1
Q
Competition law
A
promote fair competition
2
Q
price fixing
A
when competitors agree to all provide the same price meaning all can charge higher prices
3
Q
What are businesses not allowed to do according to competition law (3)
A
- agree fixed prices with competitors
- limit production in order to reduce competition
- separate markets or customers between each other e.g. geographically divide countries with each firm taking a section.
4
Q
competition policy
A
seeks to improve the competitive nature of markets
5
Q
competition in markets can be improved by… (3 points)
A
- Curtailing monopoly power and protecting competitive markets
- restricting mergers and prohibiting cartels
- creating fairness in markets for both businesses and consumers so businesses dont abuse power but can make acceptable profits to drive innovation and productivity
6
Q
advantages of competition policy (4 points)
A
- encourages enterprising and efficiency
- creates a wider choice for consumers
- beneficial to economy
- quality of products and services
7
Q
labour market laws
A
collective labour law guarantees certain rights, and places certain restrictions, on groups of employees e.g. trade unions
8
Q
key features of labour laws (4 points)
A
- pay: equality
- pay: national living wage
- discrimination is illegal
- legislation gives employees “rights”
9
Q
environmental law
A
- legislation designed to influence the behaviour of individuals and businesses in order to decrease the negative environmental impacts
10
Q
benefits of environmental law (3 points)
A
- laws prevent/discourage businesses from committing harmful acts against the environment
- gives businesses a CSR
- New business opportunities e.g. green tech and innovation
11
Q
drawbacks of environmental law (2 points)
A
- may restrict businesses from working as quickly as possible as they are sticking to the rules and regulations
- could result in increased operating costs for businesses
12
Q
enterprise explination/definition
A
- a term relating to the ideas and skills of entrepreneurs, government may want to invest in ways to keep enterprise to help the economy
13
Q
international trade
A
the exchange of goods between different countries
14
Q
effect of exchange rates on trade
A
if the $ is worth less than the pound, importing raw materials from the USA will be cheaper, encouraging trade
15
Q
GDP definition/explanation (2 points)
A
- Gross domestic product
- the total value of a country’s output in a year, when the value of GDP increases its called economic growth.
16
Q
recession
A
when the GDP shrinks twice in a row
17
Q
how often is GDP measured
A
every 3 months
18
Q
Expanding economy: consumer confidence
A
increases
19
Q
Expanding economy: spending
A
increases
20
Q
Expanding economy: income
A
increases
21
Q
Expanding economy: unemployment
A
decreases
22
Q
Expanding economy: prices
A
decrease
23
Q
Expanding economy: investment
A
increase
24
Q
Expanding economy: interest rates
A
decrease
25
Expanding economy: GDP
increase
26
Contracting economy: Consumer confidence
Decreases
27
Contracting economy: spending
decreases
28
Contracting economy: income
decreases
29
Contracting economy: unemployment
increases
30
Contracting economy: prices
increase
31
Contracting economy: investment
decrease
32
Contracting economy: interest rates
increase
33
Contracting economy: GDP
decrease
34
inflation
the sustained increase in the average price of goods and services
35
exchange rates
show the price of a currency in terms of another currency
36
Fiscal policy
the manipulation of government spending, taxation and government borrowing to influence the level of economic activity
37
income tax
tax on peoples incomes, expresses as a percentage
38
taxation
the process of imposing charges on business and individuals by the government
39
direct tax
tax imposed on an individual or property
40
indirect tax
tax on goods and services
41
corporation tax
a tax paid by companies on the profit they have made
42
monetary policy
the manipulation of the rate of interest, the money supply and exchange rates to influence the level of economic activity
43
High interest rates: consumer saving
increases
44
High interest rates: consumer borrowing
decreases
45
High interest rates: investment
decreases
46
High interest rates: house prices
decrease
47
Low interest rates: Consumer saving
decreases
48
Low interest rates: consumer borrowing
increases
49
Low interest rates: investment
increases
50
Low interest rates: House prices
increase
51
Open trade
the removal of any trade restrictions between countries
52
advantages of open trade (6 points)
- cheaper goods
- lower prices for consumers
- wider variety of products
- no tariffs on exporting goods
- increased competition
- can make community less self reliant
53
disadvantages of open trade (4 points)
- ethical questions
- human rights questions (sweatshops)
- can undermine local industries
- could undermine quality
54
protectionism
when an economy introduce barriers to trade, restricting the free movement of goods and services e.g. tariffs.
55
Advantages of protectionism (2 points)
- restricts poor quality goods
- protects inefficient and unviable businesses
56
Disadvantages of protectionism (2 points)
- reduces variety and volume of goods
- makes goods more expensive
57
social changes
refers to the fluidity of human behaviour and actions that affect demographic and lifestyle
58
urbanisation
the movement of people towards cities and away from rural areas. usually increases as country becomes more developed.
59
migration
the movement of people between countries
60
advantages of migration (3 points)
- migrants can fill skill gaps
- UK have an aging population: migrants can be young workers
- more consumers for businesses = increased sales revenue
61
disadvantages of migration (2 points)
- polish plumber: offer a lower price for a British one to match
- Puts pressure on public services e.g. hospitals and housing
62
CSR - Corporate social responsibility
a business behaving ethically and contributing to economic developments
63
impact of bad CSR
People will scrutinise the business on social media which will lead to a bad brand image and loss of customers
64
Carroll's CSR pyramid: Level 1 (2 points)
Economic:
- Responsibilities of businesses to be profitable
- only way to survive and benefit society later on
65
Carroll's CSR pyramid: level 2 (2 points)
Legal:
- responsibility to obey laws and regulations
- e.g. employment, competition and health & safety laws
66
Carroll's CSR pyramid: level 3 (3 points)
Ethical:
- Responsibility to act morally and ethically
- go beyond narrow requirements of the law
- e.g. treatment of suppliers and employees
67
Carroll's CSR pyramid: level 4 (3 points)
philanthropic:
- Responsibility to give back to society
- Discretionary but still important
- e.g. charitable donations
68
drawbacks of Carroll's pyramid
- Doesn't take into account the changes in market or performance of a business
69
pros of CSR: finance (2 points)
- Able to attract investors
- avoid fines and environmental taxes
70
pros of CSR: HR
- increase recruitment, retention and motivation
71
pros of CSR: Marketing (3 points)
- increase brand loyalty
- CSR=USP= premium pricing
- positive media attention
72
pros of CSR: operational (2 points)
- Lower production costs through efficient procedures
- recycling and good supplier relations
73
cons of CSR: financial costs (3 points)
- looking after employees and suppliers
- green operations
- appointing a director of CSR
74
cons of CSR: Not meeting corporate objectives (2 points)
- short term = shareholder returns
- long term = growth - entering new markets
75
cons of CSR: Opportunity costs (2 points)
- time and money spent on CSR
- Day to day functions
76
Technological change: Marketing (2 points)
- May move to online websites such as instagram
- no more magazines and newspapers
77
Technological change: Operations
- AI may be able to do a more efficient job as they dont require breaks or get tired
78
Technological change: Finance (3 points)
- AI will decrease costs
- it can do jobs people are paid to do for free, therefore increased redundancies
- AI more efficient = lower average unit cost
79
Technological change: HR (3 points)
- AI no sick days
- AI cant resign, decreased labour turnover
- increase people to maintain the robots
80
the competitive environment
- relates to the number of firms in the market and how they influence the strategy and behaviour of the other firms
81
Porters 5 forces: Threat of new entrants (3 points)
- increase in new entrants gaining market share = increase in rivalry
- position of existing firms are stronger if barriers to entering are high
- low barriers = high threat of new entrants
82
Porters 5 forces: Bargaining power over suppliers (3 points)
If a firms suppliers have power they will:
- exercise that power
- sell their products at a higher price
- squeeze industry profits
83
Porters 5 forces: Bargaining power of customers
- powerful customers are able to exert pressure to decrease prices, or increase quality for the same price therefore reduce industry profits
84
Porters 5 forces: threat of substitute products (2 points)
- A sub product can be regarded as something that meets the same need
- if threat is high then demand will be lower
85
High competitive rivalry will lead to (3 points)
- price wars
- investment in innovation and new products
- increase in marketing
all likely to increase costs and decrease profits
86
High industry profits need... (5 points)
- weak suppliers
- weak customers
- high barriers to entry
- few opportunities for sub products
- little rivalry
87
Low industry profits need... (5 points)
- strong suppliers
- strong customers
- low barriers to entry
- many sub product opportunities
- intense rivalry
88
ways to adapt to increased competition (5 points)
- increase differentiation
- increase customer service
- increase brand loyalty
- decrease prices
- product development
Business
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