Week 1 - internal and external environment of firms Flashcards
What is economics about
A social science that studies how individuals, businesses and governments allocate resources to mark choices that satisfy their needs and wants
What is time, resources and businesses connected with
Scarcity (finite)
What is opportunity cost
The cost of choosing one option resulting in the loss of the next best option
What can incentives be (2 things)
Financial or non - financial
Encourage or discourage
What is microeconomics concerned with
The behaviour of individual households, firms and industries
What are the key topics associated with microeconomics
- supply and demand
- market structures
- consumer behaviour
- the role of government regulating markets
What is an example of an microeconomic event in the UK
The rental cost crisis
What is macroeconomics concerned with
Studies the economy as a whole, nationally or globally
What are key macroeconomic topics
- GDP
- unemployment rates
- fiscal policy
- monetary policy
- exchange rates
What is an example of a macroeconomic event in the UK
UK high inflation and cost of living crisis
What are the 3 factors of the operational environment
- Suppliers
- customers
- competitors
Departments involved with product decision making (5)
- production
- marketing
- research and development
- finance
- personnel
Reasons for structural change in a business
- market dynamics
- global economic conditions
- competitive pressure
What is the definition of globalisation
The process of integration on a worldwide scale of markets and production
Factors leading to globalisation
- technological advancements
- reduction in trade barriers
- favourable economic policies
- international institutions
Examples of international organisations
- The world bank
- The world health organisations
What has been a negative of globalisation
The benefits of globalisation has not been shared equally globally
What happens when countries are open to international trade
They experience faster levels of growth then countries that are not
What do barriers to trade encourage industries to be
Uncompetitive
Benefits of globalisation
- greater specialisation
- faster growth
- all businesses benefit
Drawbacks of globalisation
- benefits not shared equally
- issue of equality and human rights and impact of environment
Positives of globalisation on firms
- larger markets
- access to global talent
- innovation
- economies of scale
Challenges of globalisation on firms
- increased competition
- complex supply chain
- cultural differences
- political risk
The impact of globalisation on strategy
- diversification
- adaption to local tastes
- offshoring and outsourcing
- sustainability focus
Reason for deglobalisation
- trade protectionism
- supply chain disruptions
- geopolitical conflicts
- environmental concerns
What is trade protectionism
Government actions and policies that restrict or limit international trade
What is nationalism
a political ideology centered on promoting the cultural and identity of a nation, prioritising national interests over foreign influences
What is populism
A political approach that seeks to represent the interest of ordinary people who feel they are being ignored by political establishments or institutions
What are supply chain disruptions
Unexpected events or circumstances that interfere with the normal flow in a supply chain
Examples of events that have/would disrupt a supply chain
- covid 19
- natural disasters
- geopolitical tensions
How can geopolitical lead to deglobalisation
Countries are becoming more aware and concerned with the economic dependence on rival nations
e.g Europe are reducing their reliance of Chinese technology and manufacturing
How might environmental concerns lead to deglobalisation
Global supply chains contribute significantly to carbon emissions, so some countries are prioritising local production to decrease their environmental impact
