Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

Business awareness > The external and internal environment > Flashcards

The external and internal environment Flashcards

(91 cards)

Start Studying
1
Q

What is the way a business operates affect by ? P51

A
  • External factors - cannot control
  • assessement:
  • minimise negatvie
  • maximise positibe
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is PESTLE ? P51

A
  • Analysis technique - understand external factors on operations
  • positive and negative effect possible
  • Political
  • Economic
  • Social
  • Technological
  • Legal
  • Envrionmental
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What do policitcal factors, that can affect a business, relate to ? P51

Within PESTLE

A
  • Government influences the economy
  • policies & decision making affect operations
  • e.g. operating/ trading overseas = government stability & local regulations impact actions
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What are some of the specific political factors tht affect the environemnt in which a busienss operates ? P51

A
  • Government policy
  • Taxation
  • imports and exports
  • public spending
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

How does government policies influence businesses ? P51

Within PESTLE

A
  • e.g. encourage overseas investments:
  • tax breaks / reduce taxation = encouragement
  • others = discouraage overseas invesmtnet
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is the taxation factor ?

Within PESTLE

A
  • Increase / decrease rates of taxation
  • e.g.
  • Corporation, VAT ,income
  • tax reduces - positive effect ( profits and disposable income increasing
  • tax increasing - negative effect (profits and disposable income decreasing)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What are tariff on imports / exports and why are they imposed ? P52

Within PESTLE

A
  • Trariffs imposed - tax for international trading
  • tariff on imports = reducing goods into country
  • domestic producer protection - undercut/ cheaper imports
  • consumers poruction - products cuasing harm
  • exporting goods - tarrifs of country exporting to
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is public spending and what are its effects ? p52

Within PESTLE

A
  • Public spending = expenditure in public sector by the government
  • government decision - allocation of taxation money - public sector areas
  • businesses providing to public sector businesses affected
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is a macro economy and how does this affect business operations ? P53

Within PESTLE

A
  • Macro economy - economy as a whole - affecting business operations
  • economy financial state of country/ global level affects consumer demand, growth of business & profitability
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What are some of the key economic factors that may be relevant to a PESTLE analysis carried out by a business ? P53

A
  • Interests rates
  • exchange rates
  • disposable income
  • business cycles
  • inflation
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What are interests rates ? P53

Economic factors within PESTLE

A
  • Costs of borrowing/ return on saved money
  • business loanee bank borrowing = higher repayments
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What do higher interest rates result in ? P53

Economic factors of PESTLE

A
  • business less likely to borrow - less investment in growth
  • consumer - more saved money - less spent on goods/ services
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What do low interest rates result in ? P53

Economic factors in PESTLE

A
  • Encourage busness to borrow more
  • Consumer less likely to save = more likely to spend money
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is the main characteristic of an exchnage rate ? P53

Economic factors within PESTLE

A

Fluctuate
weakening of pound/ fall = amout currency worth abroad falling
e.g.
£1: $1.45 to £1:$1.30 - 15 cents less

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What does a weak pound mean ? P53

A
  • WPIDEC
  • Weaker Pound
  • Imports Dearer
  • Export Cheaper
  • Uk produced goods - cheaper for buyer
  • UK buying abroad:
  • not value for money
  • increased cost of production
  • passed to consumer
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What does a stronger pound mean ? P53

A
  • S.P.I.C.E.D
  • Stronger Pound
  • Import Cheaper
  • Export Dearer (for the buyer)
  • UK goods bought by buyer abroad- more expensive for buyer - price decrease possible to stay competative
  • UK buying from abroad- costs less & more for money
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is disposable income ? P53

Economic factors within PESTLE

A
  • Money to spend post tax & living costs
  • results from economic growth
  • More goods, service, employment = more disposable income
  • benefits business - disposable income on goods/ services
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What happens to disposable income when economic growth decreases ? P54

Economic factors within PESTLE

A
  • Recession
  • Unemployment increase - less disposable income on goods/services
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What are business cycles? P54

Economic factors within PESTLE

A
  • Rise and fall in goods & services produced
  • OR
  • cycle of change in business activity
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What are the four elements of a business cycle ? P54

A
  • Boom
  • downturn
  • recession
  • recovery
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is boom stage within the business cycles ? 54

economic factors - PESTLE

A
  • Low unemployment
  • Consumer demand high
  • high level of business profit
  • government collects high taxes
  • ‘win win’
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What is downturn element within business cycles ? p54

Economic factors within PESTLE

A
  • begins to slow down
  • inflation & interests rates start to rise
  • businesses get nervous
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What is the recession element in business cycles ? P54

A
  • starts to shrink
  • unemployment rises
  • business struggles = dmenad for products & service decreases
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

What is the recovery cycle in business cycles ? P54

A
  • post recession - interests rates lowered to stimulate economy
  • low interests rates - prompt business invesmnts
  • job creation
  • unemployment wull fall
  • diposable income increase & consumer spending
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
What must businesses do for each stage of the business cycle ? P54
* Adapt operations
26
What is inflation ? p54 | Economic factors within PESTLE
* Percentage rise- prices overtime * money - doesn't buy as much as previously did * e.g. Butter inflation rate - 5% over a year - 5% more on butter than year ago
27
What is a small amount of inflation (2%) considered to be ? P54
* Customer buy sooner rather than later potential price drop
28
Why do businesses want to avoid high levels inflation ? P54/55
* Rapid price increase * discourage purchasing more than essentials * negative impact - luxury, non essential items
29
What are the two key drivers of inflation ? P55
* Demand-pull inflation * cost-push inflation
30
What is demand pull inflation ? P55
* product/service demand increase * business cannot meet demand - drives price up * expanding economy/ government spending / growth trading oversease = demand pull inflation
31
What is cost push inflation ? P55
* Increase in production costs -> Supply in goods/ services decreases > cost push inflation * scarcity of materials/ labour pushing prices up/ increase tax by government > increase in production costs * passed onto consumer i.e. inflation
32
What are the 8 social factors affecting a business ? P55 | Within PESTLE
* Factors relating society - operation of business * cultural and demographic aspects: * income levels * language and culture * religion * education * family structure * age * occupations
33
What levels will the social factors within PESTLE affect a business ? P56
* Local/national/ international * e.g. highly skilled workforce - area with high level education * retail business - range of items specific branhes - local community
34
What are the three main social factors that busiensses must be aware of ? P56
* Demographic changes * Trends * Unemployment
35
Why must a busienss monitor demographic chnages - changes in the structure of the population P56
* Meeting wants and needs * increase in size = demands of products and services * increase in specific segement = specific tastes and spending power * older generation = higher disposable income = more luxuries
36
What are "trends" when looking into social factors of PESTLE? P56
* More health conscious people - gym membership - healthy meal options needed * new takeaway coffee * monitor market - relevant and competative
37
How is unemployment a social factor for businesses ? P56
* Social factor - location * Location high unemployment area - larger population draw workforce from * location in high unemployment area - local population - adapt (basic non expensive range )
38
What are the positive impacts of technological influences on busiensses ? P57 | Within PESTLE
* Easier market access - sales and internet marketing * CAD - time reduction - idea for new product and production * automated production lines = labour reduction & increased productivity * automated production = improved safety * EPOS - warehouse to checkout - up-to-date info on inventory levels / consumer habits * more consumer choice via internet
39
What are the negative impacts of technological influences on the businesss ? P57
* Quick Obsolete products - old inventory cheap * more choice - supplier easily swithced * Automated processes = redundancy costs & staff unrest
40
How can technology impact the structure of the business ? P58
* global communication Support departments - customer service & finance overseas * reduction in costs * well trained staff - non reduction in quality of service
41
How does technology help with outsourcing production ? P58
* Monitor production - reduction of quality issues and delays
42
What are legal factors within PESTLE? P58
* Comply with laws and regulations - trading country * depends on what does
43
What are the main laws and regulations within legal factors ? P58 | Within PESTLE
* Health and safety law * employment law * discrimination law * ntional minimum wage regulations * consumer protection * import/ export law
44
How is health and safety law a legal factor to consider ? P58
* Production deparments - regualtion - safe workplace * office workers * oversea workers
45
How is employment law a legal factor for business ? P59 | Within PESTLE
* No simple 'hire and fire' * fair treatment * working conditions * flexible working * maternity/ paternity
46
How are discrimination laws a legal factor for businesses ? P59
* Equality act 2010 - protected characteristics * age * disability * sex * race * religion * marital status and pregnancy
47
How are national minimum wage regulations a legal factor for businesses ? P59
* pay in UK = National minimum wage regulation UK * overseas workers = fair wage
48
How is consumer protection a legal factor for busineeses ? P59
* Detailed information products and services - consumer understanding
49
How are imports and exports a legal factor for busnesses ? P59
* Importing into UK - Comply imports laws and tariffs * exporting - importing law compilance importee country
50
What must businesses be aware of after considering legal factors ? P59
* current legislation and regulation may change * national minimum wage increases each yer * new laws and regulations - e.g. supermarkets with plastic bags
51
What are the two issues that environmental factors can create for the business ? P60
* Enviornmental change * sustainability
52
How does environmental change cause an issue for businesses ? P60
* Change in weather,increased pollution , availability of non-renewable resources - business operations * e.g. farming and weather * e.g. energy companies and renewable energy options
53
How does sustainability cause issues for a business? P60
* need for it: * business - self motivation * customer expectations * risk - customer goes elsewhere
54
What is the takeaway summary from PESTLE ? P61
* Assess external factors * factors outside control * identify ways - adapt to minimise risk & maximise opportunities
55
What does the micro-economic environment look at ? P61
* the factor affects pricing - between buyer and sellers * key factor - supply and demand
56
What is the concept of supply and demand ? P61
* explanation - relationship = price of product and service & inclination of individual to buy or sell it * rules determining - separate & interact- arrives @ price & volume of goods & services
57
What does the term 'demand' mean when looking at a micro economic environment, and what are the four types of goods this is concerned with ? P61
* Quantity goods/ services - wants & willing to pay * more income = more puchasing * normal goods * inferior goods * necessity good * substitute products
58
What is considered 'normal goods' within a micro economic environment ? P61
* demand most good services rises = income rises * demand for most goods & services decreases = income decreases
59
What are inferior goods in the context of micro economic environments ? P61
* Demand for goods/services decreases = income increases * cheaper goods - affordable lower income * more expensive option - income rises * e.g. 'own brand coffee -> more expensive coffee
60
What are necessary goods when looking at micro economic environments ? P61
* Buy - regardless of income changes e.g. utilities - power & water
61
What a substitue products when looking at micro-economic products ? P61
* Two or more goods, services - same purpose * e.g. coca cola & pepi * price of one product rises = increased demand for other * exceptions - preferred characteristics - taste of pepsi v coca cola
62
What are ' complements'? P62 | Supply and demand
* two goods must be used together * vehicles and fuel * rise in price of one = fall in demand of other vice versa
63
What is the demand curve ? P62 | Supply and demand
* price affects demand * price falls = expanded demand * price increases- contracted demand * shown on graph = demand curve
64
How is demand, price , and quantity displayed on the demand curve graph ? P63
D = demand P = price Q = quantity
65
What are straight lines on a demand curve graph referred to as ? P62
Demand curve
66
What is supply in the conext of supply and demand ? P62
* Quantity - willing and able to produce - given period of time * price - how much to supply
67
What is a supply curve ? P63
* Depends on price * price increase = supply increase * sell more = price going up * sloping upwards
68
How is supply, price , and quantity displayed on a supply curve graph ? P63
S = Supply P = Price Q= Quantity
69
What is the price mechanism ? P63
* Consumer - lowest price possible * Supplier - charge as much as possible * compromise needed - demand & supplier curve meet - determines price * not instant - price affects demand & supply (vice versa) * two curves settled together = meeting equilibruim price * market found - price mechanism ( supply & demand) determines price
70
What causes a shift in demand curve rather than expansion / contraction ? P64
all changes exlcuding price
71
What does an increase or rise in demand, for anything other than price , cause the demand curve to do ? P64
* Shift to the right * increase at same price * e.g. celebrity use of product - causes demands
72
What happens to the demand curve when the demand for the product decreases, for a factor other than price ? p64
curve shifts to left
73
What happens to the supplier curve if theres a price change? P65
* Movement along supplier curve * price increase = supply increases * price decreases = supply decrease
74
What happens to the supply curve if there's a chnage in something other than price ? P65
Shift
75
Whats an exmaple of something causing the supply curve to shift to the left ? P65
* scarcity of raw material - costs increase * producer focuses other products * reduce supply- shifts to left
76
Whatv woudl cause a supply curve to shift to the riight ? p65
* Cost production change = decrease * automated production process * costs of machinery > costs of labour * shift to right
77
What are the five things affecting competition in a micro-economic environment ? P66
* Product features * number of seller and buyers * barriers to entry * location * availability of information
78
How do product features affect competition ? P66
* Choose product over other - particular feature * more differences = fewer competitors * less differences = more competition (e.g. milk & toothpaste)
79
How do surplus suppliers affect competition ? P66-67 | Number of buyers and sellers
* Surplus suppliers - attract customers - competative prices - quality goods, services
80
How do scarce suppliers affect competition ? p66-67 | Number of buiyers and sellers
* scarce competitotrs - complancey danger - high prices & low quality
81
What is a monopoly and how does this affect competition ? P66
* Monopoly - one supplier controlling market * markets difficult to enter * no close substitutes = higher price * legislation to avoid * e.g. pharmaceutical companies
82
How do fewer buyers in the market affect competition ? P67
fewer buyers = more competative sellers e.g. reducing prices or improving quality e.g. supermarkerts dictating prices to farmers - no where else 2go
83
What is a barrier to entry defined as ? P67
* Costs / other obstacles * prevent/ deter new competitors * entering markert for product/ service
84
What are the 4 main barriers to entry ? P67
* Legal barriers * set-up costs * bran loyalty * expertise
85
What is a legal barrier to entry ? P67
* Obtain licenses - certain markets * standards and regulation adherence * e.g. health and safety - restaurant
86
What are set up costs in barriers to entry ? P67
* Costs to set up - prohibitive * markerting, capital expenditure , purchases of inventory , employmnet of staff
87
What is brand loyalty in barriers to entry ? P67
* difficulty entry to established market * Customer - existing favourity brand * e.g. burger chain - McDonalds & Burger King * impossible to penetrate markert
88
How are expertise a barrier to entry ? P68
* Previous expertise likley * Industries - significant knowledge barrier e.g. new computer software busienss * owner - technological knowlegde and expertise / sufficient funds ( hire someone)
89
How does location affect competition ? P68
* Location of raw materials and customers - level of competition and location of busienss
90
What are examples of how location can affect competition ? P68
* Frozen food processing plants - crops are grown & fishes are caught * retailers - customers/ good transport links & parking * distribution companies centrally located - good transport links - quick and efficient delivery * technology industry business - where can recruit staff
91
What is meant by avability of information ? P68
* Difficulty consumer compare prices of products * easy to find - level of competition increases * not easy to find - competition will decrease * e.g. cafe menus on window - more competition * cafe no menu on window - less/ no competition

Business awareness (10 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions