Edexcel A-Level Business Theme 2.5 External influences overview quiz quiz

It lowers its loan repayments and frees up cash for new investment

It raises borrowing costs and can cut consumer demand

It has no effect on either its repayments or its level of sales

It guarantees higher profit because savers now have more to spend

Makes imports dearer and exports cheaper

Has no effect on trade

Makes imports cheaper and exports dearer

Lowers inflation only

High-end luxury goods

All goods rise in demand equally

No goods see any change

Inferior or value goods

Consumer protection law

Competition law, which targets price-fixing and cartels

Employment law, which sets out workers' rights and pay

Environmental law, which limits a firm's pollution and waste

Workers joining trade unions or taking part in any organised industrial action

Anti-competitive behaviour such as price-fixing and abuse of market power

Businesses making any profit at all from selling to their customers

All advertising, including honest claims about a product's qualities

It always reduces profit to zero, so it can never be worth the expense

It removes all competition from the firm's market once it is met

It builds trust and reputation and avoids fines and lawsuits

It guarantees higher sales simply because the firm follows the rules

No pricing power at all, and therefore no risk of any regulatory action

Lower prices forced on it by rivals, with no risk of regulatory action

Power only over its own staff and not over the prices it can charge

Greater pricing power, but a risk of regulatory scrutiny

The external environment: Political, Economic, Social, Technological, Legal and Environmental factors

Only the firm's internal finances, covering its cash flow, profit and the strength of its balance sheet

Only the firm's direct competitors, comparing their prices, products and share of the market

Only employee motivation and how pay, recognition and conditions affect staff productivity

Rigid processes, no cash reserves and a refusal to alter the existing plan

Flexibility, adaptability and a healthy financial position

Ignoring competitors and keeping the firm focused only on its own routines

A single product in a single market, with no diversification at all

It never affects a business that already has a strong, established market position

It only affects large firms, leaving small businesses entirely unaffected by it

It also creates opportunities a quick-responding firm can seize

It always lowers costs across the whole of the affected industry