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Business Studies 🏢💴 > External Influences (Miss Blackwell) > Flashcards

External Influences (Miss Blackwell) Flashcards

1
Q

What does STEEPLE stand for?

A

Social, technology, environmental, ethical, political, legal, economic.

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2
Q

GDP (Gross Domestic Product)

A

Total value of output produced in an economy.

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3
Q

Name an impact of GDP decreasing.

A

Job cuts and falling house prices.

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4
Q

Name an impact of rising GDP.

A

New jobs and more wealth.

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5
Q

Economic Growth

A

Annual percentage change in GDP.

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6
Q

Name a form of government action to facilitate growth.

A
  • Encourage investment in physical capital by offering subsidies or lowering taxation.
  • Improve infrastructure through better transport links.
  • Improve quality of human capital by investing in education.
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7
Q

Standard of Living

A

The amount of goods/services a person can buy with their income in a year.

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8
Q

Inflation

A

Persistent general tendency for prices in the economy to rise.

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9
Q

Consumer Price Index (CPI)

A

A measure that examines the weighed average of prices of a basket of consumer goods/services.

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10
Q

Name something that causes inflation.

A
  • Increased demand and decreased supply.
  • Cycle of rising costs and prices.
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11
Q

Demand Pull

A

Buyers activity pulling up prices.

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12
Q

Cost Push

A

Increase in cost pushes prices up.

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13
Q

Name an impact of high inflation.

A
  • UK exports uncompetitive as identical products can be made elsewhere cheaper.
  • Reduce multinational investment as prices of labour raw materials etc are cheaper elsewhere.
  • High inflation creates uncertainty around profits as businesses cannot plan ahead on future purchases.
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14
Q

Exchange Rate

A

The value of one currency in terms of another.

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15
Q

If the pound increases in value it is..?

A

Strengthening.

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16
Q

If the pound decreases in value it is..?

A

Weakening.

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17
Q

What does SPICED stand for?

A

Strong pound, imports cheap, exports dear.

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18
Q

Import

A

A sale that leads to money leaving the economy.

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19
Q

Export

A

A sale that leads to money coming into the economy.

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20
Q

How is the value of pound determined?

A

Forces of supply and demand.

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21
Q

Name four methods of dealing with high exchange rates.

A
  • Increase prices.
  • Bulk buy when the pound is strong, non-perishable goods.
  • Reduce costs etc. Marketing.
  • Employ zero hour workers.
  • Do nothing.
  • Search elsewhere for cheaper raw materials.
  • Focus on exports by selling more there.
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22
Q

Name a factor that determines demand for £.

A
  • Foreign investment in the UK.
  • Desire of foreign customers to buy UK exports.
  • ‘Hot money’ flows into the UK (money that flows in search of highest possible interest rate).
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23
Q

Interest Rates

A

The reward for saving and cost of borrowing expressed as a percentage of the money saved or borrowed.

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24
Q

Who sets interest rates?

A

Back Of England, Monetary Policy Commitee.

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25
Q

How are interest rates and exchange rates linked?

A

If interest rates are high, the pound will be strong because sterling is in demand due to hot money and vice versa.

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26
Q

Unemployment

A

A situation in which people who are able and willing to find work are not able to find employment.

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27
Q

Unemployment figures between 2019-2021.

A

2019 - 3.8%
2020 - 4.9%
2021 - 4.2%

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28
Q

Economically Inactive

A

Unable / unwilling to work.

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29
Q

Name 2 reasons why the government wants low unemployment.

A
  • Unemployment is a waste of human resources, not producing goods/services.
  • Bad for society social problems.
  • Benefits have to be paid which could be spent in other areas.
  • A low level of employement leads to more tax revenue and less welfare payments paid out.
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30
Q

Balance of Payment/Trade

A

Difference between the value of exports and imports.

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31
Q

Indirect Taxes

A

Taxes on expenditure / spending. These are paid to tax authorities indirectly by suppliers of goods/services.

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32
Q

Direct Taxes

A

Taxes on income and profits, paid directly by the bearer to tax authorities.

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33
Q

Income Tax

A

A tax taken out of a person’s income.

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34
Q

National Insurance

A

Taken as a contribution towards the state pension and treatment under the NHS.

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35
Q

Standard rate of VAT.

A

20%

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36
Q

What does VAT stand for?

A

Value added tax.

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37
Q

Tax on products are also known as?

A

Duties and excise.

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38
Q

Why add tax to certain products? (2 reasons)

A

To gain more tax revenue, deter people from buying it, pay for the negative effects it may cause e.g NHS costs.

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39
Q

Corporation Tax

A

A tax on the profits made by companies.

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40
Q

Name two purposes of taxation.

A
  • Raises large amounts of revenue for the government to spend on public services.
  • To control economic activity e.g through stamp duty.
  • To influence expenditure on certain items.
41
Q

Name 4 areas of government spending.

A

Welfare, health, education, pension, defence, debt interest, housing, business, environment, transport.

42
Q

Monetary Policy

A

Manipulation of the level of demand in the economy using interest rates.

43
Q

Fiscal Policy

A

Economic policy used to influence the level of spending in an economy. Through taxation and public spending.

44
Q

Supply Side Policies

A

Aim to improve the economy’s overall productive capacity.

45
Q

Name 2 supply side policies.

A
  • Investment in education and training.
  • Reducing welfare benefits.
  • Income tax cuts.
  • Cuts in corporation tax.
  • Removing expensive and unnecessary business regulation.
  • Encouraging business start ups through subsidies.
46
Q

Subsidies

A

Payment from government to a supplier of a good or service.

47
Q

Business/Economic Cycle

A

The observed pattern of increases and decreases in economic growth over time.

48
Q

Stages of Business Cycle

A

Boom, recession, slump, recovery.

49
Q

Name 3 benefits of subsidies.

A
  • Decreases prices.
  • Encourages consumption of goods with positive externalities.
  • Helps business survival, especially during start up.
  • Helps declining industries.
  • Boosts demand during recessions.
50
Q

Name two ways a business could benefit in a recession/slump.

A
  • Business location/premises (cheaper to buy)
  • Asset purchases (cheaper)
  • Share purchases (cheaper to sell on for a profit later)
  • Staff (taking advantage of labour while its cheap and available)
51
Q

Ethics

A

Concerned with the judgement about whether something is morally right or wrong.

52
Q

Name two benefits of ethical behaviour for a business.

A
  • Attract new customers to the business.
  • Attract new and better quality employees.
  • Encourage employees to stay within the business.
  • Encourage investment.
  • Create positive publicity.
  • Result in increased sales and profits.
53
Q

Name a disadvantage of behaving ethically.

A
  • Increased costs.
  • Danger of building up expectations.
  • Less competitive on prices.
  • Could lead to less output.
54
Q

Name a reason why some businesses are more affected than others by ethical issues?

A
  • Larger businesses are more well known and so more media attention and customers.
  • Business outsourcing production to countries with different laws more likely to be affected by employee issues.
  • Businesses with lower price points as they seek to lower unit costs.
55
Q

Name 3 advantages of computer hardware/software.

A
  • Systems are usually faster and more efficient.
  • Communication is easier.
  • Costs may be reduced in long run.
  • Remote working possible.
  • Reduces the need for physical storage space.
  • Offers convenience for customers.
  • May offer employees the opportunity to learn new skills.
56
Q

Name 3 disadvantages of computer hardware/software.

A
  • High initial costs.
  • Job losses.
  • Not always reliable.
  • Staff will need to be trained.
  • The businesses will need to spend time and money keeping data safe.
  • May cause demotivation as workers resist change in workplace.
57
Q

National Minimum Wage

A

The minimum pay per hour workers of school leaving age are entitled to by law.

58
Q

National Living Wage

A

A new minimum wage rate for those aged 23 and over.

59
Q

Sanction of not following minimum wage.

A

Fines, reimbursement of underpayment to staff.

60
Q

Name a consequence of not following minimum wage.

A
  • Recruitment problems.
  • High turnover (staff leaving)
  • Loss of sales from bad reputation.
61
Q

What 3 things does the consumer protection act state?

A

Products/services must be..
1) As described
2) Fit for purpose
3) Of satisfactory quality.

62
Q

Sanction of breaking consumer rights act.

A
  • Fines
  • Costs of rectifying.
  • Time of staff dealing with complaints.
  • Loss of loyal customers.
63
Q

Name two ways a business avoids breaking the consumer rights act.

A
  • Training
  • Good quality i.e better suppliers.
  • Methods of ensuring quality.
  • Checking any modifications to law.
64
Q

Intellectual Property

A

Intangible property that is the result of creativity.

65
Q

Trademark

A

Name, slogans, logos and other items that essentially brand the product/company can be trademarked.

66
Q

Copyright

A

Legal protection against copying for authors, composers and artists.

67
Q

Planning Permission

A

Formal permission from a local authority for the construction or altering of buildings.

68
Q

Name a reason why environmental legislation exists.

A
  • Address pollution.
  • Protect human health.
  • Support continued growth of economies.
69
Q

Name a reason why financial legislation exists.

A
  • Encourage professionals to report suspicious activity or known wrongdoing.
  • To promote fairness and prevent businesses gaining unfair advantages.
70
Q

Demographics

A

Characteristics of human population groups.

71
Q

Name the two key changes within the UK demographic.

A
  • Ageing population.
  • More ethnically diverse.
72
Q

Name 3 types of environmental problems businesses cause.

A
  • Air pollution
  • Habitat loss from expansion
  • Water pollution
  • High wastage for landfill
  • Deforestation
  • Plastic wastage
73
Q

Inferior products

A

When income goes up, demand goes down.

74
Q

Name two impacts of changes in environmental issues to a business.

A
  • Costs to change business practices.
  • Gaining access to new markets.
  • Pressure from consumers.
  • Pressure from stakeholders.
75
Q

Sustainability

A

Refers to preventing negative impacts from economic systems and production on the earth and it’s environment.

76
Q

Name three ways a business can behave in a sustainable manner.

A
  • Recycling waste.
  • Alternative energy sources.
  • Responsible waste management.
  • Minimising travel, working from home.
  • Reducing consumption.
  • Local suppliers.
77
Q

European Union

A

The economic and political union of most European states aimed at reducing trade barriers and harmonising economic policy.

78
Q

Free Trade

A

Involves agreement between countries to trade with each other without erecting barriers to trade (tariffs and quotas).

79
Q

Tariff

A

Tax/duty on imports.

80
Q

Quota

A

Maximum quantity that can be imported.

81
Q

Name 2 ways the UK benefited from being in the EU.

A
  • More availability of foreign labour.
  • No extra costs importing supplies.
  • Consistent regulations and rules, no time spent adapting to different countries.
  • No other countries could gain competitive advantage.
  • More export demand.
  • No additional paperwork + border checks.
82
Q

Name an impact of paperwork and checks on UK importers.

A
  • Higher costs as exporter may charge more due to higher labour costs.
  • Higher delivery times.
  • Quality may be reduced from higher times.
83
Q

Name an impact of paperwork and checks on UK exporters.

A
  • Higher costs.
  • Reduced product ranges.
84
Q

What are the 3 main ways economic uncertainty affects businesses?

A
  • Investment stalemate.
  • Reduced customer confidence.
  • Weak pound, less foreign investment.
85
Q

Name two positive implications of political stability.

A
  • Increased confidence to invest.
  • Reduces need to leave domestic markets.
  • Helps to prepare for future.
  • Reduces risk associated with business decisions.
86
Q

Why do companies trade internationally?

A
  • for variety (to obtain products they cannot make themselves)
  • to specialise (can sell what they produce best)
  • to grow (billions of new customers)
  • to reduce costs (economies of scale can be gained)
  • to avoid conflict (less eager to cause conflict if trade links exist)
87
Q

International Trade

A

Refers to selling across borders.

88
Q

Trading Bloc

A

A group of countries within a particular geographical region that have reduced/removed trade barriers for its member countries.

89
Q

Globalisation

A

The increased integration and interdependence of national economies.

90
Q

Multinationals

A

A business that has activities and operations more than one country.

91
Q

Global Strategy

A

A plan of action on a global scale.

92
Q

Global Brand

A

A brand that is recognised throughout much of the world.

93
Q

Threats of global brands.

A
  • Local and national businesses may be driven out as customers buy from global brands instead.
  • May result in downward pricing pressure as global brands offer products more cheaply.
94
Q

Challenges of globalisation

A
  • Increased competition
  • Understanding moral/ethical standpoints.
  • Costs of expansion.
  • Adapting to different cultures.
  • Communication (language and time differences)
  • The physical distance.
95
Q

Digital Revolution

A

Encompasses the shift from analogue and mechanical technology to digital.

96
Q

Information age

A

A time when large amounts of information is widely available.

97
Q

Threats of the digital revolution.

A
  • Digital tech is changing/improving quick
  • Increased access to info allows customers to make more informed decisions, therefore businesses need to be more competitive.
  • Both employees and customers may be reluctant to grasp the virtues of the digital revolution.
98
Q

Factors affecting the effect of digital revolution

A
  • The market in which the business operates.
  • How rivals respond.
  • The type of product/service.
  • The budget of the business to use digital tech.
  • The type of customer.

Business Studies 🏢💴 (10 decks)

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