Chapter 4- Analysing the external environment to assess opportunities and threats: Political and legal change

Question 1

What does the EU single market mean for the UK?

Answer 1

• Very few trade barriers between EU states and free trade (no tax) for firms
• Customs union, this means that the same customs duties apply to all goods entering the EU regardless of the country
• Freedom of movement within the EU for all raw materials, finished goods and workers
• Regulation that businesses must adhere to e.g. how food should be labelled, how much energy appliances can consume. Businesses must take these into account when making functional decisions.

Question 2

what does fair competition do?

Answer 2

Motivates businesses to provide good quality for reasonable prices otherwise customers will go somewhere else.

Question 3

why do businesses need to understand competition laws?

Answer 3

So that they don’t break them and they can catch competitors breaking them e.g. fines and prosecution can follow.

Question 4

What are the laws of the Competition act of 1998?

Answer 4

• Cant conspire with other businesses to fix prices
• Cant conspire with other businesses to reduce production which raises the price because of limited supply
• Cant divide up the market in order to not have to compete
• Cant abuse a dominant position(over 50% of the market share.)e.g cant reduce prices to forces smaller businesses out of the market (predatory pricing).

Question 5

What is a monopoly?

Answer 5

A business that has full control of the market. The consumer has to pay whatever the business sells it at.

Question 6

How can the Competition and Markets Authority stop monopolies from occuring?

Answer 6

Stopping certain mergers and takeovers from happening

Question 7

What law do businesses need to follow about the environment?

Answer 7

That the production process doesn’t cause any unnecessary pollution or risk heavy fines

Question 8

How can businesses turn good environmental standards into increasing profit?

Answer 8

Advertising as a USP

Question 9

how does law protect consumers?

Answer 9

• Must be fit for purpose and of satisfactory quality

- Must comply with health and safety standards e.g chairs must be fire resistant

Question 10

How does the Equality act protect employees?

Answer 10

Stops discrimination against age, gender, race,disability and pregnancy

Question 11

What is direct discrimination?

Answer 11

Treating someone less favorably because of a certain characteristic

Question 12

What is indirect discrimination?

Answer 12

When everyone is treated the same but it has a worse effect one one group than another

Question 13

Is it discrimination to refuse a parent to work flexibly

Answer 13

yes, unless the business has a good reason

Question 14

how do discrimination laws affect recruitment?

Answer 14

• Cant state in job adverts that someone must be a certain race, gender, age etc. unless it is a genuine requirement of the job
• Have to justify why they gave a certain candidate the job over someone else
• Avoiding discrimination gives the business a more diverse workforce so wider range of skills,backgrounds and experiences.

Question 15

how do discrimination laws affect pay?

Answer 15

• Same pay and benefits to everyone doing the same work

- Not paying fairly can lead to lower quality of work and poor staff retention.

Question 16

how do discrimination laws affect promotion and redundancies?

Answer 16

• Same opportunities for promotion for everyone

- Have to have a valid reason for redundancy

Question 17

What happens if employers don’t pay minimum wage?

Answer 17

• Named and shamed
• possible fine of up to £20000
• Possible prosecution

Question 18

What does the employment contract set out?

Answer 18

what the employees rights and duties are

Question 19

What rights are common to all employers and employees?

Answer 19

• Right to a safe working environment
• Paid holiday of minimum 28 days per year (including bank hols)
• Right to paid maternity or paternity leave (Not necessarily on full pay)
• Employees have to attend work when they are supposed to and be on time and must carry out any reasonable task that’s asked of them.

Question 20

what depends on how much money you get for your state pension?

Answer 20

how many years you have paid national insurance for

Question 21

how does the government encourage entrepreneurship?

Answer 21

• setting up schemes allowing businesses to borrow money at low interest rates
• small businesses don’t have to pay business rates and a employment allowance
• the great business website advises people on setting up and running a business

Question 22

give some examples of businesses that need regulation to stop them dominating their market

Answer 22

• British gas, British steel, BT because these were privatized in the 1980s meaning that they became natural monopolies

Question 23

how does infrastructure affect business?

Answer 23

-improve productivity because goods can move around quicker or data transfer is faster due to better broadband.

Question 24

how does the government encourage private investment in infrastructure?

Answer 24

-The uk guarantee scheme promises that they will be repaid if the project fails so no risk involved

Question 25

How does governmental policy protect the environment?

Answer 25

EU: Emissions trading scheme gives greenhouse emissions allowances to businesses. Can trade their allowances giving an incentive to choose greener processes

• Environmental agency is sponsored by the government
• the renewable heat incentive pays businesses to use renewable heat in their buildings

Question 26

how do import tariffs (taxes) discourage trade?

Answer 26

Trade is more expensive and more difficult. The world trade organisation encourages tariff free trade around the world

Question 27

what is a Quota

Answer 27

Trade restrictions set up by governments that put limits on imports and exports- may use these to protect their own economy and jobs.

Question 28

is there a tariff between eu countries?

Answer 28

no

Question 29

what is a embargo?

Answer 29

when a country bans trade with a another country

Question 30

Why is EU membership good?

Answer 30

• Market of 500m people
• large market means opportunities for economies of scale, lower costs and increased specialization
• more competition leads to improved efficiency and therefore lower costs
• Opportunities for mergers resulting in synergy and improved efficiency

Question 31

why is membership of the eu bad?

Answer 31

• Increased legislation to meet the needs of common technical standards
• Increased competition both in Europe and the UK because European firms can compete in the UK free of charge
• Low wages rate in eastern European countries make these member states fierce competitors for jobs