External influences on business activity

Question 1

How changes in taxes and government can affect business activity

Answer 1

• Decrease shareholder’s dividends
• Decrease production
• Relocate their operations in a foreign country with a lower tax rates

Question 2

How changes in interest rates can affect business activity and how businesses might respond to these changes

Answer 2

High interest rates means that the cost of borrowing is more expensive and interest costs are high, which may cause businesses to delay or cancel their plans to expand as the cost of borrowing money is high

Question 3

Ways of achieving sustainable development:

Answer 3

• Use renewable energy
• Use recycled products to produce packaging
• Avoid unnecessary travelling
• Reduce waste
• Use energy efficient processes

Question 4

How business might react and respond to ethical issues

Answer 4

Businesses may change their practices in order to satisfy their stakeholder

Question 5

Advantages of satisfy the stakeholders

Answer 5

• Long-term survival will be more successful
• Good reputation
• Increase potential customers
• Motivating workers
• Attract investors

Question 6

Disadvantages of satisfy the stakeholders

Answer 6

• High costs

- Lower profits