Businesses and the external environment

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  • Created by: hamishc
  • Created on: 29-04-16 21:44
What are market conditions?
The range of factors affecting the market. These factors influence the costs faced by businesses and the demand for their products.
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How are political factors affecting market conditions?
If the economy is too low/ high (governments will increase/ decrease it by changing taxes, benefits and interest rates to change disposable income), government can also influence demand for particular products.
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How are labour supply factors affecting market conditions?
When unemployment is high (there's a good supply, businesses can hire staff easily and page low wages, low costs).
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How are incomes and economic factors affecting market conditions?
State of the economy (in recession there are lower incomes, less money spent on products), vice versa applies to economic boom.
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How are seasonal demand and supply factors affecting market conditions?
Variations in supply and demand throughout the year (seasonality), caused by weather and holidays, also variations in supply (more strawberries available in summer)
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How do competitors reduce demand?
Demand from competitors product is likely to attract customers, therefore reducing demand.
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How do competitors increase costs?
If competition is taking demand, a business is likely to increase its marketing costs to improve and diversify its products to win back demand.
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What are the different types of competition?
Perfect competition (when firms compete on an equal basis), oligopoly (small numbers of large firms dominate the market and charge similar prices), monopoly (when one business has complete control over its market, no competition, can increase prices)
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What are interest rates?
The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.
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What is demographic change?
The change in population structure in terms of age/ sex/ race over time.
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Why is demographic change important to businesses?
It has an impact on the demand for products. Different demographics tend to buy different things, so the business needs to change the amount and type of product.
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How does the supply of workers affect business costs?
If there is an ageing pop = a smaller % of the pop are of working age = supply of workers decreases = increased wages to attract workers= increased costs, Immigration = more working age people = increased supply = decreased wages = decreased costs.
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How do environmental factors affect business costs?
Government legislation= measures and controls= increased costs, some businesses minimise environmental impact = change in packaging and production = increased costs, being environmental= increased demand due to good public image = competitiveness.
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Why/ how will a business become more ethical?
Consumers are concerned with a businesses ethical/ unethical behaviour, fair trade (increased costs, but gives a USP, increasing demand), improving working conditions avoids customer pressure.
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How can technology influence demand and costs?
Technology can improve marketing= more demand (e.g. social media), social networking sites can also allow companies to target the right people with adverts = decreased costs.
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Other cards in this set

Card 2

Front

How are political factors affecting market conditions?

Back

If the economy is too low/ high (governments will increase/ decrease it by changing taxes, benefits and interest rates to change disposable income), government can also influence demand for particular products.

Card 3

Front

How are labour supply factors affecting market conditions?

Back

Preview of the front of card 3

Card 4

Front

How are incomes and economic factors affecting market conditions?

Back

Preview of the front of card 4

Card 5

Front

How are seasonal demand and supply factors affecting market conditions?

Back

Preview of the front of card 5
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