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Business A Level > Steeple Factors (external influences) > Flashcards

Steeple Factors (external influences) Flashcards

1
Q

What does STEEPLE stand for

A 
Social
Technological
Environmental 
Economic
Political
Legal
Ethical
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2
Q

Key economic indicators

A

GDP

Economic growth

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3
Q

What is GDP

A

Gross domestic product

Total value of output produced in an economy in a year

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4
Q

Economic growth

A

Annual percentage change in GDP

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5
Q

What is economic growth

A

Where GDP increases

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6
Q

What is a shrinking economy

A

Where GDP falls

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7
Q

Impacts of a shrinking economy

A

Job cuts

Fall in house prices

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8
Q

Impacts of growing economy

A

More wealth

More jobs

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9
Q

Ways that the government encourage increase in GDP

A
  • Lower taxation or offer subsidies to encourage investment in physical capital
  • Improve infrastructure > increase efficiency
  • Improve quality of human capital (skills, education)
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10
Q

Ways businesses encourage economic growth

A
  • Invest in training
  • Invest in physical capital

Act as resources
Increase productivity
Increase output
Economic growth

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11
Q

Why is growth important to government

A
  • creates a higher standard of living (GDP per capita)
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12
Q

Standard of living

A

Amount of goods/service a person can buy with income in a year

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13
Q

Inflation

A

Persistent general tendency of prices in an economy to rise

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14
Q

What is the EU

A

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

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15
Q

Characteristics of the EU

A
  • Member countries must pay membership fees
  • Legally binding regulations must be followed
  • 4 freedoms for member countries
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16
Q

Positives to UK businesses leaving the EU

A

Laws and regulations

Encourage domestic trade (less comp)

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17
Q

Reasons for UK businesses to be in the EU

A

Single market/ 4 freedoms

Subsidies

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18
Q

Consequences to businesses of political uncertainty

A

Reduced business investment

Reduced customer spending

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19
Q

Political factors affecting business

A
  • EU
  • Brexit
  • Competition policy (CMA)
  • Privatisation ( gas and electric)
  • Minimum wage
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20
Q

Example of social factors

A
  • Demographics
  • Social habits
  • changes in employment patterns (part time)
  • Women in work
  • Increase holiday expectations
  • Education til 18
  • Grey pound, retired people have greater wealth through property, pensions, savings
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21
Q

Demographics

A

Characteristics of human populations and population groups

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22
Q

UK demographic changes

A

People living longer

Ethnic diversity

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23
Q

Ethics definition

A

Concerned with the judgement about whether something is normally right or wrong

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24
Q

Examples of ethical issues

A
  • Child labour
  • Testing animals
  • Arms
  • Carbon footprint
  • Tax avoidance (corporation tax)
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25
Q

Benefits of ethical behaviour

A

Increased reputation leads to:

  • Attract customers
  • Attract/retain employees
  • Encourage investment
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26
Q

Disadvantages of ethical behaviour

A
  • Costly
  • Less competitive
  • Ethics can vary
  • Can create false expectation
  • Higher prices for consumers
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27
Q

What can ethical behaviour cause between other objectives

A

Conflict

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28
Q

Business objectives

A 
P rofit 
I ncrease market share
G rowth 
S urvival 
S ervice (social+ethical)
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29
Q

Example of conflict between objectives

A

Ethical and profit

Ethical increases costs, thus reduce profits

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30
Q

Ways to improve ethical behaviour

A
  • Avoid child labour
  • Pay full taxes
  • Charitable contributions/donations
  • Increase independence of LEDC’s eg training
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31
Q

Environmental issues caused by business operations

A
  • Air pollution
  • Water pollution
  • Land pollution (deforestation)
  • Noise pollution
  • Congestion
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32
Q

Examples of environmental changes

A
  • 5p bags
  • ban cotton buds
  • ban plastic beads
  • deposit return for bottles
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33
Q

Sustainability definition

A

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

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34
Q

How a business can be more sustainable

A
  • use Skype
  • recycling schemes
  • dispose chemicals in correct manner
  • Water/energy saving measures
  • Use renewable energy
  • Buy sustainable products
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35
Q

Government measures for sustainability

A
  • Climate change levy

- Pressure groups

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36
Q

What is the climate change levy

A

It is a tax on the use of energy in industry and commerce

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37
Q

How is climate change levy effective

A
  • Business attempts to minimise energy usage
  • Save costs
  • Operate more sustainably
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38
Q

What are pressure groups

A

Associations that highlight unsustainable behaviour eg green peace

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39
Q

How are pressure groups effective

A
  • Cause negative publicity
  • Poor reputation
  • less sales
  • Business acts sustainably to avoid this
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40
Q

2 key economic indicators

A
  • GDP

- Economic growth

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41
Q

What is GDP

A

Gross domestic product

The total value of output produced in an economy (in a given time)

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42
Q

What is economic growth

A

Annual percentage change in GDP

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43
Q

What is it called if GDP is less than the year before

A

A shrinking economy

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44
Q

Impacts of a shrinking economy

A

Job cuts

Fall in house prices

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45
Q

What is it called if GDP is higher than the year before

A

An expanding economy

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46
Q

Impacts of an expanding economy

A

More wealth

More jobs

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47
Q

Government methods of encouraging an increase in GDP

A
  • lower tax and increase subsidies
  • Improve infrastructure, efficiency
  • Improve quality of human capital (skills) eg education
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48
Q

How can businesses contribute to economic growth

A
  • Invest in training

- Invest in physical capital

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49
Q

How does investment in training and physical capital by businesses lead to economic growth

A

Increases resources, productivity, output

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50
Q

Why is economic growth important to the government

A
  • Causes a higher standard of living (GDP per capita)
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51
Q

Definition of standard of living

A

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

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52
Q

What is inflation

A

The persistent general tendency of prices in economy to rise

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53
Q

What is deflation

A

General prices decreasing in an economy

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54
Q

What is a recession

A

Negative economic growth for 2 consecutive terms (quarters)

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55
Q

Impacts of a shrinking economy

A 
Less produce
Less GDP
Less spending
Less revenue
Business cut costs
More unemployment
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56
Q

What is the consumer price index (CPI)

A

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

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57
Q

Formula for deflation

A

Change in price of (CPI)/original price X 100

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58
Q

3 impacts of high inflation

A
  • UK exports become uncompetitive
  • Reduction in investment (costs too high)
  • Creates uncertainty
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59
Q

Exchange rates definition

A

The value of one currency in terms of another

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60
Q

Strengthening exchange rate

A

Pound buys more of a foreign currency

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61
Q

Weakening exchange rate

A

Pound buys less of a foreign currency

62
Q

What is an export

A

A sale leading to money coming into the economy

63
Q

What is an export

A

Sale leading to money leaving the economy

64
Q

SPICED

A 
Strong
Pound
Imports
Cheap
Exports
Dear
65
Q

Impacts of weakening pound on UK businesses

A
  • Rise in costs of raw materials

- More demand for exports (cheaper)

66
Q

Short term responses from UK businesses to a fluctuating exchange rate

A
  • Nothing, accept lower mark up

- Cut overhead costs eg electricity

67
Q

Long term responses from UK businesses to fluctuating exchange rates

A
  • Use domestic suppliers
  • Increases prices
  • Focus on exports to EU customers
68
Q

3 factors determine demand for pounds

A

Foreign investment - eg offices
Interest rates - hot money
Desire to buy UK exports

69
Q

Interest rates definition

A

The reward for saving and the cost of borrowing expressed as a percentage

70
Q

Who sets interest rates

A

The monetary policy committee

Bank of England

71
Q

Impacts of interest rates

A

1st page second book

72
Q

What are the links between interest rates and exchange rates

A

High interest rates cause a strong pound due to hot money, therefore an appreciation of the pound
Vice versa

73
Q

Relationship between interest rates and inflation

A
  • MPC raise interest rates
  • less spending/more saving
  • demand falls
  • prices fall/stabilise inflation
74
Q

Unemployment definition

A

Situation where a person willing and able to work is unable to find employment
On the claimant count

75
Q

Claimant count

A

People claiming job seekers allowance (unemployed)

76
Q

Reasons gov want low unemployment

A
  • Waste of Human Resources
  • Social problems eg self esteem, depression, crime, drugs etc
  • cost of benefits
  • Less tax revenue
77
Q

Balance of payment
Balance of trade
Net trade

A

Difference between the VALUE of exports and imports ( x - m )

78
Q

Trade surplus

A

Exports exceed imports

79
Q

Trade deficit

A

Imports exceed exports

80
Q

Cause of trade surplus

A
  • Weak pound

More competitive exports and less imports due to expense

81
Q

Purposes of taxation

A
  • Gov generate revenue

- Influence consumer spending

82
Q

Purposes of taxation

A
  • Gov generate revenue

- Influence consumer spending

83
Q

What are indirect taxes

A

Taxes on expenditure

Included in price of product

84
Q

Examples of indirect taxes

A

VAT
Stamp duty
Alcohol, cigarette and fuel duties

85
Q

Direct taxes

A

Taxes on income and profits

Paid directly by bearer to HMRC

86
Q

Examples of direct taxes

A

Income
National insurance
Corporation tax

87
Q

What is a progressive tax and example

A

Different rates depending on factor

Eg income tax, stamp duty

88
Q

What is income tax

A

Tax taken out of a persons income

89
Q

What is national insurance

A

Tax taken from employee and employer, that contributes towards state pension and NHS

90
Q

What does VAT stand for

A

Value added tax

91
Q

What is VAT

A

A tax on spending, it is inclusive of the price of a product

92
Q

Current rate of VAT

A

20%

93
Q

How do businesses benefit from being VAR registered

A

Can reclaim expenses

94
Q

What is corporation tax

A

A tax levied on a business’s profits

95
Q

What is stamp duty

A

A tax paid when a house is purchased

96
Q

What can the government use stamp duty for

A

Controlling inflation

97
Q

What is HMRC

A

The government department responsible for the collection of tan in the UK

98
Q

What is a subsidy

A

A payment by the government to firms, to incentivise an increase in supply of particular goods or services

99
Q

Benefits of subsidies to business

A
  • Lower costs/increase profits
  • Decrease prices (competitive)
  • Ensure business survival during start up
100
Q

What are demand-side policies

A

Policies used to manipulate/influence the level of demand in the economy
Monetary and fiscal

101
Q

What is monetary policy

A

Manipulation/control of the level of demand in economy using the rate of interest

102
Q

Who is in charge of monetary policy

A

Controlled by MPC/bank of England

103
Q

High interest rates cause

A
  • less spending (cost of borrowing)

- More saving (reward for saving)

104
Q

High interest rates do what to the pound

A

Stronger pound (hot money)

105
Q

High interest rates do what to inflation

A
  • Slow rate (don’t say disinflation), due to less demand
106
Q

Low interest rates cause

A
  • More spending

- Less saving

107
Q

Low interest rates effect on pound

A
  • Weaker pound (less hot money)
108
Q

Low interest rates effect on inflation

A
  • Higher rate of inflation due to increase in demand
109
Q

What is fiscal policy

A

Manipulation of the level of demand in the economy through taxation and government spending

110
Q

Who controls fiscal policy

A
  • Government

- Chancellor of the exchequer

111
Q

What is caused by an increase in tax

A

Less spending

112
Q

What is caused by a fall in tax

A

More spending

113
Q

What does an increase in government spending cause

A

An increase in demand, due to the multiplier effect

114
Q

What is he multiplier effect

A

The effect of changes in economic activity in one sector on another sector
If a business experiences a rise or fall in demand for its product/service, there is a knock on effect to it suppliers

115
Q

What are supply side policies

A

Policies that manipulate the productivity/output of an economy

116
Q

Examples of supply side policies

A
  • Improving skill set (education/training)
  • Cut corporation tax
  • Reduce welfare benefits
  • Subsidies
  • Increase in minimum wage
  • Fall in income tax
117
Q

What should supply side policies lead to

A
  • An economy with skilled workers incentivised to work

- Business’s able to invest

118
Q

Definition of the business/economic cycle

A

An observed pattern of decreases and increases in economic growth over the long term

119
Q

What are the 4 stages of the business/economic cycle

A

Boom, Recession, Slump, Recovery

120
Q

Factors to explain at different points in business cycle

A
  • spending
  • investment
  • inflation
  • confidence
  • unemployment
  • income
121
Q

How to define boom/recession/slump/recovery

A

A stage in the economic cycle where…

Then state a characteristic of this stage

122
Q

Examples of thriving businesses during a slump/recession

A 
Aldi
Lidl
Cash for gold
Pay day loans
Repair garages (less new cars)
123
Q

National min wage

A

The min pay per hour workers are entitled to by law

Rate for each age bracket is different

124
Q

National living wage

A

Min wage for 25+

125
Q

Consequences of breaches in civil law

A

Fine

126
Q

Positives of compliance with civil law

A
  • Avoid fines/compensation/rectifying costs
127
Q

What is copyright

A

An automatic right protecting intellectual property from being copied
Don’t have to apply

128
Q

What is Intellectual property

A

Intangible property that is the result of creativity (eg song, book, film)
Protected by copyright

129
Q

What is a contract

A

A legally binding document between 2 parties

130
Q

What is contract law

A

The law making it illegal for one party to change the terms and conditions of the contract

131
Q

Example of a breach of contract law and it’s consequence

A

A supplier failing to supply what they are meant to

Firm paying fine/compensation

132
Q

What is the weights and measures act

A

Concerns needing to indicate the correct amount of a product

133
Q

Example of a breach in weights and measures act and consequence

A

1L milk having 990ml

Fine to supplier

134
Q

What is the data protection act

A

Protects personal data of staff and customers, ensuring it can only be accessed by authorised members of staff

135
Q

Consequence of a breach in data protection act

A

Up to £500,000 fine

136
Q

What is the health and safety act

A

Means employers legally have a duty of care towards its employees, with an obligation to create a safe and healthy workplace

137
Q

Consequence of a breach in health and safety act

A

Compensation, fine, forced to rectify issues

138
Q

What is smoking in the workplace (law)

A

Illegal to smoke within a workplace

139
Q

Consequence of breach of smoking in the workplace

A

£200 fine

140
Q

What is trademark

A

Where a firms name, slogan, logo or other items that brand the product/firm is protected from being used by another firm
Have to apply for it

141
Q

What is planning permission/legislation

A

Needed for new buildings, extensions, and change of use in a building

142
Q

Who to apply to for planning permission

A

Government/council

143
Q

Why is planning peromission needed

A

To ensure that buildings are safe, and to prevent disputes due to building on private land

144
Q

What is environmental legislation

A

Law that addresses pollution and protects human health

145
Q

Acts included in environmental legislation

A
  • Clean air act
  • Environmental health act
  • Safe drinking water act
  • Resource conservation act
  • Control of Substances Hazardous to health act
146
Q

What is the FCA

A

The financial conduct authority, regulating body of finance (loans, mortgages, credit cards)

147
Q

What do the FCA do

A

Protect and enhance the integrity of financial markets

Promo for competition

148
Q

Characteristics of the consumer rights act/sale of goods act

A
  • Product/service must be of satisfactory quality
  • Fit for purpose
  • Match description
  • Return in 30 days
  • Return for up to 6 years (up to discretion of seller eg partial refund, exchange etc
149
Q

Examples of technology that aids business

A
  • Computer hardware/software
  • Internet connection
  • Automation
  • Portable tablets/iPads
  • Computer calculation
150
Q

Advantages of hardware and software

A
  • efficiency/speed
  • communication
  • long term costs fall
  • Remote working (from home)
  • reduces need for physical storage space
  • convenience for customers and staff
  • offer opportunities to learn new skills
151
Q

Disadvantages of hardware and software

A
  • high initial costs
  • job losses
  • not always reliable
  • can be hacked
  • training costs
  • data protection costs
  • demotivation if difficult to operate
  • redundancies

Business A Level (16 decks)

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