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Business Component 3 > Unit 3 - PEST > Flashcards

Unit 3 - PEST Flashcards

1
Q

What is PEST

A

This is the political, economic, social and technological enviroments that affect a business

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2
Q

Politcal Factors

A
  • Instability
  • National security
  • Major trading partners
  • Changes in goverment
  • Pressure groups
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3
Q

Economic factors

A
  • Exchange Rates
  • Interest rates
  • Inflation
  • Fiscal policy
  • Taxation
  • Business Cycle
  • Unemployment
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4
Q

Political factors

Instability

A

If a business operates or expands into a politically unstable country there would be risks to consider

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5
Q

Political Factors

National security

A

Restrictions on the movements of people, goods and capital

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6
Q

Political Factors

Major trading partners

A

Numerous countries and trade blocks are essential for businesses that operate internationally or multinational

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7
Q

Political Factors

Changes in goverment

A

Different goverments and political parties could have different veiws and attitudes about businesses

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8
Q

Political Factors

Pressure groups

A

Brings about political change

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9
Q

Economic Factors

Exchange rates

A

The price of one currency expressed in terms of another.
* SPICED
* WPIDEC

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10
Q

Economic Factors

Interest rates

A

The price paid for borrowing money. This also applies for saving money. More money on loans means less disposable income

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11
Q

Economic Factors

Fiscal Policy

A

The use of taxtion and public spending expenditure as a means of controlling the level of activity withing economy.

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12
Q

Economic Factors

Inflation

A

The rate at which the general level of prices is rising. This is measured by CPI
* Demand pull inflation - The demand for a countries goods and services exceeds the ability to supply it. Prices increase to restrict demand
* Cost push inflation- Costs rise due to factors such as rising costs of raw materials and components

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13
Q

Economic Factors

Taxation

A

Part of any income earned by a business must be paid to the goverment

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14
Q

Economic Factors - Taxation

Direct

A
  • Income- Paid by individuals, sole traders and partnerships
  • Coropration- Paid by all business except sole traders
  • National insurance- Paid by both employees and employers on a individual salary
  • Capital gains- Paid based on the profit they generate from buying and selling assets
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15
Q

Economic Factors- Taxtation

Indirect

A
  • Value added tax- This is paid by consumers on the goods and services that they buy
  • Excise/ Custom Duties- This tax is paid on goods exported out of/ bought into the UK from abroad
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16
Q

Economic Factors

Business cycle

A
  • Boom- The level of economic activity is rising rapidly leading to higher inflation and increased imports. Wages can also rise
  • Recession- Economic activity declines as the economy moves into recession production rises less quickly or declining and unemployment increasing. Wages remian static and prices may fall to encourages others to spend
  • Slump- Demand falls unemployement is reletaivley high and there is low inflation. Business have to reduce prices and they will be reluctant to invest
  • Recovery- The rate of growth of GDP begins to rise unemployment falls as businesses take on more workers
17
Q

Economic Factors

Unemployment

A
  • Structural- This occurs when there is a large change in patterns of demand or developments in technology
  • Cyclical- Occurs with the business cycle. As an economy downturn unemployment increases and will peak during recession periods
  • Frictional- Occurs when there is a delay in finding a job after losing a previously held job. Tends to be temporary.
18
Q

Social Factors

Demographic

A
  • Size of population
  • Median age of popluation
  • Migration
19
Q

Social Factors

Lifestyle

A
  • Economically active women
  • Health conscious
  • Behaviour of consumers
  • Cultural changes
  • Social+Fashion change
  • Being enviormentally friendly
20
Q

Techonological Factors

Automation

A
  • Retailers- Helps with business efficiency
  • Banks-Clerks being replaced with machines
  • Warehousing- Staff are being replaced with robots
  • Online services- Mathematical analysis on certain products
21
Q

Techonlogical Factors

ICT

A
  • Internet Marketing
  • Web Based Marketing
  • B2B
  • Manufacturing resource planning
  • Electronic point of sale systems

Business Component 3 (7 decks)

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