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6. External influences on business activity

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  1. 6.1. Economic issues

    1. 6.1.1Business cycle

      • main stages of the business cycle: growth, boom, recession, slump • how each stage of the business cycle may affect a business • effects of changes in the levels of employment, inflation and economic growth on a business

    2. 6.1.2Effects of government policy

      • effects of changes in taxes on business profit • effects of changes in taxes on people’s income • effects of changes in government spending • effects of changes in interest rates • how businesses may respond to changes in taxes and interest rates

  2. 6.2. Business and the international economy

    1. 6.2.1The importance of globalisation

      • reasons for globalisation: improved transport links, technological change including communication, free trade agreements, newly industrialised countries • opportunities and threats of globalisation for businesses • import tariffs and import quotas • effects of import tariffs and import quotas on businesses

    2. 6.2.2Multinational companies (MNCs)

      • advantages to a business of becoming an MNC • advantages for the country where an MNC is located, e.g. jobs, exports, increased choice, investment • disadvantages for the country where an MNC is located, e.g. increased competition, environmental damage, exploitation of natural resources, repatriation of profits

    3. 6.2.3External costs and benefits

      • external costs and external benefits of business decisions

    4. 6.2.4Exchange rates

      • appreciation and depreciation of an exchange rate • how changes in exchange rates can affect businesses which import and export products and services, e.g. price, costs, competitiveness Note: candidates will not be assessed on exchange rate calculations.

  3. 6.3. Business and the environment

    1. 6.3.1

      • how business activity can negatively affect the environment, e.g. pollution, depletion of resources • why businesses may respond to environmental issues, e.g. improved reputation, increased sales • how businesses may respond to environmental issues • effects of legal controls over business activity affecting the environment: how, what and where to produce or sell, influence on costs

  4. 6.4. Business and ethical issues

    1. 6.4.1

      • ethical issues which may affect businesses, e.g. child labour, paying fair wages to employees, paying fair prices to suppliers, using suppliers who do not damage the environment • how businesses may respond to ethical issues • advantages and disadvantages of a business being ethical

  5. 6.5. Pressure groups

    1. 6.5.1

      • how pressure groups can influence business decisions