Topic 6 of 6 · Form 4
External influences on business activity
The business cycle (growth, boom, recession, slump); government objectives (growth, low unemployment, stable prices, balance of payments); government policies (taxes, interest rates, exchange rates, spending) and their effects on businesses.
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Economic issues
The business cycle (growth, boom, recession, slump); government objectives (growth, low unemployment, stable prices, balance of payments); government policies (taxes, interest rates, exchange rates, spending) and their effects on businesses.
Environmental and ethical issues
Environmental concerns (pollution, resource depletion), pressure groups, ethical decisions (child labour, fair trade, bribery), corporate social responsibility.
Business and the international economy
Globalisation; multinational companies (benefits and drawbacks to host countries); exchange rates – the effect of appreciation and depreciation on exporters and importers.
Worked example: The local currency depreciates. How does this affect a business that exports tobacco?
Its exports become cheaper for foreign buyers, so demand and revenue are likely to rise (though imported inputs cost more).
Legal controls
Consumer protection, employment law, competition law and health and safety regulations.
Check yourself
- Give one effect of a recession on a car dealer.
- What is a pressure group?
- How does an appreciation of the currency affect importers?
Show answers
- Sales fall as incomes and confidence decline.
- An organisation that tries to influence business or government decisions on a particular issue.
- Imports become cheaper, benefiting importers.
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