Unit 7 - Section 4 Analysing The External Envirnonmenr Political And Legal Changes

Question 1

Political decisions

Answer 1

Actions taken by local, national or international authorities that affect the activities of a business

This includes:
Encourage enterprise
Regulate markets
Effect the countries infrastructure
Relate to how businesses treat the environment
Promote or restrict the international trade

Question 2

Regulation

Answer 2

Enforcement of principles or rules

Question 3

Single market

Answer 3

An area where there is no restriction on trading activity

Question 4

Infrastructure

Answer 4

The physical and organisational structure required for an economy to work affectively e.g transport and utilities

Question 5

Privatisation

Answer 5

The process of transferring state and organisations to privately owned concerns

Question 6

Monopoly

Answer 6

Where there is only one supplier of a good or service

Question 7

The law

Answer 7

A framework of rules governing behaviour

Question 8

Anti-competitive practices

Answer 8

The action is taken by a business to limit the extent of rivalry that exists in the market

Question 9

Cartels

Answer 9

Two or more businesses collude to control prices and limit supply

Question 10

Dominant market position

Answer 10

A firm which has high market share is able to prevent effective competition in the markets in which it operates

Question 11

Merger

Answer 11

When two businesses become one new business

Question 12

Takeover

Answer 12

When one business buys a controlling number of shares in another

Question 13

Individual labour law

Answer 13

Rules governing how employers treat their employees

Question 14

Collective labour law

Answer 14

Laws governing the behaviour of organised groups of workers, usually trade unions and how businesses must treat them

Question 15

Trade unions

Answer 15

Organisation set up to promote the interests of a group of employees

Question 16

Policies affecting enterprise

Answer 16

I’m the UK:
The British business bank
Schemes:
Enterprise allowance - a combination of a grant and a loan for those who wish to set up their own business
Funding for lending - scheme to encourage banks to lend to firms by the Bank of England, lending them money at a low rate
Enterprise finance guarantee - this is a loan guarantee scheme
The department for business innovation and skills (DBIS) - concern for enterprises in the UK

Question 17

The growth voucher scheme

Answer 17

Business is assisted with advice on:
Funding and cash flow
Staff
Leadership and management
Attracting and keeping customers
Making the most of technology

Question 18

The role of regulators

Answer 18

Regulation is the enforcement of principles or rules in the UK
Regulation for free and fair competition – imposing windfall taxes
(on excessive profits), restricting price rises, restricting R0CE, allowing new entrants to have access to facilities that may restrict competition
Regulations for high profile industries
Regulation for privatised monopolies to protect consumers
Encouragement of self regulation. Voluntary code of conduct e.g supermarket industry

Question 19

Policies affecting infrastructure

Answer 19

This refers to the physical and organisational structure required for an economy to work effectively e.g transport, broadband, and utilities

Question 20

Policies affecting the natural environment

Answer 20

Development of renewable energy source

Mainly covered by regulation through laws

Question 21

International trade

Answer 21

Government department - international trade and investment

Trade fairs

Brings exporting business together

Financial support for exporters

The Uk is also a member of the world trade organisation. This organisation works together to remove barriers

Question 22

EU

Answer 22

28 member states

It gives access to a single market with free movement of: labour, capital and resources

Question 23

Positive effects for business EU

Answer 23

505 million customers
Economies of scale
Increase competition = increase efficiency lower costs and the drive for better innovation
European merges and joint ventures
Better opportunity to inward investment e.g Toyota in derby
Mobility of labour
Movement of production to other lower cost EU countries

Question 24

Negative effects for business (EU)

Answer 24

Increased legislation
More competition from firms locating in lower cost locations
Inward investment can be more attracted to Eastern Europe
The cost of membership- funds are used to run the EURO and to help areas economically. Typically the UK puts in much more than it gets out

Question 25

BREXIT

Answer 25

Key issue is that the effects are unknown
This means that UK based business are nervous and unsure of the future
The pound has weakened (have to pay more for imports)
Investment in the U.K. has been placed on hold in some instances until the full exit deal is known
Some foreign businesses are indicating that they may move out of the U.K.

Question 26

Types of law affecting businesses

Answer 26

Consumer 
Competition 
Employment (Individual and collective)
Health and safety 
Environment

Question 27

Competition law

Answer 27

Intended to protect business and consumers from the affects of anti-competitive practices

Anti-competitive practices are actions taken by businesses to limit the extent of rivalry that exists in a market

Question 28

U.K. competition laws

Answer 28

The competition act 1998
This prohibits cartels and the abuse of dominant market positions

Penalties can be up to 10% of worldwide sales

Question 29

EU competition law

Answer 29

For mergers and takeovers the EU has jurisdiction if the impact extends across Europe

Question 30

The legal environment and business decision making

Answer 30

The impact of laws will be different for different businesses

New laws take time to come into force so businesses can plan. They should prepare for the changes in advance

If businesses are unhappy about legal changes they can protest through CBI, trade organisations or lobbying MPs