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Business > External influences- Blackwell > Flashcards

External influences- Blackwell Flashcards

1
Q

The definition of demand

A

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

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2
Q

Definition of supply

A

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

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3
Q

Equilibrium price

A

The situation in a market where demand is equal to supply ie both parties are happy. In theory, customers can buy what they want and shops have no unsold stock.

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4
Q

Which way does a positive impact shift the curve?

A

To the right

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5
Q

Which way does a negative impact shift the curve?

A

To the left

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6
Q

What are the demand factors?

A

Wealth, taste and fashion, advertising, promotional offers and public relations, demographic changes, government action and the price of other products

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7
Q

How is a change in price shown on a curve?

A

It is shown on the existing curve.

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8
Q

What are the supply factors?

A

Price,costs,taxes,subsidies,price of other products.

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9
Q

What happens if there is a excess supply?

A

Suppliers will reduce the cost to make customers buy it. They will then reduce the supply as they want to sell the most at the highest price.

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10
Q

What will happen when there is excess demand (a shortage)?

A

The demand will push the price up, making suppliers want to supply more and bringing the price closer to equilibrium.

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11
Q

What does the line look like when it is an inelastic demand curve?

A

Steep.

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12
Q

What does the line look like when it is an elastic demand curve?

A

Flatter.

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13
Q

State four factors that make demand inelastic.

A

The number of substitutes, the degree of necessity, if it is subject to habitual consumption, peak and off peak demand.

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14
Q

Definition of elasticity of demand.

A

Measures how sensitive quantity demanded is to a change in price.

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15
Q

Definition of inelastic demand.

A

The quantity demanded is insensitive to a change in price.

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16
Q

Definition of elastic demand.

A

Th quantity demanded is sensitive to a change in price.

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17
Q

Definition of competition.

A

Rivalry amongst sellers.

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18
Q

Definition of a market.

A

It is any situation where buyers and sellers are in contact in order to establish price.

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19
Q

Definition of an online market.

A

Physical products shipped to you.

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20
Q

Definition of a digital market.

A

Things that can be downloaded onto a device.

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21
Q

Definition of market price.

A

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

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22
Q

Definition of mark up.

A

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

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23
Q

Definition of a competitive market.

A

A market where there are a large number of sellers. Businesses mainly compete on price.

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24
Q

Definition of a monopoly.

A

A market dominated by one seller or one firm that has over a 25% market share.

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25
Q

What prices do competitive market businesses sell at and monopoly businesses sell at?

A

Competitive- low (usually)

Monopoly- high (not always)

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26
Q

Reasons why prices in a monopoly may not always be high.

A

Economies of scale and to force a new business out of the market.

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27
Q

Definition of economies of scale.

A

They arise when unit costs fall as output rises.

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28
Q

How are unit costs calculated?

A

Total production costs in period/ total output in period.

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29
Q

Features of a monopoly.

A

Higher prices, lower quality goods, little choice for customers, high barriers to entry.

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30
Q

Definition of a oligopoly.

A

When the market is dominated by a few firms eg the mobile phone network market- o2, EE, sky.

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31
Q

Features of an oligopoly.

A

Prices are high and similar, high barriers to entry, products are similar, businesses compete on non price difference, may force new firms out of the market.

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32
Q

What is collusion.

A

A secret agreement. Companies cooperate for their mutual benefit eg to influence prices to prevent fair competition.

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33
Q

Definition of monopolistic competition.

A

A market structure with many competing firms each of whom supplies a slightly different product (non price difference).

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34
Q

Definition of market size.

A

The collective value of the goods/ services that buyers purchase.

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35
Q

Definition of market growth.

A

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

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36
Q

Definition of market share.

A

Percentage of total sales that a business has in a specified market.

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37
Q

What options does a business have in a shrinking market.

A
  1. Adapt to a changing market- customers off competitors.

2. Enter a completely new market.

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38
Q

Why might a firm enter a market?

A

Satisfy an interest, fill a gap, achieve social objectives, gain profit, diversify from another market

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39
Q

What are some barriers to entry?

A

Large start up costs, break customers loyalty, inability to gain eos , a price war may be started, legal restrictions

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40
Q

Barriers to exit

A

Difficult to sell capital, high redundancy costs, contracts wit suppliers have to be honoured

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41
Q

Definition of market dominance.

A

A measure of market share compared to competitors.

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42
Q

Definition of market power

A

The ability of a firm to influence or control the terms and conditions on which goods are sold and brought.

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43
Q

Definition of a merger

A

When two often equal businesses agree to join together as one business.

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44
Q

Definition of a takeover (acquisition)

A

When an often larger business takes over another smaller business.

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45
Q

Disadvantages of mergers/takeovers.

A

Suffer from deos, communication issues, take on extra debt, redundancies, higher prices, a dominant business.

46
Q

Definition of organic growth.

A

Expansion within a business.

47
Q

What is the main aim of the cma

A

To promote competition.

48
Q

What does the cma do?

A

Investigate mergers which could restrict competition, investigate abuse of dominance, criminal proceedings against individuals, enforces legislation.

49
Q

Sanctions that the cma can impose.

A

10% of their global turnover, customers and competitors involved can sue, individuals can be disqualified/fired

50
Q

Impacts of regulation

A

Better quality goods, more choice, better value, more businesses, better terms with suppliers,less abuse of dominant positions, firing,prosecution, suspension

51
Q

What does steeple stand for?

A

Social, technological, environmental, economic, political, legal and ethical.

52
Q

How do you work out inflation?

A

Difference/original x100

53
Q

Causes of inflation

A

Demand pull and cost push

54
Q

Definition of gdp

A

The total value of output produced in an economy in a year.

55
Q

Definition of economic growth

A

The annual percentage change in gdp

56
Q

How can the government facilitate economic growth?

A

Encourage investment, improve infrastructure, improve the quality of human capital.

57
Q

Definition of exchange rates

A

The value of one currency in terms of another

58
Q

Definition of an import and an export

A

Import- a sale which means money exits an economy

Export- sale which means money enters an economy

59
Q

What does spiced stand for

A

Strong pound, imports cheap, exports dear

60
Q

Factors that effect demand for the pound

A

Foreign investment in the uk, desire to buy uk exports,hot money flows into the uk, political events.

61
Q

Definition of interest rates

A

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

62
Q

Definition of unemployment

A

A situation in which people who are able and willing to find work are not able to find employment.

63
Q

Why is unemployment bad?

A

It is a waste of Human Resources- producing more if employed
It causes social problems-benefits could be spent elsewhere
There is less tax revenue for the government
It is personally bad- low self esteem or addiction problem/anti social behaviour

64
Q

What is the balance of payments?

A

The difference between the value of exports and imports.
Exports>imports = surplus
Exports

65
Q

What is taxation?

A

A compulsory payment to the government.

66
Q

What are indirect taxes?

A

A tax on expenditure/ spending. Paid by the suppliers of the goods.
Eg, VAT, stamp duty, tobacco/alcohol/ Peterson tax

67
Q

What are direct taxes?

A

Taxes on income and profits, paid by the bearer to the tax authorities.
Eg, national insurance, income tax, corporation tax

68
Q

What is income tax?

A

A tax taken out of a persons income- progressive in the uk

69
Q

What is national insurance?

A

It is taken as a contribution towards state pension and treatment under the NHS- employer also contributes.

70
Q

What is VAT?

A

Value added tax- collected via the selling price and passed on to the government. If a business is registered they can reclaim VAT

71
Q

What is corporation tax?

A

A tax on profits made by incorporated companies decided by the government (currently 19%)

72
Q

What is a subsidy?

A

Payments by the government to suppliers. To increase supply of particular goods

73
Q

What is monetary policy?

A

Manipulation of the level of demand in the economy using the rate of interest (controlled by the Bank of England)

74
Q

What does an increase in interest rates do and vice versa?

A

Increase- slows down spending, increases saving (high interest, strengths pound)
Decrease- encourages spending, reduces saving (low interest, weakens pound)

75
Q

How long does a change in interest rates take to have an impact?

A

18 months

76
Q

What is fiscal policy?

A

Is economic policy conducted by the gov through taxation and public spending. It effects demand in the economy

77
Q

What effect will increased taxation and less spending have? And vice versa?

A

More tax- less people will spend, more demand

Less tax- more people will spend, less demand

78
Q

What do supply side policies do?

A

Aim to improve the economies overall productive capacity.

79
Q

Examples of supply side policies?

A

Investment in education and training, reduce welfare benefits, income tax cuts, cuts in corporation tax, removing expensive/unnecessary business regulation, encouraging business start ups.

80
Q

What is the business cycle?

A

The pattern of increases and decreases in economic growth over the long term (measured by a % change in GDP)

81
Q

What happens during a recession or slump?

A

Cheaper products/ businesses will do better, some will stay the same (necessities), businesses will cut back on investment+ dividends+ production, move to a cheaper supplier or premises, reduce stock holding, stop excess promotional campaigns

82
Q

What happens during a boom/ recovery?

A

Increased demand and spending, invest more, increase premise size or change location, increase prices, sell shares

83
Q

Political factors- what is the EU?

A

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

84
Q

What’s free trade?

A

An agreement between countries to trade with each other without erecting barriers (tariffs and quotas).

85
Q

What are political factors affecting businesses?

A

Leaving the EU, competition policy (the cma), privatisation, renationalisation, minimum wage decisions

86
Q

Social- what are demographics?

A

The characteristics of human population groups eg the size of the population

87
Q

What social factors should businesses consider?

A

Changing demographics, changing tastes and habits, changing lifestyles, how the workforce is changing, changes in employment patterns, the role of women,attitudes to work and social habits

88
Q

What are types of environmental problems?

A

Air pollution, destroying habitats,noise pollution, water pollution, congestion and using natural resources

89
Q

What are some gov measures to increase sustainability?

A

Congestion charges- charged for being in congested area, sustainable development strategy- introduced a landfill tax, tax allowances for using environmentally friendly methods and recycling schemes

90
Q

What is ethics?

A

It is concerned with the judgement whether something is morally right or wrong.

91
Q

What are some benefits of ethical behaviour?

A

Attract new and better employees, encourage employees to stay, encourage investment, create positive publicity, increase amount of customers/ sales

92
Q

What are disadvantages of ethical trading?

A

Increased cost, danger of building up false expectations, less competitive price, different judgements so wont necessarily please everybody

93
Q

Legal- what is the national minimum wage and living waage?

A

Minimum-the min pay per hour of workers of school leaving age are entitled to by law
Living- min wage rate for those 25+

94
Q

What are the costs and benefits of complying with wage rates?

A

Costs- being fined £14m, having to reimburse workers

Benefits- wont have extra costs that aren’t planned, good reputation, motivated workers

95
Q

What is the consumer rights act?

A

Goods have to be of satisfactory quality, fit for purpose and match the description

96
Q

What are the return rights for a customer before 30 days,after 30 days and how long do they have to complain?

A

Before 30 days- complete refund
After- partial refund, repair or exchange (choice to offer full refund)
6 years if reasonable for that product eg laptop

97
Q

What is intellectual property? A trademark? A copyright?

A

Property- intangible property that is the result of creativity
Trademark- a company can register a trademark for its businesses name, slogans, logos and other items identifiable with the brand.
Copyright- legal protection against copying for authors, composers and artists.

98
Q

What is the FCA?

A

The financial conduct authority that regulates financial markets eg pensions, loans, insurance, direct debits, credit cards, children’s ISAs

99
Q

How does the fca regulate the market?

A

Give customers info, create legislation, keep them moral and honest, keep the competitive by informing customers so they can chose better

100
Q

What is hardware and software?

A

Hard- physical parts of a computer

Soft- all the instructions that tell hardware how to perform a task- programs or apps

101
Q

What are some advantages of technology?

A

Systems are faster and more efficient, communication is easier, long run cost will be reduced, convenience for customers

102
Q

What are disadvantages of technology?

A

High initial costs, may lead to job losses, not always reliable, staff need to be trained, demotivated staff

103
Q

What is globalisation?

A

It is the increased integration and interdependence of national economies or the world coming together to trade in each other’s markets.

104
Q

What is a multinational?

A

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

105
Q

What are benefits of being a multinational?

A

Economies of scale can be obtained, take advantage of lack of legal constraints, enter less competitive markets, take advantage of lower wages

106
Q

What are some positive effects of globalisation?

A

Creating jobs in LEDCs, gives skills to workers, investment in local infrastructure, utilise local resources

107
Q

What are some negative effects of globalisation?

A

They are unskilled jobs, low wages, unsafe conditions, child labour, effects local businesses, people in MEDCs lose jobs, income goes back to domestic country.

108
Q

What is a brand and a global brand?

A

Brand- a distinctive product to differentiate it from other businesses.
Global- a brand that is recognised across most of the world.

109
Q

How can global brands effect local and national businesses?

A

Positive- their presence may bring in people to the area and they may use local suppliers
Negative- businesses driven out (loss of customers), downward pricing pressure

110
Q

What are some challenges to globalisation?

A

Increased competition, differences in moral/ethical views, costs, adapting to different cultures, mastering marketing, communication, the physical distance

111
Q

What is international trade?

A

Selling across borders ie the exchange of goods and services between countries.

112
Q

Why do countries trade internationally?

A

For variety, economic efficiency, to grow, avoid conflict and to specialise.

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