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external influences / 2.5 - Coggle Diagram

- - - - the general rise in prices over time
      - problems caused
        
        increased costs
        
        increase price of raw material
        workers often ask for more pay to cope with increase cost of living
        
        higher repayments on loans (higher interest rates)
        
        consumer habits change (less spending)
        
        uncertainty ( cant predict what will happen)
    - - value of one currency compared to another
      - problems
        
        change to currency value
        
        depreciation = decrease in value of the pound
        
        importing business-
        sales are likely to rise
        may choose to increase selling prices
        
        importing business -
        costs are likely to rise
        may seek domestic supplier as its cheaper locally
        
        appreciation = increase in the value of the pound
        
        expoting business -
        sales likely to fall as products become more expensive
        may need to lower prices
        
        importing businesses -
        costs are likely to fall as importing is cheaper
        may look to increase the pool of overseas suppliers to reduce further costs
    - - a % reward offered for saving money and the percentage charged for borrowing it
      - If interest rates rise businesses will have to pay more on new or variable rate borrowing which will increase their costs
      - Customers are less likely to purchase goods on credit when interest rates are high leading to a fall in sales
      - Exporting businesses may see demand for their products overseas fall as higher interest rates usually strengthen the value of the domestic currency and make their products comparably more expensive abroad
    - - Governments impose direct and indirect taxes on businesses and households
        
        direct taxes are managed on income e.g. Income tax and Corporation Tax
        
        Indirect taxes are managed on spending e.g Value added tax (e.g. VAT)
      - impact on
        
        revenue
        
        most likely fall for a lot businesses
        
        Increased income tax will reduce the disposable income of customers and demand for products may fall
        
        Increased VAT will make products more expensive and customers may switch to alternative products
        
        cost
        
        Operating costs will rise as a result of increased taxes such as VAT and National Insurance contributions
        
        higher costs = charge higher prices = less buyers
        
        business decisions
        
        Business spending and investment may be affected by increases in Corporation tax as less pro|t will be retained to cover future expenses and make plans for business expansion
        
        Businesses may choose to forego business improvement or relocation, or employ fewer workers as a result of increased costs
    - - The business cycle describes the upturns and downturns in the level of a country’s economic activity
        (Gross Domestic Product or GDP) over time
      - A recession occurs when an economy experiences two consecutive quarters (6 months) or more of negative economic growth
      - A boom is de|ned as a period of time where an economy experiences increasing/high rates of economic growth
      - impacts and characteristics of a recession
        
        increased unemployment
        
        less customers want to spend with businesses
        
        business may delay spending focuses and focus on educing risk and survival
        
        production likely to be reduced
      - impacts and characteristics of a boom
        
        decreased unemployment
        
        GDP rises as businesses expand and consumer spending surges.
        
        higher consumer confidence
        
        People feel secure in their financial situation and spend more.
- - - - Consumer protection legislation aims to ensure that consumers are treated fairly by the companies with which they interact
      - safety, standard and quality of products
    - - Employee protection legislation aims to prevent the exploitation of workers
      - pay, working and equality conditions
    - - Environmental legislation aims to hold businesses responsible for their environmental impact
      - pollution, destruction of land, air quality, traffic construction - all in control other wise may face fines
    - - Competition legislation aims to protect the interests of both consumers and businesses by restricting anti-competitive practices
      - preventing abuse of market power so as to limit monopoly power
    - - Health and safety legislation requires businesses to operate in a way that protects the physical and mental wellbeing of its employees and contractors as well as its customers
      - The provision of adequate breaks and rest periods, Temperature and noise levels and provision of safety equipment ....