External influences (P1)

Question 1

Exchange rate

Answer 1

the value of a foreign currency measured against another currency

Question 2

When the pound is strong what happens to imports

Answer 2

Imports are cheap

Question 3

When the pound is weak what happens to imports

Answer 3

Imports become more expensive

Question 4

Inflation

Answer 4

the persistent rise in general prices overtime

Question 5

Deflation

Answer 5

the persistent fall in general prices overtime

Question 6

disinflation

Answer 6

prices are rising but at a slower rate.

Question 7

How is inflation measured

Answer 7

CPI- measures the change in price of a basket of 650 goods

RPI- takes into account of mortgage repayment

Question 8

Pestle

Answer 8

Political
Economic
Social
Technological
Legal 
Environmental

Question 9

What does pestle measure

Answer 9

external environment

Question 10

Factors affecting PED

Answer 10

availability of substitutes
price of competitor goods
Branding

Question 11

purchasing power parity

Answer 11

The exchange rate that equalizes the purchasing power in two economies

Question 12

GDP per capita

Answer 12

national income divided by the population

Question 13

push factors in a market

Answer 13

1. saturated markets (lots of seller and few buyers)

Question 14

pull factors into a market

Answer 14

1. economies of scale
2. risk spreading
3. low costs of factors of production
4. government incentives

Question 15

reasons for globalisation

Answer 15

1. containerisation
2. internet making it easier to target global markets
3. free trade agreements

Question 16

offshoring

Answer 16

internal growth which involves moving parts of the business overseas

Question 17

outsourcing

Answer 17

when an external firm is used to complete business functions

Question 18

porters five forces definition

Answer 18

it can help inform a business whether the market they are going to enter is likely to be profitable

Question 19

what are porters five forces

Answer 19

1. buyer power
2. supplier power
3. threat of entrants
4. threat of substitutes
5. competitive rivalry.

Question 20

what is supplier power

Answer 20

the influence providers have over the price that consumers have to pay for raw materials.

if there is a limited number of suppliers they may have greater power and may be able to change higher prices as a result

Question 21

globalisation

Answer 21

is the increasing flows of goods/ services, capital and labour across international boarders

Question 22

factors contributing to globalisation

Answer 22

1. reduced cost of transport (as a result of containerisation)
2. more free trade agreements
3. growth of e-commerce

Question 23

what theory goes against a business being ethical

Answer 23

the shareholder concept

Question 24

what does the shareholder concept suggest

Answer 24

the one responsibility that a business has it to maximise profit within the legal framework.
Suggesting ethics are irrelevant

Question 25

factors making an country a better production location

Answer 25

1. cheaper labour
2. more skilled labour
3. government incentives
4. natural resources.

Question 26

benefits to countries by having an MNC operate in the area

Answer 26

1. increased employment-increased incomes-better standard of living
2. helps develop skills of the labour force
3. can access larger tax revenues

Question 27

drawbacks to countries by having an MNC operate in the area

Answer 27

1. local competition may collapse
2. profits earned may be remitted back to the host country
3. may act unethically and ignore local cultures to maximise profit

Question 28

offshoring

Answer 28

work is done within the business overseas

Question 29

outsourcing

Answer 29

the work is done by an external firm

Question 30

factors causing cost competitiveness to fall

Answer 30

1. an depreciation of the exchange rate may make the cost of raw imported materials more expensive
2. an unproductive workforce may mean cost of labour per unit increases

Question 31

push factors from a country

Answer 31

1. high protectionist measures
2. high competition
3. lack of skilled labour

Question 32

pull factors into a country

Answer 32

1. high market demand
2. low labour costs
3. government incentives.

Question 33

joint venture

Answer 33

when two businesses come together to form a separate entity

Question 34

2 benefits for a business to specialise

Answer 34

1. employees may become more productive overtime

2. purchasing economies of scale

Question 35

negatives for a business to specialise

Answer 35

1. may be over reliant on an individual market/ material which may increase the risk of failure

Question 36

what is a trade bloc

Answer 36

an areas of free trade

EU, ASEAN, NAFTA

Question 37

benefits to a business by operating in a trade bloc

Answer 37

1. lower cost of imported goods from local countries

2. can target a larger market at low cost

Question 38

Negatives to a business by operating in a trade bloc

Answer 38

1. if a common external tariff is placed imports may be more expensive from countries such as Africa or America (if in the EU)
2. increased competition from trading partners

Question 39

what is the impact of a skills shortage on international competitiveness

Answer 39

it is likely to make it less competitive as wage rates are likely to rise to attract workers into work. meaning firms may have less profit to finance r and d and the product may be less developed as a result

Question 40

advantages of comparative advantage

Answer 40

1. specialisation

2. ???

Question 41

how have MNCs increased globalisation

Answer 41

1.when MNCs move goods from one country to another they can avoid the cost of tariffs.