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Business > External Influences > Flashcards

External Influences Flashcards

1
Q

International Trade

A

Selling across borders - exchange of goods and services between countries.

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2
Q

Export insurance

A

UK gov offers insurance to UK exporters against risk non-payment by overseas buyers.

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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

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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
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5
Q

Sustainability

A

Preventing negative impacts from economic systems and production on the earth and its environment.

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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

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7
Q

Free trade

A

Agreement between countries to trade with each other without erecting barriers to trade

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8
Q

Tariffs

A

A tax paid on imports

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9
Q

Quotas

A

Limit on total quantity of a product can be supplied to a market

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10
Q

Market dominance

A

High Market share compared to competitors

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11
Q

Market power

A

Ability of firm to influence terms and conditions on which goods are bought and sold

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12
Q

Acquisition

A

Control of another company by buying majority of its shares

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13
Q

CMA (competition and markets authority)

A

Investigates mergers and acquisitions which could restrict competition

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14
Q

Cartel offence

A

Where businesses act together instead of compete
- bid rigging
- market sharing
- price fixing

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15
Q

Exchange rate

A

Value of one currency in terms of another

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16
Q

Reasons for increased demand for £

A
  • foreign investment in UK (factories)
  • desire to buy UK exports
  • hot money from high interest
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17
Q

EU

A

Union of most European countries aimed at reducing trade barriers

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18
Q

Free trade

A

Agreement between countries to trade with each other without tariffs and quotas

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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

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20
Q

Sustainability

A

Preventing negative impacts on environment from economic production

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21
Q

Standards of living

A

Amount of goods and services a person can buy with their income in a year

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22
Q

Consumer price index (CPI)

A

Measure that examines average prices of basket of goods and services

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23
Q

Balance of trade

A

Difference between value of imports an exports

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24
Q

Indirect taxes

A

Taxes on spending

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25
Q

Direct taxes

A

Taxes on income and profits

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26
Q

Stamp duty

A

Indirect tax when you buy property or land over certain price

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27
Q

Supply side policies

A

Investment in education and training
Infrastructure spending
Reduce income tax
benefits
Subsidies

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28
Q

Emerging markets

A

Country achieving rapid economic growth

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29
Q

Opportunities that emerging markets present

A

lack of legal constraints
Cheaper land
cheaper labour
Access new markets with higher disposable incomes

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30
Q

Threats of emerging markets

A

Lower labour costs
Job losses in domestic markets
Fewer exports from developed economies
More competition

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31
Q

Globalisation

A

Countries and economies have become more interconnected

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32
Q

Multinational

A

Business has activities and operations in more than one country

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33
Q

Positive effects of multinationals

A

Provides employment opportunities
Skills
Investment in infrastructure

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34
Q

Negative effects of multinationals

A

Low wages
Low skilled
Unsafe working practices
Child labour
Local businesses driven out
Profit goes back to where multinational is based

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35
Q

Global strategy

A

A plan of action on a global scale

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36
Q

Global brand

A

Brand that’s recognised throughout much of the world

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37
Q

Digital Revolution

A

The shift from analogue and mechanical technology to digital technology

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38
Q

Information Age

A

A time when large amounts of information is widely available

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39
Q

Opportunities arisen from digital Revolution

A

Lower cost
Wider range of info
Easier market research

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40
Q

Threats from digital revolution

A

Expensive to ‘keep up’
Businesses will need to be more competitive
Adverse publicity spreads more easily

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41
Q

Intellectual property

A

Intangible things that are the result of creativity
Eg Logo, slogans, Software

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42
Q

Trademark

A

A company can register a trademark for its name slogans logos - stops anyone taking the idea

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43
Q

Copyright

A

Legal protection against copying for authors, composers and artists - automatic

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44
Q

Planing permission

A

Seeking permission before buying something new or extension

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45
Q

3 main principles of consumer rights act

A

Of satisfactory quality
Fit for purpose
As described

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46
Q

Contract law

A

Outlines legal obligations each business owes to another

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47
Q

Weights and measures act

A

All products should give amounts

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48
Q

Data protection act

A

Employee or customer information is not spread

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49
Q

Health and safety act

A

Business has “a duty to take reasonable care” of employees

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50
Q

Smoking in the workplace 2007

A

Smoke free environments

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51
Q

Environmental laws

A

Clean air act
Climate change act

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52
Q

Ethnic diversity

A

Increase in diversity in a country

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53
Q

Political stability

A

Limited gov changes

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54
Q

Benefits of being member of EU

A

Larger pool of workers
No tariffs on imports
Greater demand for exports
Minimal paperwork
One set of regulations

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55
Q

Demand

A

Quantity of good/service customers are willing and bale to buy at given price

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56
Q

Supply

A

Amount of good/service sellers are willing and able to sell at given price

57
Q

Demand factors

A

Wealth
Income
Advertising
Trends
Demographic changes
Government action
Substitutes
Complements

58
Q

Supply factors

A

Price
Cost
Taxes
Subsidies
Price of other products
Weather
Availability of factors of production

59
Q

Elasticity of demand

A

How sensitive/responsive demand is to change in price

60
Q

Inelastic demand

A

Demand not very responsive to change in price

61
Q

Elastic demand

A

Demand is responsive to change in price

62
Q

Market size

A

Total value of all sales in market

63
Q

market growth

A

% change in size of market over specific period

64
Q

Market share

A

% of total sales in industry from particular business

65
Q

Competition

A

Rivalry amongst sellers

66
Q

Market

A

Situation where buyers and sellers establish a price

67
Q

Barriers to entry

A

Prevent a firm entering market

  • large start up costs
  • inability to gain eos
  • price war
  • legal restrictions
68
Q

EOS

A

When output goes up costs go down

69
Q

Competitive market

A

Large number of sellers competing on price

70
Q

Monopoly

A

Market dominated by one seller, usually high prices

71
Q

Oligopoly

A

Market dominated by few firms, similar prices, competing on non price differences, prices tend to be high

72
Q

Collusion

A

Rival companies cooperate for mutual benefit, usually influencing price levels, preventing fair competition

73
Q

Monopolistic competition

A

Many competing firms, slightly differentiated product, relatively low prices

74
Q

Market power

A

Ability of firm to influence or control terms and conditions on which goods are bought and sold

75
Q

Market dominance

A

Measure of market share compared to competitors

76
Q

Barriers to exit

A

Factors that prevent a firm from leaving a market

  • difficulty selling off capital
  • high redundancy costs
  • contracts with suppliers
  • leases with landlords
77
Q

Merger

A

Two companies joint together to form new business

78
Q

Acquisition / takeover

A

Control of another company buy buying majority of shares

79
Q

External growth +

A

Gain new management
Increased revenue and market share
New skills and ideas
EOS
Meet customer needs more effectively

80
Q

External growth -

A

Diseconomies of scale
Extra debts
Redundancies for employees
Higher prices for customers
Worser results for suppliers

81
Q

Organic growth

A

Expansion from within the business
- new stores
- new products
- more employees
- increase productive capacity
- new tech
- international selling

82
Q

Organic growth +

A

Less risky
Cheaper
Controlled growth
Internal finance

83
Q

Organic growth -

A

Could be too slow
Low Market growth may restrict growth
Harder to increase market share
Shareholders want greater dividends

84
Q

CMA - competition and markets authority

A

Investigates mergers and acquisitions that could restrict competition
Brings criminal proceedings against those committing cartel offence
Enforces legislation

85
Q

Cartel offence

A

Where businesses act together
- bid rigging
- market sharing
- price fixing

86
Q

CMA sanctions

A

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
Q

GDP

A

Total value of output produced in an economy in a year

88
Q

Economic growth

A

Annual %change in GDP

89
Q

Standards of living

A

Amount of goods and services a person can buy with their income in a year

90
Q

GDP considers:

A

Healthcare, shopping centres, bus travel, haircuts, meals out, mortgages

91
Q

GDP doesn’t consider

A

Well-being
Environment quality
Time with family

92
Q

Inflation

A

Prices to rise in economy

93
Q

Consumer price index (CPI)

A

average prices of basket of consumer goods/services

94
Q

Cost push inflation

A

Costs increasing rising prices

95
Q

Demand pull

A

More buyers competing over same amount

96
Q

Exchange rate

A

Value of one currency in terms of another

97
Q

Strengthening exchange rate

A

£ will buy more foreign currency
Imports cheap, exports expensive

98
Q

Weakening exchange rate

A

£ buys less foreign currency
Imports expensive
Exports cheap

99
Q

Demand for £

A

Foreign investment in UK - building factory
Foreign customers to buy UK exports
Hot money flows into UK

100
Q

Interest rate

A

Reward for saving and cost of borrowing

101
Q

Disinflation

A

Slower rate of inflation

102
Q

Recession

A

Two consecutive quarters where GDP is decreasing - negative economic growth

103
Q

Unemployment

A

People who are able and willing to work are not able to find employment

104
Q

+ of high employment

A

Increased output
Less Benefit payments
More tax rev
Decreased crime or drug use

105
Q

Balance of trade

A

Difference between value of exports and imports

106
Q

How exports can be increased

A

Good quality products
Low inflation
Weak pound
Passport to export programme

107
Q

How can imports be decreased

A

Trade barriers
Weak pound
Subsidies

108
Q

Income tax

A

Direct tax taken out of persons income

109
Q

National insurance

A

Direct tax taken as contribution towards state pension and treatment under NHS

110
Q

Corporation tax

A

Direct Tax on profits made by PLCs and LTDs

111
Q

Monetary policy

A

Manipulation of level of demand in economy using rate of interest

112
Q

Purpose of tax

A

Increase gov spending
Control economic activity - stamp duty controls house prices
Influence expenditure on certain items

113
Q

Subsidy

A

Direct payment made by gov to assist a business and increase supply

114
Q

hot money

A

Inflow form foreign investors to a country with high interest

115
Q

Fiscal policy

A

Influence level of spending in economy through tax and public spending

116
Q

Multiplier effect

A

Effect of changes in economic activity in one sector on other sectors

117
Q

Supply side policies

A

Aim to improve economy’s overall productive capacity
- Investment in education and training
- reduce welfare benefits
- income and corporation tax cuts
- subsidies

118
Q

Business/economic cycle

A

Increases and decreases in economic growth

119
Q

Boom

A

High confidence, high spending, skills shortage, high investment, high inflation

120
Q

Recession

A

Falling confidence, decrease spending, lower inflation , only essential investment

121
Q

Slump

A

Pessimistic confidence
Deflation
No investment
Low incomes

122
Q

Recovery

A

Decrease unemployment
Inflation
Increased investment but only essential

123
Q

Advantage to business of slump / recession

A

Cheaper to buy premises
Low wages for staff
Higher demand for cheaper products
Higher demand to liquidise assets
Cheaper to buy shares

124
Q

Ethics

A

Judgment about whether something is morally right or wrong

-zero hour contracts
-child labour
-animal testing
-cost of pharmaceuticals

125
Q

Ethical behaviour +

A

New employees
New customers
Positive publicity
Increased sales
Encourage investment

126
Q

Ethical behaviour -

A

Increased costs
Build up expectations
Less competitive prices
Less output

127
Q

Objetives that conflict with ethical objectives

A

Profit
Increased market share
Growth
Survival
Service

128
Q

Why some business are effected by ethical issues

A

More well known
Outsourcing with different laws
Lower prices

129
Q

Technological factors

A

Computer hardware - physical parts
Computer software - apps/programs
Internet connectivity
Wireless charging
Automation
Devices

130
Q

Computer hardware and software +

A

Systems faster and more efficient
Easier communication
Technological EOS
Remote working
Less storage space
Customer convenience
Employees learn new skills

131
Q

Computer hardware and software -

A

High initial cost
Job losses
Not always reliable
Staff training
Data safety
Demotivation

132
Q

PESTELE

A

Political
Environmental
Social
Economical
Legal
Ethical

133
Q

Political factors

A

Competition policy
Industrial regulation
Gov spending and tax
Business policy and incentives
Tariffs and quotas
EU

134
Q

Economic factors

A

Interest rates
Consumer spending and income
Exchange rates
Economic growth
Inflation
Unemployment
Recession
Business cycle

135
Q

Social factors

A

Demographic changes
Impact of pressure groups
Consumer tastes and fashion
Changing lifestyles
Cultures

136
Q

Legal factors

A

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
Q

Technological factors

A

Automation
Innovation
R&D
Trading online

138
Q

Environmental factors

A

Climate change
Weather
Sustainability
Pollution carbon emissions

139
Q

Ethical factors

A

Working conditions
Sustainability
Ethical sourcing
CSR
Bonuses whilst making redundancies

Business (8 decks)

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