Political Environment (AQA A Level Business): Flashcards
Exam code: 7132
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Define political environment.
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Cards in this collection (28)
Define political environment.
The political environment refers to the actions, policies and decisions of governments and political institutions, both in the UK and internationally, that can affect how a business operates.
True or False?
Political change can be sudden or gradual.
True.
Political change can be sudden, such as a new law coming into force, or gradual, such as a shift in government priorities over several years.
How can a new trade agreement create an opportunity for a business?
It can open up access to new markets, allowing a business to sell to more customers or source materials more cheaply.
Define subsidy.
A subsidy is financial support provided by the government to businesses to reduce their costs, encourage production or help them remain competitive.
A ___ is a sum of money given to a business that does not need to be repaid.
A grant is a sum of money given to a business that does not need to be repaid.
How can deregulation benefit a business?
Fewer rules can make it easier and cheaper for a business to operate or enter a market.
Why can political stability help a business?
Political stability can increase investor confidence, making it easier to raise finance or plan for the long term.
How can government spending on infrastructure or public services create an opportunity?
It can create new demand for a business's products or services. For example, HS2 has created significant work for construction and engineering firms.
How can new laws or regulations threaten a business?
They can increase costs, for example through higher minimum wages, new safety standards or environmental rules.
True or False?
Sanctions and conflict between countries only affect businesses that export.
False.
Changes in international relations can disrupt supply chains or close off markets entirely, affecting importers as well as exporters.
Changes in taxation, such as higher corporation tax or increased National Insurance, can reduce a business's ____.
Changes in taxation, such as higher corporation tax or increased National Insurance, can reduce a business's profit.
How can political decisions affect a business's marketing?
They can restrict what a business may say in its adverts, such as rules on health claims. New taxes can also push prices up, affecting who a business can realistically target.
How do political decisions on employment rights affect human resources?
They affect what a business must pay staff, how many hours they can work and what protections they have. HR must update contracts, payroll and policies whenever these rules change.
How can government economic policy affect the cost of borrowing?
Interest rate changes, often linked to government economic policy, affect the cost of loans, which the finance function must plan for.
Define trade agreement.
A trade agreement is a formal arrangement between two or more countries that sets out the rules for trading with each other.
A trade agreement between several countries at once is described as __________.
A trade agreement between several countries at once is described as multilateral.
How can trade agreements reduce costs for a business?
They reduce or remove tariffs, lowering the cost of importing materials or exporting goods. They can also simplify customs procedures, reducing delays and paperwork.
True or False?
Trade agreements protect domestic businesses by reducing competition.
False.
Trade agreements often increase competition from foreign businesses. This can threaten firms that struggle to compete on price, but can also drive them to become more efficient and innovative.
Why can trade agreements be especially challenging for smaller businesses?
Adapting to new rules, standards or paperwork takes time and money. Smaller businesses may also lack the resources to take advantage of new export opportunities.
How might a trade agreement affect a business's operations?
Operations may find new suppliers to take advantage of the agreement or adjust production to meet a trade partner's standards.
Define protectionism.
Protectionism means government policies designed to shield domestic businesses from foreign competition, usually by restricting imports.
What is the difference between a tariff and a quota?
A tariff is a tax on imported goods, making them more expensive. A quota is a limit on the quantity of a good that can be imported over a set period.
Safety or quality standards placed on imported goods are a form of protectionism known as trade _________.
Safety or quality standards placed on imported goods are a form of protectionism known as trade regulations.
How can protectionism help a new or developing industry?
It can help the industry grow and establish itself before it faces full international competition.
Why might a government protect industries such as food, energy or steel?
Protecting these industries helps a country maintain its self-sufficiency in important industries.
True or False?
Tariffs on imports can increase costs for some domestic businesses.
True.
Tariffs increase costs for domestic businesses that rely on imported materials or components.
Why can protectionism harm businesses that export?
Other countries may retaliate with their own tariffs or restrictions, reducing access to international markets.
How can protectionism affect consumers?
It reduces consumer choice and can push prices up, as domestic producers face less competitive pressure.
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