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Business studies > External Influences > Flashcards

External Influences Flashcards

1
Q

Explain what is meant by a market

A

Any situation where buyers and sellers are in contact in order to establish price

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2
Q

Explain what is meant by competition

A

A rivalry amongst sellers

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3
Q

Explain what is meant by market size

A

The collective value of the goods/services that buyers purchase

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4
Q

Explain what’s meant by market growth

A

The percentage change in the size of the market, measured over a specific period

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5
Q

Explain the importance of market size to a business

A

If a business has more market size, they are more dominant meaning they’d have more sales and greater revenue

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6
Q

Evaluate how a business could increase its market share

A

Mergers or takeovers/acquisitions

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7
Q

Describe the key features of a monopoly

A

Dominated by one seller
In theory its described as any firm with more than 25% of the sales
High barriers to entry

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8
Q

Describe the key features of an oligopoly

A

The markets dominated by a few firms
High barriers to entry
Products and prices in the market are similar

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9
Q

Describe the key features of monopolistic competition

A

Many firms competing
They supply a slightly differentiated product
Low barriers to entry

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10
Q

Explain what is meany by demand

A

The willingness to buy a product if you’re able to buy it at any given price

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11
Q

Explain what’s meant by supply

A

The amount of a good/service that sellers are willing and able to sell at any given price

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12
Q

Explain what’s meant by equilibrium

A

The situation in a market where demand is equal to supply and both parties are happy

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13
Q

Explain the determinants of demand ( what factors can affect the level of demand )

A

Income - as it increases, demand increases
Wealth - as it increases, demand increases
Taste and fashion - as it changes, demand increases
Government action - as they campaign it more, demand increases
Price of substitutes - the less, demand increases
Price of compliments - the less, demand increases
Demographic changes
Advertising, promotional offers and public relations

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14
Q

Explain the determinants of supply

A

Price - the amount that a customer is willing and able to pay
Costs - the higher the costs the more supply
Taxes - government may put tax on a product in order to raise revenue, or discourage the use of certain products
Subsidies - government might offer subsidies to businesses supplying a certain product, because it believes them to be beneficial
Price of other products, the cheaper the others, the less demand for theirs

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15
Q

Explain how changes in the determinants of demand and supply affect price and out put decisions

A

The more alternatives, the less demand for their product, the cheaper the price, the less supply because firms receive less mark up

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16
Q

Evaluate factors which affect demand and supply in a market

A

Taxes - the higher the tax on products, the less demand and supply
Government regulation - the less of it, the more demand and supply
Market power - the more market power, the greater the demand and supply
Availability of substitute goods - the more of them, the less and demand and supply

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17
Q

Evaluate the effect of excesses and shortages in markets

A

Excesses - if theirs excess, it could lead to perishable goods being binned
Shortages - it could lead to a loss of customers as they’d go elsewhere for the same product leading to less revenue

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18
Q

Evaluate the impact of market forces on businesses and stakeholders

A

can affect the profitability of the businesses within the industry and the level of outpu

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19
Q

Recommend and justify how a business should respond to market forces

A

Make appropriate changes to products,targeting different markets or adjusting prices appropriately

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20
Q

Distinguish between physical and non-physical markets

A

Physical - buyers can physically meet the sellers
Non-physical - buyers don’t physically meet the sellers, its all done online

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21
Q

Distinguish between online and digital markets

A

Online - an e-commerce site that connects sellers with buyers
Digital - a market that’s digital

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22
Q

Explain why firms choose to operate in physical markets

A

They can provide good customer service, creating potential repeat customers which mean more revenue for the business

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23
Q

Explain why firms choose to operate in non-physical markets

A

They’re more convenient, meaning you don’t have to spend money on stores which can be spent elsewhere

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24
Q

Explain what’s meant by competition

A

A rivalry amongst sellers

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25
Q

Explain how the strength of competition affects a business

A

The more competition means greater choice and more services for customers, because they can access a wider range of products and services

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26
Q

Explain why firms may choose to enter or exit a market

A

Enter - the market is doing well and developing more
Exit - the market is failing, making it not profitable to be in it

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27
Q

Analyse the barriers to enter in a market

A

Large start up costs
Having the marketing budget to break customer loyalty
The inability to gain economies of scale
Possibility of existing business starting a price war
Legal restrictions such as patents

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28
Q

Analyse the barriers to exit a market

A

Difficulty of selling off capital
High redundancy costs
Contracts with suppliers
Leases with landlords

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29
Q

Explain what’s meant by market dominance

A

The company that possesses the greatest market share to competitors

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30
Q

Explain what’s meant by mergers

A

Where two company join together to make one company

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31
Q

Explain what’s meant by takeovers

A

Where one company makes a successful bid to take control of or buy another company

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32
Q

Explain what’s meany by organic growth

A

Growth from inside the business

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33
Q

Explain what is meant by monopoly

A

A market dominated by one seller, described as them having over 25% market share

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34
Q

Explain how mergers, organic growth and takeovers can lead to dominant firms

A

By acquiring another firm or merging with another, it will lead to you possessing greater market share

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35
Q

Evaluate the impact on a busines of a dominant firm operating in its market

A

It could led to less sales for the smaller companies and them potentially failing

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36
Q

Explain how market dominance is restricted and regulated in the UK

A

CMA - competition and marketing authority

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37
Q

Evaluate the impact and importance of the regulation of the market on businesses

A

If markets become to dominant in a firm it could lead to less sales foe th other business in the market

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38
Q

Explain what the European Union is

A

The economic and political union of most European countries aimed at reducing trade barriers and harmonising economic policy

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39
Q

Evaluate the UK not being part of the EU

A

Domestic trade - more expensive and takes longer to arrive
Regulations - no longer have to follow EU regulations
New trade deals - the UK can make their own deals with countries

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40
Q

Evaluate the UK rejoining the EU

A

Recruitment - will be easier because people from other countries can come work in the UK
Paperwork - less paperwork making it easier to move goods and services
Checks - less checks meaning goods will move quicker

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41
Q

Explain what’s meant by emerging market

A

An economy that experiences considerable economic growth and possesses some but not all characteristics of a developed economy

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42
Q

Explain how political uncertainty may affect a business

A

It means that they can’t plan ahead for the future

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43
Q

Evaluate the benefits to the business of political stability

A

It means they can plan for the future for things like expansion and what they aim to acheive

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44
Q

Explain how and why political instability may affect international trade

A

It may mean that the pound becomes stronger through the political instability, meaning there is less trade with foreign countries

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45
Q

Explain what a tariff is

A

A duty paid on imports

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46
Q

Explain what quotas are

A

A limit on the total quantity of a product can be supplied to a market

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47
Q

Explain what free trade is

A

Involves an agreement between countries to trade with each other without erecting barriers to trade

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48
Q

Explain the key economic indicators which influence a business

A

Interest rates
Exchange rates
Tax rates
Inflation
Labour supply and demand
Wages
Government activities

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49
Q

Identify the nature and purpose of different types of taxation in the UK

A

Income tax - taken out your income
National insurance- taken as a contribution towards the state pension and NHS treatment
VAT - added onto the price of a product
Corporations tax - a tax limited company’s pay on their profits
Stamp duty - tax on when you buy a house

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50
Q

Distinguish between direct and indirect taxes

A

Direct - a tax that goes straight to the authority
Indirect - a tax that goes to the customer and then the authority

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51
Q

Identify the main types and purposes of government expenditure

A

The expenses of national or local governments and is often used to fund national services like health, infrastructure, benefits or security

52
Q

Explain what’s meant by a subsidy

A

A payment made by the government to a business to encourage them to keep on producing their product and at a lower price

53
Q

Analyse the benefits to a business of a subsidy

A

A greater supply of goods
Lowering prices, controlling inflation
Prevents long term decline of industries

54
Q

Distinguish between monetary, fiscal and supply side policies

A

Monetary - manipulation of the level of demand in the economy using the rate of interest
Fiscal - economic policy conducted by the government through taxation and public spending
Supply side - aim to improve the economy’s overall productivity capacity

55
Q

Explain the relationship between interest rates and exchange rates

A

The higher the interest rates, the more foreign investment a country is likely to attract so it strengthens the exchange rate

56
Q

Explain what’s meant by GDP

A

A measure of size and health of a country’s economy over a period of time

57
Q

Explain what’s meant by the business cycle

A

The cycle of a business during economic upturn and downturn

58
Q

Describe the main phases of the business cycle

A

Boom, recession, slump, recovery

59
Q

Explain how a business can use the business cycle to its advantage

A

Business premises - expand the business during a recession as its cheaper
Products on sale - start selling products that are discount and budget
Asset purchases - buying land and buildings fall so it’s cheaper and can be bought in the anticipation of recovery
Share purchases - buy them when they’re cheaper and sell the, when they rise in price
Staff - be willing to work at a lower wage because the need the money

60
Q

Explain why some businesses are more affected by the business cycle than others

A

Some are greater affected because they could be a small company that loses most of its customers

61
Q

Identify technological factors which influence a business

A

Computer hardware
Computer software
Internet connectivity
Wireless charging
Automation

62
Q

Explain how technology can be used in a business

A

In production
In communication
Printers
Marketing

63
Q

Explain how changes in technology may impact a business

A

New technology may be too expensive for the business, meaning they no longer have the most up to date technology so they aren’t as efficient as others

64
Q

Identify what is meant by computer hardware and software

A

Computer hardware - includes the physical parts of the computer
Computer software - known as programs and apps in the computer

65
Q

Distinguish between law and ethics

A

Law - the difference between what is right and wrong in the law
Ethics - the difference between what’s morally right and what’s morally wrong

66
Q

Explain ethical issues which affects business

A

Child labour
Excessive hours
Low pay
Working conditions
Degrading the environment

67
Q

describe social factors which influence a business

A

Demographics - the characteristics of the human population groups
Social habits - eating out mor or less
Changes in employment patterns - increase in part-time working
Changing role of women - more in the workforce
Education - young people have to stay for longer
Grey pound - retired people have a greater wealth through property and pensions and savings
Increased flexible working - more working form home

68
Q

Explain why some businesses are more affected by ethical issues

A

Larger businesses are more well know so theirs more attention from social media and customers
Businesses involved in outsourcing production to countries with different laws are more likely to be affected

69
Q

Evaluate ethical trading methods and working practices
(Reasons to be an ethical company)

A

Attracts new customers - if you’re ethical, they’ll choose you over competitors
Increased sales and profits - customers will feel reassured to use you if you’re ethical
Encourages employees to stay - you’re more attractive to customers so more profit and could lead to a pay rise

70
Q

Explain the importance of being seen as an ethical organisation

A

Customers are more likely to come to you as they know you’d don’t use any unethical practices

71
Q

Explain the drawbacks of trading ethically

A

Increased costs
Danger of building up expectations
Less competitive on printing
Could lead to less output

72
Q

Describe environmental issues which influence a business

A

Air pollution
Land pollution
Congestion pollution
Noise pollution
River or sea pollution

73
Q

Explain why a business needs to consider environmental issues

A

They need to consider them because if they are seen as an unenvironmentally friendly business it could cause potential customers to go elsewhere which could lead to less revenue and profits

74
Q

Recommend and justify ways in which a business can address environmental issues

A

Use renewable energy
Recycle materials
Use sustainable materials and equipment

75
Q

Evaluate the importance of being seen as an environmentally friendly organisation

A

Customers will feel positive after purchasing product from a business which is doing on harm to the environment which could lead to them being repeat customers crating more revenue for the company

76
Q

Evaluate the possible conflicts between environmentally friendly objective and business objectives

A

One objective could be keeping down costs, whereas being environmentally friendly could lead to higher production costs, resulting in less profits

77
Q

Explain what’s meant by sustainability

A

A company’s strategy to reduce negative environmental impact resulting from their operations in a particular market

78
Q

Explain globalisation

A

A process by which countries and economies have become more interconnected OR the world coming together to trade in each others markets

79
Q

Explain factors facilitating globalisation

A

Reduction in tariffs and quotas
Lower cost of production abroad
Ease of transportation
The internet and particularly the rise in e-commerce
Communication technologies such as smart phones
Easy movement of capital
The rise of multinationals

80
Q

Explain multinationals

A

A business that has activities and operations in two or more countries - McDonald’s, she’ll and Microsoft

81
Q

Why are so many companies keen to be multinationals

A

Economies of scale can be obtained as production increases
Ability to take advantages of legal constraints
They can enter new markets where less competition exists
Ability to take advantages of lower wages

82
Q

What is a LEDC

A

Less economically developed countries

83
Q

Wahat is a MEDC

A

More economically developed countries

84
Q

Explain positive effects of multinationals

A

Demand for raw materials
Creates jobs
Utilise the trade agreements

85
Q

Explain negative effects of multinationals

A

Profits sent back to home countries
They pay low wages
Poor working conditions
Exploitation of workers

86
Q

Explain positive effects of multinationals operating in LEDCs

A

Provides employment opportunities in LEDCs
Employment equips local people with skills
Leads to utilisation of local resources to supply factors

87
Q

Explain negative effects of multinationals operating in LEDCs

A

Employment often in exchange for low wages
Jobs are low skill
Working practices can be unsafe
Child labour is often used which can mean that the child misses out on education
Local businesses can be driven out of the market
Profit often goes black to domestic country where the multinational is based

88
Q

Explain the role of multinationals in globalisation

A

Multinational corporations are a function of inter connectedness, as they can form and use the connections between national economies, to operate within multiple countries.

89
Q

Explain why some businesses are more affected than others by globalisation

A

Businesses with mass market products who sell in multiple countries would be more affected
Businesses with products the middle class would buy because by 2030 it is expected that their will be more than 2 billion people in the middle class

90
Q

Explain globalisation

A

A process by which countries and economies have become more interconnected OR the world coming together to trade in each others markets

91
Q

Explain what factors facilitate globalisation

A

Reduction in trade restricted tariffs and quotas
Lower cost of production abroad
Ease of transportation
The internet and the rise in e-commerce
Communication technologies such as smart phones
Easy movement of capital
The rise of multinationals

92
Q

Explain multinationals

A

A business that had activities and operations in two or more countries

93
Q

Explain why companies are keen to be multinationals

A

Economies of scale can be obtained as production increases
Ability to take advantage of legal constraints
They can enter new markets where less competition exists
Ability to take advantage of lower wages

94
Q

What’s an LEDC

A

Less economically developed country

95
Q

What’s an MEDC

A

More economically developed country

96
Q

State positive effects of multinationals

A

Demand for raw materials
Creates jobs
Utilise trade agreements

97
Q

State negative effects of multinationals

A

Profits sent back to home countries
They pay low wag3s
Poor working condition
Exploitation of workers

98
Q

State positive effects of multinationals operating in LEDC’s

A

Provides employment opportunities in LEDC’s
Employment equips local people with skills
Leads to investment in local infrastructure
Lead to utilisation of local resources to supply factories

99
Q

State negative effects of multinationals operating in LEDC’s

A

Employment often in exchange for low wages
Jobs are low skill
Working practices can be unsafe
Child labour is often used which can mean that the child misses out on education
Local businesses can be driven out of the market
Profit often goes back to domestic country where the multinational is based

100
Q

Explain the link between globalisation and multinationals

A

Globalisation refers to the interconnectedness of national economies. Multinational corporations are a function of this interconnectedness, as they can form and use the connectedness between national economies, to operate within multiple countries

101
Q

Explain why some businesses are more affected than others by globalisation

A

Businesses with mass market products who sell in multiple countries would be more affected
Businesses with products the middle class would buy because by 2030, theirs expected to be an additional 2 billion people in that class

102
Q

Explain global strategy

A

A plan of action on a world wide scale

103
Q

Explain global branding

A

A brand that is recognised throughout much of the world

104
Q

Explain a brand

A

A distinctive product offering created by the use of a logo, symbol, name, design, packaging or combination a of multiple

105
Q

Explain threats of global brands to local businesses

A

Local and national businesses may be driven out as customers buy from the global brands instead
May result in downwards pricing pressure as global brands may offer products for cheaper
Global brands can afford market research to tailor products to that, but smaller businesses can’t afford it

106
Q

Explain how the presence of global brands can help local markets/businesses

A

The global brand may decide to get supplies locally, so it creates more business for the smaller companies
The shops near the global brand would have more people walk past, so it could create more sales
The global brands could bring new ideas that local businesses decide to adapt

107
Q

State challenges of globalisation

A

Increased competition
Understanding differences in customers ethical/moral standpoints
Cost of expansion
Adapting to different cultures and customer behaviour
Communication
The physical distance

108
Q

Explain international trade

A

The refers to selling across borders i.e. the exchange of goods and services between countries

109
Q

Explain why countries trade internationally

A

Variety - trade enables countries to obtain products they can’t make themselves
Economic efficiency - the development of export markets can enable a business to gain economies of scale
Growth - access to millions of new customers which creates the potential for business and for the economy to grow
Avoid conflict - trade leads to co-operation rather than conflict as nations become dependant on one another
Specialisation - a country can specialise in what it does best and then sell these products to others

110
Q

State what insurance is

A

A legal agreement between an insurance company and an individual where they can receive financial protection for the losses they may suffer

111
Q

State what export insurance is

A

When the Uk government offer assistance against the risk of non-payment by overseas

112
Q

3xplain the passport programme

A

Offers help to smaller and medium sized businesses who want to to start exporting

113
Q

Explain the assistance included in the passport programme

A

Help with market research and selection of target markets
Help to visit potential markets
A detailed assessment of the businesses readiness to export
An action plan for exporting

114
Q

Explain free trade

A

Trade without tariffs or quotas being imposed on products

115
Q

Explain advantages of free trade

A

Business - obtain economies of scale if export demand increases
Business - access to greater variety of raw materials at a lower costs
Customers - lower price through increased competition

116
Q

Explain disadvantages of free trade

A

Workers - foreign competition can lead to job losses
Environment - LEDC’s may use up non-renewable resources for export
Business - more competition from businesses based in other countries

117
Q

Explain a trading bloc

A

A group of countries within a particular region that have reduced or removed trade barriers for its member countries

118
Q

Explain advantages of a trading bloc

A

Business can gain access to a potential market of hundreds of millions of people
Businesses can import raw materials at a lower cost since tariffs have been removed
If exports increase, there is the potential for economies of scale

119
Q

Explain disadvantages of a trading bloc

A

Membership may hinder trade with countries outside the bloc
Competition from firms within member countries may be too great for domestic businesses and the may lose sales as customers import goods from member countries instead

120
Q

Explain emerging markets

A

A country that is achieving rapid economic growth

121
Q

Explain opportunities that emerging markets present

A

Can take advantages of legal constraints
Can move production into these markets and take advantage of cheap labour
Can move production into these markets and be located closer to other markets that they sell to
Can access new markets which possibly have higher disposable income

122
Q

Explain threats that emerging markets present

A

Lower labour costs on emerging markets could lead to job losses in domestic markets
Fewer exports from developed economies as the emerging economy can produce for themselves
More competition as businesses based in emerging economies are now pursuing expansion into developed economies

123
Q

Explain the digital revolution

A

Involves the shift from analogue and mechanical technology to digital technology

124
Q

Explain the Information Age

A

A time when large amounts of information is widely available

125
Q

Explain opportunities the digital revolution presents

A

Access to a wider market of potential customers
Range of information has increased as access to websites has grown
Greater scale of market research

126
Q

Explain threats the digital revolution presents

A

Adverse publicity travels quicker
Keeping up to date with technology can be costly
Loss of jobs in certain sectors

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