Unit 9 Flashcards
Why is trade between memebers states easy?
The European Single Market means there are very few trade barriers between the EU memeber states. Firms don’t take pay tax when they import goods with EU countries, so the EU provides easy export opportunities for UK firms.
The single markets smooths out price diffreences between memeber states. Producers can look for the highest selling prices within the EU and consumers can look for the lowest purchase price within the EU. When the price in part of the EU is high, producers flood the area with their product, driving down prices. Low prices attract more buyers in the market, pushing prices up.
What is fair competition?
Fair competition means companies are motivated to provide good quality products for reasonable prices. If they don’t constumers will be simply go elsewhere. Competition also encourages companies to innovate and develop new products, as well ad providing customers with choice by procuct diffrentiation.
What is the competition law?
Competition law includes:
Businesses can’t conspire to fix prices, where an aggreement s made to keep the price of the good above a fixed amount.
Businesses can’t conspire with competitiors to limit production so that the higher prices can be charged due to a shortage
Businesses can’t divide up the market to avoid having to compete.
What are some laws that are about a business abusing a dominant position?
Businesses have a dominant position if they have aboive 50% of the market share
Some laws that stop businesses abusing their position is:
Dominant businesses cac’t demand ‘exclusivity,’ that wholsealers only buy from them
They can’t demand that retailers must buy a second type of product in order to buy the popular product they actually want (tying)
Businesses can’t sell goods at a loss to force smaller competitiors out of the market (predatory pricing)
What is a monopoly?
A monopoly is when one business had complete control of the market. There is no competition and if customers need the product they have to pay whatever the price the monopoly sets.
The CMA can prevent monopolies from iccurring by stopping takeovers and mergers which will affect the strategy pf a business as they will have other methods of growth of expanding their business.
What law protects the community and the environment?
Industries which release waste into the water or land are regulated by the environment agency. Businesses have to ensure that their production processes dont cause unenecessary pollution.
Industrial processes which only release pollution into the air are regulated by local authorities.
Some laws include:
The landfill tax, (1996) was introduced to reduce the amount of waste being dumped into landfills
The Climate change act requires UK plcs to report their greenhouse gas emissions in their annual reports. The ides is that if these are made public, companies are more likely to try and reduce them.
What laws protects against consumers and customers?
Certain laws protect consumers and customers which affect the functional decisions made by different departments.
The trade description act (1968) ensures that businesses don’t mislead consumers with false descriptions on packaging and advertising materials.
The sale of goods Act (1979), the supply of goods act (1994) set out rights of customers. These laws mean that goods must be fit for their purpose and of satisfactory quality.
The consumer protection act (1987) says that new consumer goods must be safe. There are also other more specific regulations.
What are the labour laws?
An employee has a legal right to fair treatment while at work, and also while looking for employment.
The equality act 2010 protects employees from discrimnination based on age, gender, race, religion etc.
What are the 2 types of discrimination
Direct discimnation is treating someone less favourably because they have a protected characteristic
Indirect discrimination is when everyone is treated the same but it has a worse effect on one group of people than on others.
How does discrimination laws affect recruitment?
Recruitment -
Employers arent allowed to state the job adverts that candidates must be particular age, race etc and cant use discrimatory language
Businesses arent alowed to adverise for a particular race etc
Businesses have to make decisions on who to employ without discriminating and have to justify a particular candidate.
How does discrimnation affect Pay?
Businessea have to give male and female employees the same par for work of equal value. They are entitled to the same benefits too.
Not paying fairly can resul in in a fall in the quality of work and poor staff retention, as well as having to pay compensation and legal fees to tribunals.
How does discrimination affect Promotions and redundancies?
Discrimnation laws mean that everyone should have the same opportunity to get promoted.
If businesses need to make redundancies, they cant deliberately select staff who are older, disabled.
What is employment tribunal?
If employees feel that they have been treated unfairly by their employers they can make a claim to a tribunal.
At a tribunal, representatives of the employer and the employee put forward their cases, and at a tribunal judge.
The employer might have to pay compensation or give the employee their job back in an unfair dismissal case.
What is the national minumum wage?
The national minumum wage was introduced in 1999 to prevent employees from being paid unfairly low wages.
The minumum wage rises every year.
That national living wage is controversial because it is lower than the independently calculated living wage. Some employers voluntarily pay employees the independently calculated living wage, this can increase motivation, reduce absenteeism and allows the company to market themselves as an ethical employer.
What is an employment contract?
A contract of employment is a legally - binding agreement between the employer and the employee about what the duties and rights of the employee and the employer are.
Employees are entitled to receive a written statement of employment within 2 months of starting work.
What is the state of pension?
The state pension means that everyone has some money to live on in their old age.
For years men have been to claim state pension from 65 and women from 60, but because people are living longer, the age is being increased gradually.
A new law means that employers must enrol most employees in a workplace pension and pay into it.
What government policies encourage enterprise?
The UK government encourages entrepreneurs to set up businesses because enterprise benefits the economy, new businesses increase productivity and create jobs. The government is especially keen to promote enterprise in areas that need economic regeneration which provides lots of opportunities for new businesses.
What is the business enterprise policy?
Government schemes allow enterprises to borrow money at low interest rates and encourage private investment in businesses.
To make it easier for small businesses to succeed, they don’t have to pay business rates and an employment allowance means their national insurance contribution bill is reduced by £200.
The great business website has been launched to advise young people on setting up and running a business.
Why do many businesses need regulation?
Some industries are natural monopolies (like Thames water) so when privatizing a natural monopoly the government needs to build in regulations to prevent the new owners from exploiting their position and raising prices or cutting quality.
There are lots of regulated industries, and the regulations affect the decision making of all businesses operating in that industry.
Why is infrastructure vital to a business?
It is vital as the UK’s infrastructure is is made up of physical things such as the transport network and piped and wires that allow water and energy to move about.
Improvements in infrastructure are good for the economy as they make businesses more productive, as well as making data move faster, as well as making data transfer through the broadband network quicker and can provide jobs in the short term.
In the UK it is mainly the private sector that looks after the infrastructure, but the government has overall policies, laid out in its annual national insurance plan.
What are some government policies that aim to protect the environment?
The UK is part of the EU’s ‘Emissions trading system.’ This gives greenhouse gas emissions allowances to businesses such as oil refineries, power stations etc. Companies can trade their allowances, giving companies an incentive to choose greener processes.
The government has some ‘green subsidy schemes.’
The government and the EU fund organisations that encourage more efficient use of raw materials, such as the Waste and resources action Programme (WRAP). WRAP works with businesses to achieve circular economy, which keeps resources in use for a long as possible. as well as protecting the environment and helps businesses save money.
Also businesses breaking the law will be fined and prosecuted.
