Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

business. > External influences > Flashcards

External influences Flashcards

1
Q

What is meant by demand?

A

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

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is meant by supply?

A

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

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is equilibrium?

A

The situation where demand and supply are equal

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What are the main demand factors?

A 
Price 
Income
Promotional offers
Taste/Fashion
Substitutes
Complements
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are the main supply factors?

A 
Price
Costs
Taxes
Subsidies
Competitive supply
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is elasticity of demand?

A

Measures how sensitive quantity demanded is to a change in price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is meant by inelastic demand?

A

When QD is not very sensitive to a change in price (fags)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Why might products be inelastic?

A

It is an essential product and/or there are not many substitutes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is meant by elastic demand?

A

When QD is sensitive to a change in price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Why might products be elastic?

A

They are luxuries which means you can either not buy it, or there are many substitutes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Income definition

A

How much you’re paid

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Wealth definition

A

Total value of assets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is meant by competition?

A

Rivalry amongst sellers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is a market?

A

When buyers and sellers meet

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is the market price?

A

A price range in a market at which consumers are prepared to pay

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is mark up?

A

The difference between the cost of producing an item and the price at which it is sold

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

How are mark up and profit different?

A

Profit refers to the business as a whole whereas mark up is concerned with individual products

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is a competitive market?

A

A market in which there are a large of number of sellers. Competition is mainly based on price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What is a monopoly market?

A

A market dominated by one seller

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Why are prices not always higher for a monopoly?

A

Large firms may pass on savings to customers in the form of a lower price because they benefit from EoS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is an oligopoly?

A

Where a market is dominated by a few firms

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What is an example of an oligopoly?

A

Mobile Phone market (o2, ee ..)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What are prices like in an oligopoly?

A

High and similar

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

How might oligopolies compete with each other?

A

Non price differences (customer service, deals, etc.)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

What is a collusion?

A

When rival companies cooperate for their mutual benefit. When two or more parties act together to influence price levels, thus preventing fair competition

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

What is monopolistic competition?

A

A market structure with many competing firms each of whom supplies a slightly differentiated product

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

What is a business which has monopolistic competition and has non price differences?

A

Taxi service - late pick up, disabled access, luxury cars…

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

What is meant by market size?

A

The collective value of goods/services that buyers purchase

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

What is meant by market growth?

A

The percentage growth in the size of the market. This is measured over a specific time period

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

What is the market share?

A

The percentage of total sales that a business has in a specified market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

What can a business do to increase their market share?

A
  • Meet customers needs
  • Sell more
  • Find out why old customers no longer use products
  • Have a clear marketing plan
  • Use a variety of marketing techniques
  • Merge w competitor
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

What is a barrier to entry?

A

Factors that could prevent a firm from entering and competing in a market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

What are some examples of barriers to entry?

A
  • Large start up costs
  • Having the marketing budget to break customers loyalties
  • Inability to gain economies of scale
  • Existing businesses may start a price war
  • Legal restriction such as a patent
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

What is a patent?

A

Someone can’t copy your idea/design

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

What is a barrier to exit?

A

Factors that could prevent a firm from leaving a market, even if it wanted to

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

What are 3 possible barriers to exit?

A
  • Redundancy payments
  • Difficulty selling off capital
  • Contracts with suppliers
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

What is meant by market dominance?

A

A measure of market share compared to competitors

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

What is market power?

A

The ability of a firm to influence or control the terms and conditions (e.g, higher prices) on which goods are bought and sold

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

What is a merger?

A

When two companies join together to form a new larger business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

What is a takeover/acquisition?

A

Buying 51% of shares to achieve control of another company

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

What are a merger and takeover examples of?

A

External growth

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
42
Q

What might be some benefits of mergers?

A
  • Increased market power and dominance
  • Reduce competition
  • More sales revenue
  • Increase market share
  • EoS
  • New skills
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
43
Q

What is the definition of a multinational?

A

A business that has activities in operations in more than one country

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
44
Q

What are 3 examples of a multinational?

A

McDonalds
Microsoft
Shell

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
45
Q

What does CMA stand for and what do they do?

A

The Competition and Markets Authority regulate business and promote competition for the benefit of consumers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
46
Q

What are the responsibilities of the CMA?

A
  • Investigating anti competitive merger
  • Investigating breaches of anti competitive agreements
  • Bringing criminal proceedings against collusion
  • Enforcing customer protection
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
47
Q

Can the CMA block mergers/takeovers from happening all together?

A

Yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
48
Q

What else can the CMA do to sanction businesses?

A
  • Sue for damages
  • Disqualify individuals from directing a company
  • Fine them
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
49
Q

What is meant by organic growth?

A

Growth from within the business such as launching a new product or service

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
50
Q

What is the definition of globalisation?

A

The increased integration and interdependence of national economies (the world relying on each other and coming together to trade in each others markets)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
51
Q

What factors have enabled globalisation to work and be so popular?

A
  • E commerce
  • Communication technology
  • Easy movement of capital
  • Free movement of people
  • Rise of multinationals
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
52
Q

Why might companies be keen to operate as a multinational?

A
  • Economies of scale
  • Take advantage of less legal constraints
  • New markets with less competition
  • Lower wages
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
53
Q

State 2 advantages of being a multinational

A
  • Employment opportunities for LEDCs

- Cheaper labour

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
54
Q

State 3 disadvantages of being a multinational

A
  • Unsafe working conditions/exploitation leading to bad reputation
  • Lack of control due to distance
  • Drives local businesses out of the market
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
55
Q

What is meant by the word ‘strategy’?

A

A plan of action

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
56
Q

What is meant by global strategy?

A

A plan that helps a business consider how to build a competitive global advantage

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
57
Q

What is a global brand?

A

Brands that would be recognised throughout the world (Starbucks, Adidas..)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
58
Q

What are some opportunities linked with globalisation?

A
  • Cheaper rent/labour
  • Increased market share and size
  • Lack of legal constraints
  • More disposable income in other markets
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
59
Q

What are some possible threats linked with globalisation?

A
  • Make UK workers redundant
  • Bad reputation
  • Cultural differences (Ikea in India)
  • Fluctuating exchange rates
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
60
Q

What is meant by free trade?

A

International trade can take place without tariffs, quotas and other restrictions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
61
Q

What is the STEEPLE model?

A

A model used to assess changes in the external environment that might impact a business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
62
Q

What does STEEPLE stand for?

A 
Social
Technological
Environmental
Economic
Political
Legal
Ethical
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
63
Q

What is the European Union?

A

The economic and political union of most European states. It is aimed at reducing trade barriers and harmonising economic policy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
64
Q

What is the eurozone?

A

The group of countries that share the euro currency

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
65
Q

What are 3 things that come with being an EU member?

A
  • Paying a membership fee
  • Regulations/laws must be followed by member countries
  • Free movement of goods, services, capital and people
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
66
Q

What is meant by free trade?

A

The agreement between countries to trade with each other without barriers (tariffs and quotas)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
67
Q

What is a tariff?

A

A tax paid on imports

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
68
Q

What is a quota?

A

A physical limit on the quantity of a good that can be imported into the country in a given amount of time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
69
Q

What might be 2 (business) arguments for leaving the EU?

A
  1. No longer have to comply with EU laws (expensive)

2. Encourages domestic trade

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
70
Q

What might be 2 (business) arguments for remaining in the EU?

A
  1. trade benefits

2. Larger pool of staff for recruitment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
71
Q

What are the impacts of political uncertainty such as Brexit for a business?

A

Political uncertainty leads to business investment reducing, consumer spending reducing and so revenue and profits decrease

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
72
Q

What are some examples of political factors that might affect a business?

A
  • Brexit/The EU
  • Competitions policy (CMA)
  • Privatisation
  • Minimum wage decisions
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
73
Q

What are demographics?

A

The characteristics of human population and population groups

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
74
Q

What are 2 current demographic changes in the UK?

A
  • Ageing population

- More ethnically diverse

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
75
Q

What are possible social factors that could affect a business?

A
  • Demographics
  • Social habits (eating out more)
  • Changes in employment (shorter hours)
  • Changing role of women (female dominance in the workforce)
  • Changing attitudes to work
  • Education
  • The grey pound
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
76
Q

What is meant by the grey pound?

A

Retired people having greater wealth through a combination of property, pensions and savings

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
77
Q

What is meant by ethics?

A

The judgement of whether something is morally right or morally wrong.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
78
Q

What are some examples of moral/ethical issues?

A
  • Low wages/Unfair treatment
  • Child labour
  • Untested medicine
  • Environmental damage
  • Discrimination
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
79
Q

What are some of the benefits of ethical behaviour?

A
  • Attract new customers
  • Attract better quality employees
  • Create positive publicity
  • Increase sales and profit
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
80
Q

What are the disadvantages of trading ethically?

A
  • Increased costs
  • Prices might be higher from increased costs affecting sales and competition
  • Might not have a big effect - waste of time
  • Puts pressure on the expectations of a business
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
81
Q

Why might having ethical objectives conflict with other business aims and objectives?

A

It may conflict with other objectives because the cost increase will affect ability to maximise profits and this will have a knock on effect to increasing market share. In addition, it also reduces likelihood of growth based off a lack of funds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
82
Q

What are some possible ways a business could improve its ethical profile?

A
  • Charity work
  • ‘Buy one, donate one’ model
  • Manufacture domestically
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
83
Q

What are the benefits of a business manufacturing domestically?

A

Workers can be paid fairly and it reduces carbon footprint due to less transport

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
84
Q

What types of environmental problems do the operation of businesses cause?

A
  • Air pollution
  • River/sea pollution
  • Deforestation
  • Noise pollution
  • Congestion
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
85
Q

What does sustainability mean?

A

The endurance of resources. Refers to preventing negative impacts from economic systems and production, on the earth and the environment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
86
Q

How can a business behave more sustainably?

A
  • Recycling scheme
  • Water and energy saving measures
  • Alternative/renewable energy sources
  • Buying products from sustainable farmers
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
87
Q

What is gross domestic product (GDP)?

A

The total value of output produced in an economic year

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
88
Q

What is meant by economic growth?

A

The annual percentage change in GDP

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
89
Q

If the economic growth is 5% in one year and 3% in the next - is this growing or shrinking?

A

It is growing just at a slower rate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
90
Q

What would happen if GDP went down?

A

It would mean the economy is shrinking and so there would be job cuts and falling house prices

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
91
Q

What would happen if GDP went up?

A

It would mean the economy is expanding and so there would be increased wealth plus more new jobs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
92
Q

What can the government do to increase GDP?

A
  • Encourage investment by offering subsidies
  • Improve infrastructure to increase the speed at which products can be delivered
  • Improve the quality of human capital by investing in education
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
93
Q

What can businesses do to facilitate economic growth?

A

Businesses can invest in human and physical capital which provides them with resources and so increasing productivity/output thus leading to economic growth

94
Q

What is a benefit of economic growth?

A

In theory, it results in a higher standard of living

95
Q

What is meant by ‘standard of living’?

A

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

96
Q

What is inflation?

A

A persistent general tendency of prices in the economy to rise

97
Q

What is consumer price index (CPI)?

A

A measure that examines the weighted average of prices from a basket of consumer goods and services

98
Q

What is the link between inflation and Brexit?

A

Brexit has caused fluctuation between the pound and this has a big impact on how much UK consumers pay for imported goods

99
Q

Why does inflation make UK exports uncompetitive?

A

It will cause prices of exports to rise which makes them less attractive to consumers abroad

100
Q

What is meant by ‘exchange rate’?

A

The value of one currency in relation to another

101
Q

What is a strengthening exchange rate?

A

If the pound increases in value it is said to strengthen. This means that the pound will buy more of a foreign currency

102
Q

What is a weakening exchange rate?

A

If the pound decreases in value it is said to weaken. This means that a pound will buy less of a foreign currency

103
Q

What does SPICED stand for?

A 
Strong
Pound
Imports
Cheap
Exports
Dear
104
Q

How might a local UK business be affected by the weakening pound?

A
  • Rise in costs of imports (raw materials)
  • Unpredictable price changes
  • Pressure on the business
  • Exports more attractive
105
Q

Why does inflation reduce multinational investment in the UK?

A
  • Raw materials are more expensive

- High inflation = high wage demands further increasing costs

106
Q

Why does inflation create uncertainty for investors?

A

They are unsure about what return they will get on the investment

107
Q

What are the 3 main purposes for taxation?

A
  1. Revenue for government
  2. Control economic activity
  3. Influence expenditure
108
Q

What is a subsidy?

A

Economic benefit or financial aid (grant) provided by the government to support/incentivise a desirable activity

109
Q

What are the 3 main benefits to a business of a receiving a subsidy?

A
  1. Reduce costs
  2. Helps increase supply
  3. Able to lower price of product, more attractive
110
Q

What is meant by monetary policy?

A

Manipulation of the level of demand in the economy using interest rates

111
Q

Who mostly controls monetary policy in the UK?

A

Bank of England

112
Q

How can interest rates manipulate demand?

A

Interest rates can be used to manipulate demand because the rate of interest is essentially the price of money. The price affects demand and therefore the demand responds to changes in the rate of interest. If the Bank of England wants consumers and businesses to spend less, it raises the rate of interest.

113
Q

What is meant by fiscal policy?

A

Economic policy conducted by the government through taxation and public spending

114
Q

How is fiscal policy controlled?

A

It is controlled by the government through the chancellor of exchequer

115
Q

How can taxation be used to manipulate demand?

A
  • Increased tax will generally lead to less spending

- Decreased tax will generally lead to more spending

116
Q

What is the multiplier effect?

A

The effect of changes in economic activity in one sector on other sectors; if one business experiences a rise/fall in demand, this has a knock on effect for the businesses supplying the product

117
Q

What is an example showing the multiplier effect?

A

If public spending on building new schools increased, the multiplier effect would be that retailers would increase their supply of building supplies

118
Q

What is meant by supply side policies?

A

Aim to improve the economys overall productive capacity. It is a measure that is in place to boost supply rather than demand

119
Q

How can the output of the economy be increased?

A
  • Improving employee skills/training
  • Cutting corporation tax
  • Reducing welfare benefits
120
Q

Why is it good to have a more productive economy?

A
  • Less unemployment

- Businesses incentives to invest

121
Q

What is the business/economic cycle?

A

The observed pattern of increases and decreases in economic growth over the long term. It is measured by the % change in GDP

122
Q

What are the 4 stages of the business/economic cycle?

A
  1. Boom
  2. Recession
  3. Slump
  4. Recovery
123
Q

Why might some businesses thrive doing a recession?

A

Because income is lower and they offer cheaper alternatives (Lidl)

124
Q

What are the characteristics of a booming economy?

A
  1. Very high confidence
  2. High spending rates
  3. High income
  4. Low unemployment/skill shortage
  5. Increased investment
  6. Rise in inflation
125
Q

What are the characteristics of a receding economy?

A
  1. Falling confidence
  2. Fall in spending
  3. Income starts to decrease
  4. Inflation slows down
  5. Less investment - only essentials
  6. Rise in unemployment
126
Q

What are the characteristics of a slumping economy?

A
  1. Very low confidence
  2. Low spending rates
  3. Low income
  4. Skill surplus/high unemployment
  5. Stable/deflation
  6. Low/no investment
127
Q

What are the characteristics of a recovering economy?

A 
1. Increased confidence
2 Increased spending
3. Rise in income
4. Falling unemployment rates
5. Rising inflation
6. Only essential investment
128
Q

Why do firms cut back on investment during a recession/slump?

A
  • Less financial available
  • Higher risk
  • Lower returns from investment
  • Safer to conserve cash
129
Q

How might a business respond during a recession/slump?

A
  • Redundancy
  • Pausing investment
  • Lower prices
  • Increase promotion
  • Cut backs on production
  • Less stock holding
130
Q

How does the government aid the economy in a recession/slump?

A
  • Give grants

- Lower interest rates

131
Q

What is an interest rate?

A

The reward for saving and the cost of borrowing. It is expressed as a percentage of the money saved or borrowed

132
Q

Who sets interest rates in the UK?

A

The Bank of England/Monetary policy committee

133
Q

What happens to a business if interest rates are low?

A
  • Sales are higher
  • Loan repayments are lower
  • More likely to borrow
134
Q

What happens to a business if interest rates are high?

A
  • Save more
  • Invest less
  • Decreased sales
135
Q

What happens to borrowers if interest rates are low?

A
  • Cheaper to borrow

- More disposable income

136
Q

What happens to borrowers if interest rates are high?

A
  • Borrow less (more expensive)

- Less disposable income

137
Q

What happens to savers if interest rates are low?

A
  • Save less (lower return)

- Spend more

138
Q

What happens to savers if interest rates are high?

A
  • Save more

- Spend less

139
Q

What is meant by unemployment?

A

A situation where people who are willing and able to find work are not able to secure employment

140
Q

What does the government not want people to be unemployed?

A
  • Waste of human resources
  • Benefits have to be paid, money could be spent elsewhere
  • Employment generates more tax revenue from income tax and NI
  • Unemployment is bad for the individual, may damage self esteem and increase likelihood of substance abuse
141
Q

What are the 6 economic indicators?

A
  1. GDP/Economic growth
  2. Inflation
  3. Interest rates
  4. Exchange rates
  5. Employment rates
  6. Balance of payment equilibrium
142
Q

What is meant by balance of payments/trade?

A

The difference between the value of exports and imports

143
Q

When would there be a balance of trade surplus/defecit?

A

Exports bigger than imports = surplus

Imports bigger than exports = deficit

144
Q

How might the weak pound affect balance of payments?

A

A weak pound would be good for creating balance of payments surplus because exports will be more attractive and UK citizens will be less likely to import

145
Q

What is meant by an indirect tax?

A

These are taxes on expenditure. They are paid to the HMRC indirectly through the supplier of the good/service

146
Q

What is meant by a direct tax?

A

These are taxes on income and profit, paid directly by the bearer to the tax authorities

147
Q

What is income tax?

A

A tax deducted from income. In the UK, income tax is progressive. (more earnings, more tax)

148
Q

What is national insurance?

A

This is a tax taken as a contribution towards the state pension and treatment under the NHS.

149
Q

What is corporation tax?

A

A tax on the profits made by companies. In the UK, the main rate is 19% and it is expected to fall to 17% by 2020

150
Q

What are 3 examples of a direct tax?

A

Income tax
National Insurance
Corporation tax

151
Q

What are 3 examples of indirect tax?

A

Stamp duty
VAT
Tax on alcohol, fuel and cigarettes

152
Q

What are the 3 main purposes of taxation?

A
  1. Revenue for the government
  2. Control economic activity
  3. Influence behaviour on certain items and discourage others
153
Q

What is a subsidy?

A

Economic benefit or financial aid provided by the government to support/incentivise a desirable activity

154
Q

What are 3 benefits to a business of receiving a subsidy?

A
  1. Reduce costs
  2. Increase supply
  3. Able to lower prices, more attractive for sales
155
Q

What is meant by monetary policy?

A

Manipulation of the level of demand in the economy using interest rates

156
Q

Who controls monetary policy in the UK?

A

Bank of England/Monetary Policy Committee (MPC)

157
Q

How can interest rates influence demand?

A

The rate of interest is essentially the price of money. Price affects demand thus demand responds to changes in the rate of interest

158
Q

What is meant by fiscal policy?

A

Economic policy conducted by the government though taxation and public spending

159
Q

Who controls fiscal policy?

A

The government, through the chancellor of exchequer

160
Q

How can taxation be used to manipulate demand?

A

High tax = less spending
Low tax = more spend

Taxation will influence how much people want to spend therefore also influencing demand

161
Q

What is meant by the multiplier effect?

A

The knock on effect of an increase in supply in one thing leading to an increase in demand for another

162
Q

What are supply-side policies?

A

Aiming to improve the economy’s overall productive capacity. It is a measure that is in place to boost supply rather than demand

163
Q

How do supply side policies intend to increase the output of an economy?

A
  • Improving employee skills
  • Cutting corporation tax
  • Reducing welfare benefits
164
Q

What is the business/economic cycle?

A

The observed pattern of increases and deceases in economic growth over the long term. It is measured by the % change in GDP.

165
Q

What are the 4 stages of the business cycle?

A
  1. Boom
  2. Recession
  3. Slump
  4. Recovery
166
Q

Why might businesses like Aldi thrive during a recession?

A

Because the general population will have lower income and Aldi offer cheaper alternatives to other supermarkets therefore their sales might increase

167
Q

What are the characteristics of a boom?

A 
Very high confidence
High spending
High income
Low unemployment/potential skill shortage
Rise in inflation
Increased investment
168
Q

What are the characteristics of a recession?

A 
Falling confidence
Fall in spending
Income starts to fall
Rising unemployment
Inflation slows down
Only essential investment
169
Q

What are the characteristics of a slump?

A 
Very low confidence
Low spending
Low income
Very high unemployment/skill surplus
Stable inflation/deflation
Low/no investment
170
Q

What are the characteristics of a recovery?

A 
Increasing confidence
Increase in spending
Rising income
Falling unemployment
Rise in inflation
Only essential investment
171
Q

Why do firms cut back on investment during a recession/slump?

A
  • Less finance available
  • Higher risk
  • Lower returns on investment are likely
  • Safer to conserve cash
172
Q

How might a business respond during a recession/slump?

A
  • Redundancy
  • Pausing investment
  • Lower prices
  • Increase promotion
  • Less stock holding
173
Q

How does the government help the economy get out of a recession/slump?

A
  • Give grants

- Lower interest rates

174
Q

What is the link between confidence and investment?

A

Investors will be confident that they will get a good return and so they will be more inclined to invest. They feel confident that the demand for their product/service exists and so customers will spend money on it making the investment more profitable.

175
Q

What is the link between spending and high employment levels?

A

More spending creates the need for more staff to provide the products and services

176
Q

Why might inflation be above target? How can this be controlled?

A
  • More spending increases demand thus prices

- This can either be controlled through taxation or interest rates

177
Q

What are the 4 factors that can help a business take advantage of the business cycle?

A
  • Location
  • Asset purchases
  • Share purchases
  • Products on sale
178
Q

How can a business use their location to an advantage? (business cycle)

A

Move to a larger premises during a recovery to prepare for producing increased output expected in a boom

179
Q

How can a business use their asset purchases to an advantage? (business cycle)

A

During a recession/slump, businesses can take advantage and purchase assets because prices will be cheaper

180
Q

How can a business use their share purchases to an advantage? (business cycle)

A

Share prices will also be low during recession/slump, they can then sell them when the economy recovers

181
Q

How can a business use their products on sale to an advantage? (business cycle)

A

During recession/slump, offer discount and budget products so it is more attractive to customers

182
Q

What is meant by copyright?

A

Legal ownership of materials which prevents the being copied by others. It is an automatic right which protects intellectual property

183
Q

What is national minimum wage?

A

It is the minimum pay per hour that workers are entitled to by law

184
Q

What is national living wage?

A

A new minimum wage rate for those aged 25 and over

185
Q

What is meant by intellectual property?

A

Intangible property that is the result of creativity (e.g, song melody)

186
Q

What is meant by trademark?

A

A company can register a trademark for its business name, slogans, logos and other items that identify the brand/indicate the source of the good

187
Q

What is the Sale of Goods/Consumer Rights Act?

A
  • Goods must fit their description
  • Goods must be of satisfactory quality
  • Goods must be fit for their specified purpose
188
Q

Up to how many days can a business offer a refund if this law is breached?

A

30

189
Q

What is contract law?

A

A contract is a legally binding agreement between 2 or more parties. It is against the law for a party to change the terms of the contact without the others permission.

190
Q

What can happen as a result of contract law being breached?

A

The aggrieved person (person who has been wronged) can sue for damages such as lost revenue

191
Q

What is the weights and measures act?

A

It is an offence to give ‘short measures’ or an incorrect indication of the amount of a product on sale. For example, a litre bottle of water should have exactly 1L of liquid inside

192
Q

What can happen as a result of the weights and measures act being breached?

A

Businesses can be fined

193
Q

What is the data protection act?

A

This act controls how personal information on customers and employees is stored and used by a business. Any personal information held by a business must be kept securely and only accessed by authorised staff with a password.

194
Q

What is the health and safety act?

A

Creating a safe working environment for employees and customers. This includes machinery, storage of stock and substances, system of work and employee welfare

195
Q

What can happen if the health and safety act is breached?

A

Criminal prosecution aswell as civil proceedings for compensation

196
Q

What is the legislation concerning smoking in the workplace?

A

Prevents employees from smoking indoors in the workplace; anyone wishing to smoke must smoke outside, Employees must always not smoke if they are sharing a vehicle with other members of staff

197
Q

What can happen if the smoking in the workplace law is breached?

A

The business will be liable for prosecution and a fine

198
Q

What is the need for planning permission?

A

Prevents disputes and building on protected/privately owned land

199
Q

Why might a business need planning permission?

A

Build something new, make a major change (extension), or change the use of the building

200
Q

What does the FCA stand for and what do they do?

A

Financial conduct authority. They are a regulatory organisation who protects the UK financial system and promotes effective competition in the interests of consumers

201
Q

What are technological factors which influence a business?

A
  • Computer hardware/software
  • Computer calculation
  • Internet access
  • Wireless charging
  • Automation
  • Devices (e.g, tablets)
202
Q

What are the advantages of technology of business?

A
  • Faster, more efficient
  • Communication quicker and easier
  • Working from home possible
  • Reduces need for file storage space
  • Convenient for customers
  • Employees can learn new skills
203
Q

What are the disadvantages of using technology in a business?

A
  • High initial cost
  • Not always reliable
  • Staff will need to be trained (costly)
  • Time is lost updating and developing software and technological processes
204
Q

What is meant by international trade?

A

Selling goods and services across borders

205
Q

Is international trade different to globalisation and multinationals?

A

Yes

206
Q

Why do countries trade internationally?

A
  • Reduce costs (EoS)
  • To grow, increase potential market
  • Increase variety
  • Increase specialisation
  • Avoid conflict (unites countries)
207
Q

How does international trade increase variety and specialisation?

A

Countries can specialise in what they do best with their available resources and this enables countries to obtain resources they cannot produce themselves

208
Q

Explain the nature and purpose of trade barriers?

A
  • reduces trade deficit
  • because it is more expensive to import
  • encourages domestic spending
209
Q

Why might trade barriers not be effective to reduce trade deficit?

A

If the currency is strengthened it is more expensive to export. IF income tax decreases people have more disposable income and can afford to import

210
Q

What are the factors a business might need to consider when trading internationally? (Marriott)

A
  • Language differences
  • Exchange rates
  • Cultural differences
  • Logistics
  • Buying habits
211
Q

What is the relationship between globalisation and international trade?

A
  • Gbl leads to increased communication which boosts IT because investors have more awareness and opportunities.
  • Gbl leads to improved infrastructure which boosts IT because it facilitates movement from markets
212
Q

What is a trading bloc?

A

A group of countries within a particular geographical region that protect themselves from imports and non-members
e.g) NAFTA

213
Q

What are the advantages of trading blocs?

A
  • Access to larger potential market
  • Increase stability of firms by selling abroad
  • Potential for economies of scale
  • Access raw materials at lower costs
214
Q

What are the disadvantages of trading blocs?

A
  • Threat of job losses

- Less domestic trade

215
Q

What is an emerging market?

A

A term used to describe a country that is achieving rapid growth and industrialisation (development of secondary sector) e.g, India

216
Q

What are BRICS? (5 classic emerging markets)

A

Brazil, Russia, India, China and South Africa

217
Q

What are the opportunities presented by emerging markets?

A
  • Larger market size
  • Lack of regulation (take advantage)
  • Customers have more disposable income (China)
  • Labour/production is cheaper
  • Businesses can be relocated to where they are needed
218
Q

What are the threats presented by emerging markets?

A
  • Job losses in developed economies due to cheaper labour elsewhere
  • Reduces exports from developed economies are they are increasingly self sufficient and less reliant of the US/UK
219
Q

What is meant by the digital revolution?

A

The shift from analog and mechanical technology to digital technology

220
Q

What is an example of businesses employing the digital revolution?

A

Audi VR Showroom allows customers to explore the car’s exterior and interior in realistic detail.

221
Q

What are some common examples of digital technology?

A
  • Digital storage for files/data
  • Communication (email/video conference)
  • Use of the internet (e-commerce, online banking, advertising)
222
Q

What is the Information Age?

A

A time when large amounts of information is widely available

223
Q

An example of the digital revolution and the Information Age is being able to see the busiest times to visit Tesco when you search the supermarket online. What is the impact of this information for Tesco?

A
  • Gives the ability for time sensitive promotions

- Helps staff planning (rotas) and stock planning

224
Q

What are 3 opportunities that have arisen from the digital revolution?

A
  • Enables feedback and review services for business such as TripAdvisor which they can use to improve
  • Services can be reccommended and advertised online
  • Cost savings as information is readily available and can be accessed quickly
225
Q

What are 3 threats that have arisen due to the digital revolution?

A
  • Increased likelihood of bad publicity
  • It is fast moving, it is expensive and time consuming for businesses to keep up
  • Businesses can be compared which increases competition
226
Q

What might the effects of the digital revolution depend upon?

A
  • The market in which a business operates
  • How rivals have responded to digital revolution
  • The type of product/service being sold
  • The budget of the businesses
  • The customer demographic
227
Q

How have amazon adapted and used technological change to improve their service?

A
  1. Amazon Go (shopping w out checkouts)

2. Robots in the warehouse

228
Q

What are 2 advantages of technological change for businesses as stakeholders? (Amazon)

A
  1. Unique selling point

2. Less staffing costs (robots)

229
Q

What are 2 advantages of technological change for the customer as a stakeholder? (Amazon)

A
  1. Quicker, more convenience (1 day delivery)

2. More enjoyable experience

230
Q

What are 2 disadvantages of technological change for businesses as stakeholders? (Amazon)

A
  1. Security issues, if there was a problem with systems it could disrupt business operations
  2. Having to pay for initial cost of technology systems and for maintenance
231
Q

What are 2 disadvantages of technological change for the customer as a stakeholder? (Amazon)

A
  1. If machinery breaks down, delivery could be delayed
  2. Customers may prefer to speak to staff and engage in conversation as part of their experience. People are more sensitive to personal needs

business. (11 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions