Unit 3: The Changing Business Enviroment

Question 0

Why does the government intervene in the economy?

Answer 0

1. To protect individuals and groups from the actions of large powerful organisations. E.g to break up large monopoly organisations that are limiting competition and dominating the market.
2. To provide essential industries and services. E.g supply the transport systems of energy and water supply, or post and communication systems.
3. To help the economy to run smoothly and to protect employment e.g the government can protect jobs by increasing their own spending.

Question 1

What is the government?

Answer 1

A body with a power to make and enforce laws within a state or over certain groups of people.

Question 2

What is the impact of government intervention?

Answer 2

1. The government create laws about how good can be produced E.g health and safety laws determine safe ways to make goods that protect employees.
2. Taxes and subsidies encourage certain methods of production E.g the government subsidies farmer’s good that used organic fertiliser (not artificial) => healthy goods.
3. Government spending in defence, education and healthcare. E.g on making military aircrafts.
4. Taxes and subsidies can determine what is produced e.g taxes on tobacco.

Question 3

What are taxes?

Answer 3

Taxes are financial charge imposed by a government.

Question 4

What are taxes for? (2 reasons)

Answer 4

1. Taxes are levied mainly as a way of raising revenue to fund government activity.
2. Taxes are levied to discourage certain types of business behaviour that cause pollution or creation of waste.

Question 5

What is interest rate?

Answer 5

Interest rate is the cost of borrowing money, charged by lenders to borrowers, and are expressed as a percentage.

Question 6

What are tariff barriers and subsidies?

Answer 6

Tariff barriers are tax put on imports by the government.

Subsidies are payments to a business to carry out certain activities.

Question 7

What are the 5 main impacts of new technology on businesses?

Answer 7

1. Enabling businesses to create new products and processes (due to the ability to access the internet => decreasing the labour input and increasing automated machine input).
2. Damaging business that fail to develop new technologies E.g. Retailers of fashion shops that fail to develop a trading website will quickly loose customers to sites that are easy to use).
3. The impact on costs e.g. it is easier to look for cheaper suppliers, OR it now takes more costs to develop the sites.
4. Changing labour requirement. (technology taking place of people in manufacturing, or service industries producing more work with the same number of employers).
5. Methods of production (machinery replacing human labour and being able to produce higher outputs at lower costs).

Question 8

What is e-commerce? What are the types of e-commerce?

Answer 8

E-commerce is buying and selling over the Internet.

There is B2B - business to business buying and selling AND B2C - business to consumer selling.

Question 9

Benefits of selling and buying to businesses through B2B?

Answer 9

The internet cuts costs of ordering new components, parts or stock that would be wasted. The businesses use databases for express depict information about items for sale all over the world.

Question 10

Benefits for the provider using B2C? (4)

Answer 10

• Low ongoing costs
• The provider doesn’t have to have a high street presence at an expensive location
• The provider can offer more information about each product
• The provider can access a wide market from a remote location.

Question 11

Benefits for the consumers using B2C? (4)

Answer 11

• Low prices due to the low costs of the business
• The consumer can browse the website in the comforts of their own homes
• The consumers can spend time finding out information of each product
• Consumers do not need to be near the provider

Question 12

What are the problems associated with development of e-commerce? (5)

Answer 12

1. The cost and time taken to create a quality website.
2. Payment over the internet requires to provide details of their bank account - making sure there are no hackers to keep the trust of the customers.
3. Important of relationship because there is not face-toface contact
4. Quality customer service when it comes to delivery.
5. Limited internet access in some countries.

Question 13

What are consumer’s spending patterns and by what factors of the consumers are they affected?

Answer 13

Consumer spending patterns are typical goods and services bought by individuals.
Spending patterns are dependent on what’s the individual’s income (for example Nike trainers rather then cheap trainers) , and what lifestyle to they live by (example “American life style” or “Western life style”)