Please enable JavaScript.
Coggle requires JavaScript to display documents.
2.5 External influences - Coggle Diagram
2.5 External influences
2.5.1 Economic influences
Measuring an economy
GDP - total output for an economy (%)
Business cycle
Measures fluctuations of GDP
Recession (shrinks) - economy = smaller
Trough - bottom of the negative growth
Recovery - rise in GDP
Peak - max GDP
Inflation
Interest rates
Increases in price
Looks at average basket of consumer goods purchased by households
Measured by consumer price index
Interest rates
Cost of borrowing, reward for saving
High interest = lower spending, more saving
Low interest - higher spending, lower saving
Exchange rates
Value of one currency in terms of another
SPICED
WPIDEC
Taxation & Gov spending
Direct tax - charges on earning
Indirect - VAT, corporation tax
2.5.2 Legislation
Employee protection
Equality
Adult-discrimination
Min wage
Consumer protection
Right for refund if x satisfactory
Data protection
Trade descriptions Act - x false advertisement
Safety
Enviromental protection
Waste disposal
Emissions
Health & safety
Competition Law
Competition between businesses should be fair
2.5.3 Competitive environment
Monopoly
Where a business has control of the market w huge market share
Oligopoly
Where the market is dominated bby few large markets
Importance of market size
large has a wider customer base, less volatility, more regulation & scrutiny
Small has less competition, few eos, easier to build loyal customer relationships