S4 external influences Flashcards
(15 cards)
What are external influences?
Factors outside a business’s control that can affect its operations and performance, such as economic, legal, and social changes.
What is the economic climate?
The overall health of the economy, influenced by factors like inflation, interest rates, and economic growth.
How does inflation affect businesses?
Rising prices increase costs and may reduce consumer purchasing power, affecting sales and profits.
What is interest?
The cost of borrowing money or the reward for saving it. High interest rates increase loan costs and reduce consumer spending.
How do exchange rates affect businesses?
A strong pound makes exports more expensive and imports cheaper; a weak pound has the opposite effect.
What is unemployment and why does it matter to businesses?
Unemployment refers to people willing and able to work but unable to find jobs. High unemployment may reduce consumer demand but increase labour availability.
What is consumer protection legislation?
Laws that protect customers from unfair practices, such as faulty products or misleading advertising.
Give one example of consumer protection law.
The Consumer Rights Act 2015 - gives consumers rights to refunds, repairs, and replacements for faulty goods.
What is employment legislation?
Laws that govern the relationship between employers and employees, including minimum wage, health & safety, and anti-discrimination.
How does environmental legislation affect businesses?
It may increase costs due to requirements for waste disposal, emissions control, or use of sustainable materials.
What is competition in business?
The rivalry between businesses selling similar products or services, which can affect pricing, quality, and innovation.
What is a competitive market?
A market with many buyers and sellers, where no single business dominates. This usually leads to lower prices and more choice.
What is the effect of competition on pricing strategy?
Businesses may lower prices or offer better value to attract customers and remain competitive.
What is a market environment?
The external conditions that influence a business’s performance, such as customer behaviour, competitors, and technology.
What is the impact of government policy on businesses?
Government decisions on tax, spending, and region can affect business costs, demand, and confidence.
