3.7.5 Analysing the external environment to assess opportunities and threats: economic change Flashcards
GDP
The total market value of all final goods and services produced annually in an economy
Different aspects of GDP
- Boom
- Recession
- Slump
- Recovery
Taxation
A payment that has to be made to the government or other authority by households, firms or other organisations
Exchange rate
- The measure of how much one currency is worth in relation to another
- £1 = €1.25
Inflation
A general and progressive increase in prices
Fiscal policy
The use of taxes and spending to manage the level of economic activity
Monetary Policy
Controlling the amount of money and/or interest rates within the economy in order to achieve the desired level of economic activity
Open trade
Countries are able to trade freely with one another with no tariffs or quote imposed
Protectionism
Economic policy of shielding an economy from free entry of imports into a country
Globalisation
The trend for many markets to become worldwide in scope
Emerging markets
Countries in the process of rapid growth & industrialisation
Reasons for greater globalisation of a business
- Falling cost of international transport and communications
- Growth of global trading blocs and reduction of barriers to trade
- Growth of multinational companies
- Increasing global incomes and growing demand for goods and services
Importance of globalisation for businesses
- Increased sales, revenue and profits
- Cheaper resources
- Economies of scale
- Developing different products for different markets
Globalisation can lead to…
- Downward pressure on prices
- New producers
- Increased need for investment
- The threat of takeover
Emerging economies are important because…
- They provide enormous labour sources
- They offer large markets
- They have rapid growth rates
- Some emerging markets have extensive natural resources
