External Influences Flashcards
1
Q
what is meant by market
A
A market is any situation where buyers and sellers are in contact in order to establish a price
2
Q
what is meant by competition
A
“competition” is the rivalry among sellers trying to achieve such goals as increasing profits, market share, and sales volume by varying the elements of the marketing mix: price, product, distribution, and promotion.
3
Q
what is meant by market size
A
The number of individuals in a certain market who are potential buyers and/or sellers of a product or service. Companies are interested in knowing the market size before launching a new product or service in an area.
4
Q
what is meant by market growth
A
An increase in the demand for a particular product or service over time. Market growth can be slow if consumers do not adopt a high demand or rapid if consumers find the product or service useful for the price level.
5
Q
what is the importance of market size to a business
A
- It allows them to know the extent of which they have the ability to grow.
- Allows them to understand the size of there business to the entire market- they know their market share.
6
Q
how can a business increase its market share
A
Companies increase market share through innovation, strengthening customer relationships, smart hiring practices and acquiring competitors.
7
Q
what are the key features of a monopoly
A
Any business that has over 25% of the market share
8
Q
what are the key features of a oligopoly
A
an oligopoly is when a market is dominated by a few large firms
9
Q
what are the key features of monopolistic competition
A
- Large numbers of businesses
- Large numbers of consumers
- A lot of non-price competition occurs
10
Q
What is the relationship between market structure and a business’ decision making power
A
?
11
Q
what is meant by demand
A
Demand is the quantity of a good or service that consumers and businesses are willing and able to buy at a given price in a given time period. Market demand is the sum of the individual demand for a product from buyers in the market.
12
Q
what is meant by supply
A
the total amount of a specific good or service that is available to consumers. Supply can relate to the amount available at a specific price or the amount available across a range of prices if displayed on a graph.
13
Q
what is meant by equilibrium
A
where supply equals demand
14
Q
what factors affect supply in a market
A
An increase in supply occurs when more is supplied at each price, this could occur for the following reasons:
- An decrease in costs of production, this means business can supply more at each price. Lower costs could be due to lower wages, lower raw material costs
- An increase in the number of producers will cause an increase in supply
- Expansion in capacity of existing firms, e.g. building a new factory
- An increase in supply of a related good e.g. beef and leather
- Climatic conditions are very important for agricultural products
- Improvements in technology, e.g. computers, reducing firms costs
- Lower taxes reduce the cost of goods
- Increase in government subsidies will also reduce cost of goods
15
Q
what factors affect demand in a market
A
A shift to the right in the demand curve can occur for a number of reasons:
- Income. An increase in disposable income enabling consumers to be able to afford more goods. Higher income could occur for a variety of reasons, such as higher wages and lower taxes.
- Quality. An increase in the quality of the good e.g. better quality digital cameras encourage people to buy one.
- Advertising can increase brand loyalty to the goods and increase demand. For example, higher spending on advertising by Coca Cola has increased global sales.
- Substitutes. An increase in the price of substitutes, e.g. if the price of Samsung mobile phones increases, this will increase the demand for Apple iPhones – a major substitute for the Samsung.
- Complements. A fall in the price of complements will increase demand. E.g. a lower price of Play Station 2 will increase the demand for compatible Play Station games.
- Weather: In cold weather there will be increased demand for fuel and warm weather clothes.
- Expectations of future price increases. A commodity like gold may be bought due to speculative reasons; if you think it might go up in the future, you will buy now.
16
Q
what is the impact of market forces on a business and its stakeholders
A
Market forces= Supply and demand
CONTINUE
17
Q
how should a business respond to market forces
A
?
18
Q
how can a dynamic nature of a market affect a business
A
an ever changing market (eg- change in fashion/ change in technology)
If you are static you go out of business
if you keep up with changes and trends then you are likely to stay in business
Proactive start the trend E.g Apple
Reactive follow suit - Eg- Samsung
19
Q
what is the impact of competition at the local, national and global contexts on a business
A
Local- Small businesses may not be able to keep up with large competition as they may be to small to compete.
National- National business will have lots of competition by others in the country but may be able to be competitive as they are larger and are likely to have a larger consumer base.
Global- Global businesses will have to compete on a global scale and may have to compete on non-profit basis as well as profit.
20
Q
what are physical markets
A
shops- where you can visit and see the product before you buy it.
21
Q
what are non-physical markets
A
In such markets, buyers purchase goods and services through internet
22
Q
why may a firm decide to operate in a physical market
A
a firm may decide to operate in a physical market as it allows customers to look around a store, this may encourage them to buy more products they wouldn’t buy if they weren’t in store.
23
Q
why may a firm decide to operate in a non-physical market
A
a firm may operate in a non-physical market as it allows them to save on building costs as well as the fact that many customers now demand it.
24
Q
what is meant by competition
A
“competition” is the rivalry among sellers trying to achieve such goals as increasing profits, market share, and sales volume by varying the elements of the marketing mix: price, product, distribution, and promotion
25
how does the strength of competition affect business
If competition is strong you may have to compete on non-price competition
26
why might firms decide to enter a market
- low barriers to entry
- not very competitive
- high opportunities for expansion or product development
- Gap in what the market supplies.
27
why might firms decide to exit a market
- low ability for expansion or product development
- business having a low market share.
- very competitive so hard to compete
28
what are barriers to entry in a market
- large set up costs
- having to match the marketing budgets of those already in the market
- legal restrictions such as a patent or government restrictions
- the inability to gain economies of scale and so achieve low unit costs
- the possibility that the excisting firms in the market may set a price war.
29
what are barriers to exit in a market
- the difficulties of selling off expensive plant and machinery
- high redundancy costs
- contracts with suppliers.
30
what is the impact of competition on a business, its stakeholders and its market
?
31
what is meant by market dominance
A firm having more than 20% market share has market dominance
32
what is a merger
when two businesses combine there businesses products and the money they gain.
33
what is a acquisition
when a business obtains the majority share of another business.
34
what is organic growth
Organic growth is the process of business expansion by increased output, customer base expansion, or new product development, as opposed to mergers and acquisitions, which is inorganic growth.
35
what is a monopoly
when one business have controlling share of a market
36
how do mergers, acquisitions and organic growth lead to the creation of dominant firms
Mergers- two businesses combine. They will have a higher market share and could become a dominant firm.
Acquisitions- One business takes over another through buying out the others firm using stocks. This will mean that they will have the market share of two firms.
Organic Growth- *********
37
what is the impact on a business of a dominant firm operating in its market
?
38
How is market dominance restricted and regulated in the UK
In the UK the responsibility for enforcing competition law lies with the CMA.
Both UK and EU competition law prohibit two main types of anti-competitive activity: anti-competitive agreements and the abuse of dominant market position.
39
what is the impact and importance of the regulation of the market on a business and its stakeholders
?
40
what is globalisation
the process by which businesses or other organizations develop international influence or start operating on an international scale
41
what facilitates globalisation
- the internet
- communication technologies
- e-commerce
- trade liberalisation, -transport
- infrastructure
- multinationals
42
why are some business' more affected by globalisation than others
- some businesses have access to the globalisation than others.
- competition- if its high globalisation may be harder to achieve.
- Some businesses may not have enough funds to expand.
43
what is the role of multinationals in globalisation
* Multinational corporations affect local and national policies by causing governments to compete with each other to be attractive to multinational corporation investment in their country.
* Multinational corporations often hold power over local and national governments through a monopoly on technological and intellectual property. Because of their size, multinationals can also have a significant impact on government policy through the threat of market withdrawal.
* Economic globalization refers to increasing economic interdependence of national economies across the world through a rapid increase in cross-border movement of goods, services, technology and capital. Multinational corporations play a key role in this process.
* Those who view economic globalization positively cite evidence of per capita GDP growth, decrease in poverty, and a narrowing gap between rich and poor nations.
* Those who view economic globalization negatively cite evidence of exploitation of the local labor force, funneling of important resources away from the country itself into foreign exports, and overall dependency of developing countries upon wealthy countries.
* Those who view economic globalization positively cite evidence of per capita GDP growth, decrease in poverty, and a narrowing gap between rich and poor nations.
* Those who view economic globalization negatively cite evidence of exploitation of the local labour force, funnelling of important resources away from the country itself into foreign exports, and overall dependency of developing countries upon wealthy countries.
44
what is the difference between a global strategy and globalisation
Globalisation is the process by which businesses or other organizations develop international influence or start operating on an international scale. Whereas Global strategy is an organization's strategic guide to globalization. A global strategy should address these questions: what must be (versus what is) the extent of market presence in the world's major markets? ... Therefore, it allows these firms to sell a standardized product worldwide.
45
how should a business respond to the challenge of increasing globalisation
- increase technology and communication
| - employ more staff?
46
what are the opportunities that globalisation present to a business
- Opportunities of a larger market- opportunities for increased sales
- allows for lower production costs from EOS
- Take advantage of technological advances
- allows for specialisation
47
what are the threats that globalisation present to a business
- threat of competition (maybe from lower-wage economies)
48
what is meant by global branding
Global brands are brands that are recognized throughout much of the world. Companies intending to create global brands need to do the following: Identify the relative attractiveness of each market for your brand. Conduct attitude and usage studies in each country in which you are considering entering.
49
what are the opportunity's to a business of a rise in the number of global brands
?
50
what are the threats to a business of a rise in the number of global brands
- increases competition which limits the chance of increasing market share.
- could lead to a monopoly or oligopoly situation occurring as global brands are marking it hard for other businesses to enter the market
51
what are the roles of multinationals in globalisation
?
52
what is meant by international trade
International trade is the exchange of capital, goods, and services across international borders or territories. ... In most countries, such trade represents a significant share of gross domestic product (GDP).
53
what are the reasons for international trade
- Variety
- Economic efficiency
- Growth
- International co-operation
- Specialisation
54
what are the barriers to international trade
- Tariffs
- Non-tariff barriers to trade
- Import licenses
- Export licenses
- Import quotas
- Subsidies
- Voluntary Export Restraints
- Local content requirements
- Embargo
- Currency devaluation
- Trade restriction
55
what factors should a business consider when the trade internationally
- language
- culture & customs
- logistics
- currency
- buying habits
56
what is meant by an exchange rate
changing one moneys currency by another. How much one currency is worth against another currency
57
what is the impact of changes in exchange rates on a business and its stakeholders
- S.P.I.C.E.D
- value of money
- businesses ability to buy or sell products abroad as they have to purchase the other countries currencies for transactions to be able to occur.
58
what is the relationship between increased globalisation and international trade
?
59
what are the sources of financial support for businesses which trade internationally?
1) PRIVATE BANKS & THRIFTS
- Lc's
- Financing
- Wire transfers
2) PRIVATE EQUITY FIRMS & INDUIDUALS
- Loans
- Trade finance/ P.O finance
3) PUBLIC AND INTERNATIONAL INSTITUTIONS
- Trade/P.O finance
- Other assistance
60
what are the sources of non-financial support for businesses which trade internationally?
?
61
what is meant by free trade
international trade left to its natural course without tariffs, quotas, or other restrictions.
62
what are the advantages of free trade to a business and its stakeholders
- increased economic growth
- more dynamic business climate
- lower government spending
- foreign direct investment
- expertise
- technology transfer
63
what are the disadvantages of free trade of free trade to a business and its stakeholders
- increased jobs outsourcing
- theft of intellectual property
- crowd out domestic industries
- poor working conditions
- degradation of natural resources
- destruction of native cultures,
- reduced tax revenue.
64
what is meant by trading bloc
A trade bloc is a type of intergovernmental agreement, often part of a regional intergovernmental organization, where regional barriers to trade, (tariffs and non-tariff barriers) are reduced or eliminated among the participating states.
65
what are the advantages to a business of trading within a trading bloc
- easy access to each other's markets
- protection of individual markets from cheap imports
- increased trade between member countries
66
what are the disadvantages to a business of trading within a trading bloc
- limited trade with producers outside the trading bloc
- distortion of world trade
- retaliation by other countries.
67
what is the influence on a business of the EU, including its enlargement and single European currency
?
68
what are the advantages to a business of the UK being a part of the EU and the Eurozone
- Tax free trading among members
- Opens up more opportunities
- Culture is not lost
- A common currency
- No conflict between nations
69
what are the disadvantages to a business of the UK being a part of the EU and the Eurozone
- communication barriers
- shared wealth is not always good.
- leaving is a problem
- discriminates about potential members
- Takes power from governments
- Serves the interest as a whole not a country.
70
advantages to a business of the UK being a member of the single European market
?
71
Disadvantages to a business of the UK being a member of the single European market
?
72
what is meant by a emerging market
Emerging markets refers to developing countries that are achieving rapid growth and industrialisation and are quickly achieving the status of developed markets. Refers to BRIC countries- Brazil/ Russia/ India and China
73
what is the impact of a emerging market on a business
OPPORTUNITIES:- new markets with higher disposable income
- Opportunities to move production into these markets and take advantage of the new group of consumers
- Investment opportunities in infrastructure and production
THREATS
- lower labour costs and the ability to produce more cheaply than in developed economies
- Fewer exports from developed economies as the emerging economies become able to produce for themselves
- greater independence for emerging economies
74
what is the impact on a business of changes in its global environment
Globalisation- allows change to occur.
- The improvements in communication and the growth of cheap air travel bring these countries increasingly closer to the rest of the business world.
- Businesses in the developed world need to find markets where they can maintain an advantage over lower-cost producers.
75
recommend and justify how a business could respond to changes in its global environment
?
76
What political factors influence a business?
- Actions of the government
| - Legislation on: Employment/ Health and safety/ Competition/ Taxation etc.
77
how can political uncertainty affect a business
- businesses may be reluctant to invest in new capital or enter new markets?
- people may be reluctant there selves to make big purchases or invest in a business (buy shares)
78
what are the benefits to a business of political stability
- people more likely to invest.
| - businesses can make larger decisions.
79
What factors determine supply?
- Price
- Costs
- Subsidy
- Price of other products.
80
What factors determine demand?
- Price
- Income
- Wealth
- Advertising, promotional offers and public relations
- Taste and Fashion
- Demographic changes
- Government action
- Price of other goods
- Complements
81
How do the policies of local, national, EU and international governments affect a business?
?
82
What is the impact and importance in changes in political factors for a business and it's stakeholders?
?
83
What are the key economic indicators which influence a business?
- Consumer confidence
- Employment
- interest rates
- Inflation
84
What are the main types of taxation in the UK?
```
Income tax
National insurance contributions
consumption tax - VAT (17.5% approx.)
excise duty on alcohol tobacco
corporation tax
stamp duty
```
85
What is direct tax?
Direct taxes are taken directly from either a persons income when they work, or from a company when they make a profit.
86
What is indirect tax?
Indirect taxes aren't paid when a person or business earns money but when they spend it; that is why they are indirect.
87
What are the main types of UK government expenditure?
- social protection (pensions/ Tax/ Credits and other benefits)
- health
- education
- debt interest
- defence
- Transport
ETC
88
What is meant by a subsidy?
A payment from the government to encourage a business to increase supply.
89
What are the benefits to a business of receiving a subsidy?
- increased income
90
what are monetary policies?
A manipulation of the level of demand in the economy using the rate of interest
91
What are fiscal policies?
The use of government spending and taxation, through the government's annual budget, to influence the level of demand in the economy.
92
What are supply-side policies?
Aim to improve the economies overall productive capacity, that is they act on supply rather than on on demand.
Supply-side policies also make a country more competitive internationally. There are a wide variety of policies that can be used to achieve this:
- reducing welfare benefits
- income tax cuts
- cuts in corporation tax
- improved education and training
- remove unnecessary red tape
- encouraging business starts up and expansion
- improving the flexibility of the labour market and reducing trade union power.
93
What is the relationship between interest rates and exchange rates?
higher interest rates attract foreign capital and cause the exchange rate to rise. The impact of higher interest rates is mitigated, however, if inflation in the country is much higher than in others, or if additional factors serve to drive the currency down
94
What is meant by Gross Domestic Product?
The total value of all of the economy's output (measured quarterly or yearly)
95
What is meant by the business cycle?
Rises and falls in economic activity; these follow a pattern that can be identified as boom, recession, slump and recovery.
96
What are the main phases of the business cycle?
BOOM: in this stage there is a high level of employment and consumption, and therefore a high demand for products.
RECESSION: a recession is defined as two successive falls in in GDP; in other words, output falls for two consecutive three-month periods.
SLUMP: the symptoms of a slump are similar to those of a recession, except that they are more serious and widespread.
RECOVERY: in the recovery phase of the cycle, economic activity rises.
97
how can a business use the business cycle to its advantage?
- use it to plan money for a certain time period, this means that there is a higher likelihood that a business will survive
98
why are some businesses more affected than others by the business cycle?
some businesses rely more on economic activity for example if they are trading abroad or are owned by the government.
99
what is the impact and importance in changes in economic factors for a business and its stakeholders?
?
100
What social factors influence a business?
- demographic changes
- changes in the age of the population
- ethnic diversity
- changing patterns of employment (woman/ education/ flexibility)
- technology
- agency work
- implications of social change on demand
-
101
what us the impact and importance in changes of social factors for a business and its stakeholders?
Any successful businesses will need to be aware of changes in the society in which it operates, so that the organisation of the business and the goods or services it produces will meet the demands of all stakeholders.
102
What are technological factors that influence a business?
- level of digital technology used
- the budget of the business to utilise digital technology
- the type of consumer (age, socio-economic group, location etc)
103
How can technology be used in a business?
- internet
- quicker connection times
- promotion opportunities
- new procedures
- production line
104
What are the advantages of using computer hardware and software to aid a business and its stakeholders?
?
105
What are the disadvantages of using computer hardware and software to aid a business and its stakeholders?
- it can break down
- sometimes expensive to set up.
- consumers and staff may be reluctant to grasp the software
- systems crashing
- threat to jobs.
- review sites can lead to a bad reputation
106
what are the opportunities to a business and its stakeholders in technological factors?
- information more readily available (cost saving)
- easier market research
- customers can give feedback easier
- access to a wider market of potential customers.
107
What is meant by the digital revolution?
The Digital Revolution refers to the advancement of technology from analog electronic and mechanical devices to the digital technology available today. The era started to during the 1980s and is ongoing. The Digital Revolution also marks the beginning of the Information Era.
The Digital Revolution is sometimes also called the Third Industrial Revolution.
108
What is the impact and importance of the information age on a business?
?
109
Why are some businesses more affected than others by the digital revolution?
?
110
What are the advantages to a business and its stakeholders of rapid technological change?
?
111
What are the disadvantages to a business and its stakeholders of rapid technological change?
?
112
What are the differences between Law and Ethics?
Ethics is concerned with judgements about what is the right or wrong thing to do in a particular situation. Unlike legal issue, there is no requirement for a business or its employees to operate ethically and there will be no recourse to the law if a choice is taken not to act ethically.
113
What are ethical issues which influence a business?
- treating workers well and paying a living wage
- not harming the environment through actions or the business
- behaving responsibly towards all stakeholders by being aware of the impact of production on others, such as the local community
- working with the community through sponsorship or charity work
- not discriminating in any way. Sometimes this may be a legal requirement, but an ethical business will go beyond what is required by law.
114
Why are some businesses more affected than others by ethical issues?
?
115
What are ethical trading methods and working practices?
?
116
How could businesses improve their ethical profile?
?
117
What are the advantages to a business and its stakeholders of behaving ethically?
- attract new customers to the business
- attract new and better quality employees
- encourage employees to stay with a business
- encourage investment
- create positive publicity
- result in increased sales and profits.
118
What are the disadvantages to a business and its stakeholders of behaving ethically?
- Harm a businesses reputation
119
what are the possible conflicts between ethical objectives and other business objectives?
?
120
How can a business manage the conflicts between ethical objectives and other business objectives?
?
121
What is the impact and importance in changes in ethical issues for a business and its stakeholders?
`?
122
what is the nature and purpose of employment legislation?
```
To protect employees rights
types of employment legislation includes:
- prevention of discrimination
- national minimum wage act
- health and safety
- smoking in the workplace
- the health and safety executive
- termination of employment (redundancy/ dismissal)
```
123
what is the nature and purpose of equality legislation?
to stop people being treated differently in the workplace due to gender/ age/ race etc.
124
what is the nature and purpose of company and partnership health and safety legislation?
prevents people from being harmed at work or becoming ill, by taking the right precautions and providing a satisfactory working environment.
125
what is the nature and purpose of data protection legislation?
controls how personal information ion groups such as employees and customers is stored and used by a business.
126
what is the nature and purpose of intellectual property legislation?
```
Having the right type of intellectual property protection helps you to stop people stealing or copying:
the names of your products or brands
your inventions
the design or look of your products
things you write, make or produce
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Copyright, patents, designs and trade marks are all types of intellectual property protection. You get some types of protection automatically, others you have to apply for.
127
what is the nature and purpose of planning legislation?
Where a business can build and what they can build. goes through the local council primarily. It stops people building in areas of beauty or building something that doesn't suit the environment.
128
what is the nature and purpose of environmental legislation?
it looks after the environment in ways such as:
- emissions into the air
- storage, disposal & recovery of business waste
- storing and handling hazardous substances
- packaging
- discharges of wastewater
129
what is the nature and purpose of consumer protection legislation?
This makes sure that a business must ensure that:
- goods fit their description
- must be of satisfactory quality
- goods are fit for the purpose specified.
Consumers are also protected as:
- businesses may not use unfair commercial practices- e.g. misleading advertising
- customers have a right of return and full refund if goods/ services do not comply with the law.
- services must be done at a reasonable price and by the time stated and customers can request that unsatisfactory work be repaired or carried out again at no cost
- customers buying from home or at work habe the right to a 'cooling off period'
- distance selling regulations provide further protection for consumers against online businesses.
130
what is the nature and purpose of contract and financial conduct legislation?
?
131
What ways can a business comply with legislation?
- making sure that are up to date with legislation that effects them.
132
what are possible conflicts between complying with legislation and other objectives?
?
133
what is the importance to a business of complying with legislation?
- stops them from getting legal action taken
- customers/ consumers/ employees demand and expect it.
- stops any problems from occurring.
134
what are the consequences to a business of failing to comply with legislation?
?
135
what is the impact and importance in changes in legal issues for a business and its stakeholders?
?
136
what environmental issues can influence a business?
- Air pollution
- Noise pollution
- River or sea pollution
- Land pollution
- Congestion
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GOVERNMENT MEASURES:
- Sustainable development strategies
- Climate change levy
- Carbon trust standard
- The carbon trust
- Congestion charges
- Alternative sources of energy
-
```
137
Why does a business need to consider environmental issues?
- reputation- how they want their business to be perceived
- cost/ benefit
- people expect it, if the environment isn't taken into account a bad reputation may occur because of this.
138
How could a business address environmental issues?
?
139
what is the importance to a business of being seen as an environmentally friendly organisation?
?
140
What are possible conflicts between environmentally friendly objectives and other business objectives?
- the price of new products may have to change.
- There is likely to be good publicity
- workers may be pleased to be working for an ethical business
- shareholders will be pleased if sales or profits are affected positively, but will not be happy if there is a negative effect on sales and prospective dividends.
141
how could a business manage the conflicts between environmentally friendly objectives and other objectives?
?
142
What is meant by sustainability?
The endurance of systems and processes. It refers particularly to preventing a negative impact from economic systems and production on the earth and its environment.
143
How can a business act in a sustainable manner?
?
144
what is the impact and importance of sustainability to a business and its stakeholders?
?
145
In what ways can a business become more sustainable?
- Recycling
- Reducing energy use
- Solar panels
- Reduce packaging on products
- use fuel efficient or electric vehicles.
146
what are the consequences to a business of ignoring external factors and issues?
?
