Pest factors

Question 1

What is the purpose of political stability in business environments?

Answer 1

To provide a stable legal and economic framework for businesses to operate and grow.

Question 2

How can national security policies impact businesses?

Answer 2

• They can restrict the movement of goods, people, and capital
• leading to increased costs and skill shortages.

Question 3

How do pressure groups influence political decisions affecting businesses?

Answer 3

• They can drive changes in legislation (e.g., tobacco, alcohol) increasing business compliance costs.

Question 4

How might a change in government affect businesses?

Answer 4

• New laws may increase costs (e.g., environmental regulation, workers’ rights) or reduce them if pro-business policies are introduced.

Question 5

What are the two main types of taxation affecting businesses?

Answer 5

• Direct taxation (e.g., Income Tax, Corporation Tax)
• indirect taxation (e.g., VAT, Excise Duties).

Question 6

How do subsidies benefit businesses?

Answer 6

• They lower production costs, boosting output (e.g., EU farm subsidies, green energy incentives).

Question 7

What is inflation and how is it measured?

Answer 7

• Inflation is the rise in general price levels
• measured by indices like the Consumer Prices Index (CPI).

Question 8

What are cost-push and demand-pull inflation?

Answer 8

• Cost-push = rising production costs
• demand-pull = rising demand exceeds supply.

Question 9

How do interest rates impact business investment?

Answer 9

• High rates increase borrowing costs and reduce investment
• low rates do the opposite.

Question 10

What is the business cycle?

Answer 10

• A regular pattern of economic expansion (boom), slowdown (downturn), contraction (recession), and recovery.

Question 11

What impact do exchange rate changes have on UK exporters and importers?

Answer 11

• Strong £ = imports cheaper, exports more expensive (SPICED)
• Weak £ = imports more expensive, exports cheaper.

Question 12

How does an ageing population affect businesses?

Answer 12

• It changes product demand
• more services for older consumers and health-related products.

Question 13

What business opportunities come from increasing female workforce participation?

Answer 13

• Demand for convenience goods, childcare services, and home delivery increases.

Question 14

How do changing lifestyle trends affect marketing strategies?

Answer 14

• Businesses must adapt to trends like health consciousness, digital consumption, and ethical values.

Question 15

How has migration affected UK businesses?

Answer 15

• It helps fill skill gaps and provides a younger, often more mobile workforce.

Question 16

What is automation and how has it transformed business operations?

Answer 16

• Automation is using machines/tech to perform tasks, increasing efficiency in sectors like retail, banking, and manufacturing.

Question 17

What are examples of ICT transforming business?

Answer 17

• Internet marketing
• online banking
• EPOS systems
• B2B platforms.

Question 18

What are the advantages of automation?

Answer 18

• Lower labour costs
• higher productivity
• consistent quality
• safer workplaces.

Question 19

How do CAD and CAM benefit product development?

Answer 19

• CAD allows fast and flexible design
• CAM ensures efficient, accurate, and adaptable manufacturing.

Question 20

What challenges do rapid tech changes pose to businesses?

Answer 20

• Shorter product life cycles
• constant need for innovation
• increased pressure on profitability.