External Influences Flashcards
(239 cards)
1
Q
What is demand
A
Amount of good/services that a customers are willing and able to buy at any given price
2
Q
What is supply
A
Amount of good/services that a sellers are willing and able to sell at any given price
3
Q
What is equilibrium price
A
Demand is equal to supply
4
Q
What happens if there’s access demand in the market
A
Price would increase
Quantity would increase to try and meet demand
5
Q
What happens if there is excess supply
A
Price will decrease
Quantity demanded will increase then
6
Q
What are the factors of demand and supply
A
Price Income Wealth Advertising, promotion offers and PR Taste and fashion Demographic change Government action The price of other products (substitutes and complements)
7
Q
What happens to demand as price increases
A
Demand decreases
8
Q
How would you should the increase in demand due to a drop in price on a supply and demand graph
A
Arrows on current demand line pointing downwards
9
Q
How does income affect demand
A
High income higher demand
10
Q
Which way does the demand curve shift due to an increase in demand
A
right
11
Q
Explain what is mean by an increase in demand
A
Increase in quantity demanded at every given price
12
Q
Define wealth
A
Abundance of valuable possession or money
13
Q
How will wealth impact demand
A
High wealth positive impact
High consumer confidence
Demand shift to the right
14
Q
How will an increase of advertising and promotion activities affect demand
A
Increase
More exposure for business
15
Q
How will taste and fashion affect demand
A
Somethings ‘fashionable’ more people buy
Increase demand
16
Q
Define advertising
A
Drawing attention to a product or service to promote sales
17
Q
Define taste and fashion
A
Popular or latest style of clothing, hair or behaviour
18
Q
Define demographic change
A
Describes the size, composition and structure of populations and how they change
19
Q
How will an increase in population affect demand (demographic change)
A
More people to supply products to
Increase
20
Q
Define government action
A
Intervention by a gov to influence financial markets
21
Q
Give an example of how gov action can decrease demand
A
Illegal to smoke in car with under 18s
Decreased proportion of adults smoking
Decrease demand
22
Q
Define a substitute
A
Act or serve in the place of another
23
Q
Define a complement
A
Products that are joint in demand
Bought together
24
Q
What are the supply factors
A
Price Costs Taxes Subsidies Price of other products
25
How does price affect supply
Increase supply
| can sell at a higher price ,more profits to get more supply
26
How does costs affect supply
As costs go down, supply goes up can afford to buy more
27
How do taxes affect supply
Will increase costs (has to pay more money to gov in tax)
| Supply decreases
28
How does subsidises affect supply
Increases a companies annual income
| Increase supply
29
Define subsidy
Payment from gov for every unit supplied
30
How does the price of other products affect supply
Increase supply of the other product
| E. Price of Mars increases but price of twice stays the same
31
What is elastic demand
QD is sensitive to price will go up/down
32
What makes a product elastic
They have many substitutes
| Are a luxury
33
What is an in elastic product
QD isn’t sensitive to a change in price
34
Give an example of inelastic products
Train tickets
| Cigarettes
35
Give an example of elastic products
Newspaper
| Sofa
36
Define competition
Rivalry amongst sellers
37
Define market
Any situation where buyers and sellers meet
38
Why have none physical markets grown
Offer Convenience
39
Why do physical markets continue to exist
Try before buy
| Personalisation
40
Define market price
Price range in market at which consumers prepared to pay
41
Define markup
Difference between cost of producing an item+the price it’s sold
42
Define competitive market
Lots of sellers
| Competition bases on price
43
Define monopoly
Dominated by one seller
| 25%+ market share
44
Define oligopoly
Few firms
| Similar prices
45
Define monopolistic competition
Many firms
Different prices
Non price differences
46
Example of oligopoly
Mobile networks
47
Define collusion
Rival companies cooperate for mutual benefit
48
Market size
Collective value of goods/services that buyers purchase
49
Market growth
% growth in size of the market, measured over specific period
50
How could a business increase market share
```
Be aware of customer needs+meet them
Sell more
Have clear marketing plan
Advertise
Merge
```
51
Barriers to entry
Factors that prevent firm from entering the market
52
What are the barriers to entry
```
Large start up costs
Breaking customer loyalties
Inability to gain EoS
Existing business starts price war
Legal- patents
```
53
Barrier to exit
Factors which prevent a firm leaving a market
54
What are the barriers to exit
Difficulty selling off capital
Redundancy costs
Contract with suppliers
55
Define market dominance
Measure of market share compared to competitor
56
Define market power
Ability of firm to influence/control terms+conditions on which goods are bought and sold
57
Define acquisition/takeover
Control of another company is achieved by buying majority shares
58
Benefits to the business of a merger
```
Reduce competition
Market share
Economies of scale
New management with different skills
Combined resources
```
59
Disadvantages of mergers
Diseconomies of scale
Redundancies
Higher prices
60
Who are the CMA
Competition and market authority
61
What can the CMA do
Stop mergers and acquisitions going ahead
62
What can the European Regulatory commission do
Block UK mergers
63
What action can the CMA take in regards to legislation
Enforce consumer legislation
64
What sanctions can the CMA apply
Fine 10% global turnover for anti competitive behaviour
| Individual disqualified from position
65
Name some separate regulation bodies apart from the CMA
Ofgem
| OfCom
66
Organise growth
Within the business
67
Examples of organic growth
New products
Open more stores
Invest in machinery
68
Why would a firm want to enter a market
Growth- more customers
69
Why would a firm want to exit a market
Current market is shrinking
Want to enter a new market
Lack of sales
70
Globalisation
World coming together to trade in each other’s markets
71
Factors that have facilitated globalisation
Reduction in trade restrictions
Cost of production abroad
Ease of transportation
Increase movement of people
72
Other technological factors that have facilitated globalisation
Internet
Rise of e commerce
Smart phones
73
Multinationals
Operates in one country and manufactures and sells in a variety of others
74
Why are companies keen to become multinational
Economies of scale
Lack of legal constraints
New markets with less competition
Low wages
75
what are the benefits of multinations
employment LEDCs
local people get skills
invest in infrastructure
use local resources
76
what are the negatives of multinationals
```
low skilled jobs
unsafe
local businesses suffer
income goes to domestic market
loss of jobs in domestic market
```
77
what is global strategy
companies that are keen to operate on global scale must consider how to build a competitive global advantage
i.e choose best locations to produce products in
78
what is a global brand
recognized throughout much of the world
79
what are some of the opportunities of globalization
```
cheaper lab
more customers
less legal restrict
cheaper raw materials
new markets with high disposable income
```
80
what are the threats of globalization
less reliance on uk for products
high unemployment in UK
Pollution
ethical issues
81
why are some businesses more affected by globalization than others
businesses who produce
small businesses find it challenging
businesses with global appeal benefit
business without USP struggle
82
what is the European single market
refers to EU as one territory without internal boarders
83
what four freedoms is the EU market based upon
goods,services,people,capital
84
define free trade
trade without tariffs, quotas or other restrictions
85
benefits of the single market
not subject to tariffs or quotas
| more easily available labour
86
European union
economic and political union aimed at reducing trade barriers and harmonizing economic policy
87
tariff
duty paid on imports
88
quota
limit on quantity of goods imported over a given period
89
why should Britain leave the European Union
free from EU laws and regulations
| encourage domestic trade
90
why should Britain stay in the European union
lose trade benefits
| struggle to fill vacancies especially in low skilled work
91
what are the political factors which affect businesses
```
Brexit
EU
competition policy
privatization
minimum wage legislation
```
92
how does political uncertainty affect a business
less investment and low consumer confidence
93
demographics
characteristics of human population and population groups
94
how has age in the UK affected demand
aging population
| increase demand for retirement homes
95
how has ethnic diversity in the UK affected demand
more ethnically diverse
| higher demand for international foods
96
what are the social factors which affect a business
social habits
change in employment patterns
change role of women
attitudes to work
97
define ethics
morally right or morally wrong
98
give examples of moral issues businesses will face
child labour
untested medicine
selling arms
paying large amounts for cancer treatment
99
what are the advantage to a business of behaving ethically
attract new customers
new and better employees
positive publicity
sales+ profits
100
what are the disadvantages of trading ethically
costly
lower output
ethics is subjective
false expectation for customers if say ethical
101
what are the objectives of a business
profit,increase market share, growth,service,survial
102
give an example of an objective which conflicts with ethics
keeping production in uk (ethical) but wanting to increase profits
103
how could a business increase its ethical profile
manufacture where based-pollution
buy one donate one
train locals
give money to charities
104
what environmental issues influence a business
```
air pollution
water
land
noise
congestion
```
105
name 3 ways business are changing their operations to be more environmentally friendly
ban on plastic straws
5p bags
"latte levy"
106
why does a business need to consider environmental issues
causing widespread pollution
| pressure from the public
107
what other objective will clash when trying to be more environmentally friendly
costs e.g having to use more expensive packaging instead of plastic
108
what are the benefits to a business of being more environmentally friendly
easier to adapt if legislation was introduced
| better reputation
109
sustainability
preventing negative impacts from economic systems and production on the earth
110
how can a business behave in a sustainable manner
```
skype>transport
recycling scheme
dispose chemical right
water+energy saving
buying from sustainable farmers
```
111
how would climate change levy's make a business behave in a more sustainable manner
control their energy to keep costs low
112
how would congestion charges make a business behave in a more sustainable manner
reduce amount of traffic entering london
| less carbon emmissions in city
113
what are the positive effects of behaving in an environmentally friendly way
buying from sustainable farmers USP
accounting-turn lights of reduce costs
HRM- attract employees
114
define GDP
total value of output produced in an economy a year
115
define economic growth
annual percentage change in GDP
116
what is included in GDP
public transport
healthcare
glass+steel
117
what happens if GDP is going down
economy shrinking
118
what is the impact of GDP decreasing
job cuts
| fall house prices
119
what happens if GDP rises
the economy is expanding
120
what is the impact of rising GDP
more wealth
| new jobs
121
how does the government increase GDP
offer subsidies/lower taxation
improve infrastructure
invest in education
122
how does the gov facilitate economic growth
resource
increase productivity
increase output
growth
123
define standard of living
amount of goods and services a person can buy with their income in a year
124
inflation
persistent general tendency of prices to rise in the economy
125
consumer price index
measure that examines weighted average of prices of a basket of consumer goods/services
126
what is the target level of inflation
2%
127
why does high inflation make uk exports uncompetitive
identical products made round world
uk high inflation increqses prices
makes them less attractive from abroad
128
how does inflation reduce multinational investment
look to produce in cheapest location
| use country lowest rate of inflation
129
why does inflation create uncertainty
estimated profits from an investment can change over time due to inflation
130
define exchange rate
value of one currency in terms of another
131
what is a strengthening exchange
pound increase in value
132
what is a weakening exchange rate
pound decreases in value
133
define import
sale leads to money going out of the UK
134
define export
sale leads to money going into UK
135
how do you get the UK amount from a different currency
divide the amount by exchange rate
136
how does foreign investment influence the demand of the pound
business wanting to locate uk demand pounds
| more wanting to higher demand
137
how does hot money influence the demand of the pound
uk interest rates are high
| foreign banks surplus foreign currency to demand pounds
138
how does the desire for foreign customers to buy uk exports effect the demand for the pound
uk exports would be cheaper so buy more
| higher demand for pound
139
define interest rate
reward for saving and cost of borrowing expressed as a percentage
140
how would low interest rates effect a business
increase sales people spend more
loans cheaper
(opposite for high)
141
how would lower interest rates effect borrowers
pay back less on loans
they can spend more
(opposite for high)
142
how would lower interest rates effect borrowers
spend more less reward for saving
143
what is the link between interest rates and exchange rate
high interest rate=strong pound as sterling high in demand as more foreign investment (better return on uk savings account)
144
what is the relationship between interest rates and inflation
MPC raise IR
demand pound decrease (more reward saving)
inflation decreases
145
define unemployment
people who are willing and able to find work are unable
146
why does the government want low levels of unemployment
waste of human resources
147
why is unemployment bad for society
social problems and benefits have to be paid for
could be spent in other areas
health+education
148
how does unemployment effect tax
more employed more tax
149
why is unemployment bad for the individual
damage self esteem
| alcohol+drug addiction
150
how does high levels of employment create a more productive economy
increase GDP
greater output
cause growth
151
balance of payments
difference between valuenof exports and imports
152
what happens if exports exceeds imports
trade surplus
153
what happens if imports exceeds exports
trade deficit
154
why would a weak pound be good for creating a trade surplus
exports cheaper
| more attractive
155
what is tax used for
influence purchasing behaviour
| spend on gov service
156
indirect taxes
tax on expenditure
| indirectly paid by suppliers not consumers
157
direct tax
on income and profits
| paid directly by the bearer
158
income tax
taken out of income
| progressive
159
national insurance
state pensions+ treatment under NHS
160
VAT
automatically included in price
| 20%
161
stamp duty
tax paid to gov when buy a house
162
how would the gov control house price inflation
increase stamp duty
163
co-orpation tax
levy on profit of firm
164
corporation tax rate in UK
19%
165
corporation tax rate in NI
12.5%
166
how does low corporation tax attract business to the UK
can keep more profits
167
purpose of tax
revenue generated public services
control economic activity
influence expenditure to encourage behaviours
168
benefits of subsidies to a business
lower cost
lower prices
survival during start up
169
supply side policies
intend to increase output of economy
170
give examples of supply side policies
improve skills
cut corporation tax
reduce welfare benefits
171
define business cycle
pattern of increases and decreases in economic growth over the long term
172
monetary policy
manipulation of demand in economy using interest rates
173
fiscal policy
government control through taxation and public spending (focuses on demand)
174
what are the four stages of the business cycle
boom
recession
slump
recovery
175
what are the characteristics of a boom
high confidence,spending,income,inflation+investment
| low unemployment
176
what are the characteristics of a recession
falling confidence,spending
inflation slows
invest in essentials
unemployment rising
177
what are the characteristics of a slump
low confidence,spending,income
high unemployment
low inflation
178
what are the characteristics of a recovery
rising confidence,spending,income
unemployment rising
inflation stable
179
which kind of business would thrive during a recession/slump
aldi and lidl
180
why dont firm invest during a recession/slump
less finance
| higher risk
181
how would businesses respond during a recession/slump
redundancies
less stock holding
less production
182
how would a business get out of recession/slump
higher grant spending or MPC can decrease interest rates
183
why will production increase during a boom
customers spending more
184
what does more spending create in a boom
spending creates need for jobs as production would increase
185
what would a business do in regards to its location to take advantage of the business cycle
move to larger location before a boom
| prepare for the demand
186
what would a business do in regards to its products to take advantage of the business cycle
offer budget goods during recession
187
what stage of the business cycle would a business buy assets/shares
slump/recession its cheaper
| sell shares for more in a boom
188
how will complying with the law benefit a business
avoid fines
| prevent bad publicity
189
copyright
legal ownership of material e.g books+films
190
national living wage
new minimum wage rate 25+
191
5 pieces of legislation relating to the workplace
```
contract law
weights and measures act
data protection act
health and safety act
smoking in the workplace
```
192
contract law
agreement between two or more parties
| breaking=breach of civil law
193
weights and measures act
correct amount that it states
| can be fine
194
data protection act
controls how personal data is used
| fined up to £500,000
195
health and safety act
business comply with certain health and safety regs
| fined or imprisoned
196
smoking in the workplace
2001 work place=smoke free
| prosecution and fine
197
intellectual property
intangible property result of creativity
198
trademark
slogans,logos and other products which brand companies
199
what are the three points of the sales of goods act
- goods fit description
- must be of satisfactory quality
- fit for purpose
200
planning legislation
need when building
prevents disputes over areas of land
need it- changes can be undone to building
201
control of substances act
control hazardous substances
202
FCA
Financial Conduct Authority
203
what does the FCA do
protect consumers
promote competition
enhance market integrity
204
what type of organisation is the financial conduct authroity
regulating
205
how can a business comply with data protection act
ask permission before sharing
206
how can a business comply with trademark law
change their logo
207
how does complying with trademark law conflict with other business objectives
growth
| spent time building up brand around the logo
208
how would changing the minimum wage conflict with business objectives
could be hogher costs if increase
| conflict with profit
209
how would new environmental laws e.g a ban on black plastics conflict with other business objectives
source new packaging
time consuming
expensive
210
give examples of procedures involved in a risk assessment
protective clothing
guards on machinery
staff training
211
what are the technological factors which influence a business (7)
```
computer hardware
computer software
computer calculation
internet connectivity
wireless charging
automation
devices e.g tablets
```
212
advantages of technology in a business
```
efficient
communication
long term costs
remote working
less physical storage needed
```
213
disadvantages of technology in a business
high initial cost
job losses
not always reliable
training
214
international trade
selling across borders
215
why do countries trade internationally (5)
```
variety
economic efficiency
growth
international co-operation
specialisation
```
216
how does international trade improve economic efficiency
develop export markets=EOS
| competition forces firms to be more efficient
217
how do international improve international co-operation
nations become dependent on each other
218
what are the factors that need to be considered when trading internationally
```
language
exchange rates
cultural differences
logistics
buying habits
```
219
advantages of free trade
EOS
lower costs
lower price for customer
220
disadvantages of free trade
more raw materials being used
increase competition
threatens domestic jobs
221
what is the relationship globalisation and international trade
factors facilitating globalisation develop
makes international trade easier
increased competition-need cheaper materials
222
trading bloc
groups of countries
specific geographical region
protects themselves from imports from non members
223
name two trading blocs
TTP- trans-pacific partnership
| european union
224
why would a business choose to make most imports, tariff free
stop monopolies in the uk
| more competition
225
name an industry which tariffs protect
farming
226
exchange rate
the value of one currency in terms of another
227
disadvantages of trading blocs
agreements aren't tailored to a specific economy/country
domestic business can't cope
have to abide by laws/regs of that bloc
228
emerging market
a country achieving rapid growth as well as globalisation
229
examples of emerging markets
india
| turkey
230
what are the opportunities presented from an emerging market
```
access to more customers
lack of regulation
customers wi higher disposable income
produce closer to market they serve
cheaper labour
```
231
why would emerging markets reduce exports for UK businesses
emerging markets produce own products- self sufficient
232
digital revolution
shift from analog and mechanical to digital technology
233
give an example of digital technology in a business
self checkout
| e-commerce
234
define information age
time when large amounts of info is widely available
235
what is the impact of the information age
time sensitive promotions
| staff planning
236
advantages of technology change
efficiency
| motivated staff-jobs being made easier
237
three opportunities from digital revolution
cost saving
market researcn
wider market access
238
three threats of the digital revolution
changing quickly-hard to keep up
customers-more choice
lots of info free
239
which factors determine how much a business will be affected by the digital revolution
market
decisions of rivals
type of product+consumer
budget
