very responsive to change in price
61
Elastic demand
Demand is responsive to change in price
62
Market size
Total value of all sales in market
63
market growth
% change in size of market over specific period
64
Market share
% of total sales in industry from particular business
65
Competition
Rivalry amongst sellers
66
Market
Situation where buyers and sellers establish a price
67
Barriers to entry
Prevent a firm entering market
- large start up costs
- inability to gain eos
- price war
- legal restrictions
68
EOS
When output goes up costs go down
69
Competitive market
Large number of sellers competing on price
70
Monopoly
Market dominated by one seller, usually high prices
71
Oligopoly
Market dominated by few firms, similar prices, competing on non price differences, prices tend to be high
72
Collusion
Rival companies cooperate for mutual benefit, usually influencing price levels, preventing fair competition
73
Monopolistic competition
Many competing firms, slightly differentiated product, relatively low prices
74
Market power
Ability of firm to influence or control terms and conditions on which goods are bought and sold
75
Market dominance
Measure of market share compared to competitors
76
Barriers to exit
Factors that prevent a firm from leaving a market
- difficulty selling off capital
- high redundancy costs
- contracts with suppliers
- leases with landlords
77
Merger
Two companies joint together to form new business
78
Acquisition / takeover
Control of another company buy buying majority of shares
79
External growth +
Gain new management
Increased revenue and market share
New skills and ideas
EOS
Meet customer needs more effectively
80
External growth -
Diseconomies of scale
Extra debts
Redundancies for employees
Higher prices for customers
Worser results for suppliers
81
Organic growth
Expansion from within the business
- new stores
- new products
- more employees
- increase productive capacity
- new tech
- international selling
82
Organic growth +
Less risky
Cheaper
Controlled growth
Internal finance
83
Organic growth -
Could be too slow
Low Market growth may restrict growth
Harder to increase market share
Shareholders want greater dividends
84
CMA - competition and markets authority
Investigates mergers and acquisitions that could restrict competition
Brings criminal proceedings against those committing cartel offence
Enforces legislation
85
Cartel offence
Where businesses act together
- bid rigging
- market sharing
- price fixing
86
CMA sanctions
Fined up to 10% of global turnover
Customers and competitors sue for damages
Individuals disqualified from company directors
Fine any individuals if failing to comply with CMA requests
87
GDP
Total value of output produced in an economy in a year
88
Economic growth
Annual %change in GDP
89
Standards of living
Amount of goods and services a person can buy with their income in a year
90
GDP considers:
Healthcare, shopping centres, bus travel, haircuts, meals out, mortgages
91
GDP doesn’t consider
Well-being
Environment quality
Time with family
92
Inflation
Prices to rise in economy
93
Consumer price index (CPI)
average prices of basket of consumer goods/services
94
Cost push inflation
Costs increasing rising prices
95
Demand pull
More buyers competing over same amount
96
Exchange rate
Value of one currency in terms of another
97
Strengthening exchange rate
£ will buy more foreign currency
Imports cheap, exports expensive
98
Weakening exchange rate
£ buys less foreign currency
Imports expensive
Exports cheap
99
Demand for £
Foreign investment in UK - building factory
Foreign customers to buy UK exports
Hot money flows into UK
100
Interest rate
Reward for saving and cost of borrowing
101
Disinflation
Slower rate of inflation
102
Recession
Two consecutive quarters where GDP is decreasing - negative economic growth
103
Unemployment
People who are able and willing to work are not able to find employment
104
+ of high employment
Increased output
Less Benefit payments
More tax rev
Decreased crime or drug use
105
Balance of trade
Difference between value of exports and imports
106
How exports can be increased
Good quality products
Low inflation
Weak pound
Passport to export programme
107
How can imports be decreased
Trade barriers
Weak pound
Subsidies
108
Income tax
Direct tax taken out of persons income
109
National insurance
Direct tax taken as contribution towards state pension and treatment under NHS
110
Corporation tax
Direct Tax on profits made by PLCs and LTDs
111
Monetary policy
Manipulation of level of demand in economy using rate of interest
112
Purpose of tax
Increase gov spending
Control economic activity - stamp duty controls house prices
Influence expenditure on certain items
113
Subsidy
Direct payment made by gov to assist a business and increase supply
114
hot money
Inflow form foreign investors to a country with high interest
115
Fiscal policy
Influence level of spending in economy through tax and public spending
116
Multiplier effect
Effect of changes in economic activity in one sector on other sectors
117
Supply side policies
Aim to improve economy’s overall productive capacity
- Investment in education and training
- reduce welfare benefits
- income and corporation tax cuts
- subsidies
118
Business/economic cycle
Increases and decreases in economic growth
119
Boom
High confidence, high spending, skills shortage, high investment, high inflation
120
Recession
Falling confidence, decrease spending, lower inflation , only essential investment
121
Slump
Pessimistic confidence
Deflation
No investment
Low incomes
122
Recovery
Decrease unemployment
Inflation
Increased investment but only essential
123
Advantage to business of slump / recession
Cheaper to buy premises
Low wages for staff
Higher demand for cheaper products
Higher demand to liquidise assets
Cheaper to buy shares
124
Ethics
Judgment about whether something is morally right or wrong
-zero hour contracts
-child labour
-animal testing
-cost of pharmaceuticals
125
Ethical behaviour +
New employees
New customers
Positive publicity
Increased sales
Encourage investment
126
Ethical behaviour -
Increased costs
Build up expectations
Less competitive prices
Less output
127
Objetives that conflict with ethical objectives
Profit
Increased market share
Growth
Survival
Service
128
Why some business are effected by ethical issues
More well known
Outsourcing with different laws
Lower prices
129
Technological factors
Computer hardware - physical parts
Computer software - apps/programs
Internet connectivity
Wireless charging
Automation
Devices
130
Computer hardware and software +
Systems faster and more efficient
Easier communication
Technological EOS
Remote working
Less storage space
Customer convenience
Employees learn new skills
131
Computer hardware and software -
High initial cost
Job losses
Not always reliable
Staff training
Data safety
Demotivation
132
PESTELE
Political
Environmental
Social
Economical
Legal
Ethical
133
Political factors
Competition policy
Industrial regulation
Gov spending and tax
Business policy and incentives
Tariffs and quotas
EU
134
Economic factors
Interest rates
Consumer spending and income
Exchange rates
Economic growth
Inflation
Unemployment
Recession
Business cycle
135
Social factors
Demographic changes
Impact of pressure groups
Consumer tastes and fashion
Changing lifestyles
Cultures
136
Legal factors
Employment law
Min / living wage
Health and safety laws
Environmental legislation
Data protection
Sales of goods act
Sex discrimination act
Weights and measures act
137
Technological factors
Automation
Innovation
R&D
Trading online
138
Environmental factors
Climate change
Weather
Sustainability
Pollution carbon emissions
139
Ethical factors
Working conditions
Sustainability
Ethical sourcing
CSR
Bonuses whilst making redundancies
