Job production- is a method of producing one product that is unique for a
individual consumer
Labour productivity- output per time period/number of employees at work x100
Distinctive capabilities- business strategy by Kay-a valuable businesses
capability that one firm has but other firms struggle to replicate
Expansion- the action of becoming larger
Organic growth- growth a company achieves by increasing output and enhancing
sales internally
Inorganic growth- mergers or takeovers- rather then a increase in a company’s
own businesses activity
Rapid growth- when a business experiences a quick increase of sales and
revenue for a period of time
Gross profit margin- gross profit/revenue x100
Gross profit- revenue-total variable costs
Consumer protection legislation- set of laws that protect consumers from unfair
deception or harmful practices by businesses when buying goods and services
Cutting costs- in when a business will reduce there costs e.g. cost of production
PESTLE: political, economic, social, technology, legal, environmental
PESTLE+C: political, economic, social, technology, legal, environmental and
competition
Sales forecast- a predication for revenue/amount of sales based on previous data
JIT (just in time)- when stock arrives just before it is needed in order to reduce
waste by having as little stock as possible
2.10:
Inflation can happen due to demand or costs rise for business
Inflation= overall increase in the price of goods and services within an economy
Two types:
Demand pull inflation- too much demand then economy can supply
- Fast increase in disposable income- ppl buy more and business cant supply
good quickly enough so increase their prices
- Can make profit margins go up
- Business can put up pirces in response to high demand with costs going
up
Cost push inflation
- When rising costs push up prices
- Employees wages rises can make prices go up
, - Can make profit margins go business if business doesn’t put up their
prices
- Rate of inflation is percentage change in price of goods and servuces in
economy
When inflation is high spending goes up- ppl rush to buy more before prices go
up futher
Makes UK exports expensive abroad
Bad for economy
Deflation
- Decrease in price of good and services
- Opposite of inflation
- Causes fall in productivity- business wont keep endlessly supplying the
market goods nobody wants
Inflation can be tracked using the consumer price index
- Can be used as a mesure of inflation in a country
- Uses numbers to track the changes in average cost
- Index number= average value of the basket/base value of the basket x100
Inflation affects business strategy
- Business producing premium goods- most likely to be affected by inflation
as consumers have less to spend to look at cheaper alternative products
- Reduce prices
- Periods of inflation can be a good time for firms to expand- if intrast rates
are lower then rate of inflation its cheap for them to borrow money to
invest in new premises/machinery
- Business compare uk/forgein rates
Exchange rates
SPICED
Strong
Pound
Imports
Cheaper
Exports
Dearer
WPIDEC
, Weak
Pound
Imports
Dearer
Exports
Cheaper
Exchange rates can be compared using a currency index
- Compare different countries
Can effect price off imported and exported products
Government and the economy
Government spending influences the economy
- Spend things on social services, health, education
- Changes in gov may effect firms within economy controlled by
government
- E.g. infrastructure
Taxation
- Government taxes ppl and businesses
- Income tax- high rates= less disposable income= less money to spend
- Profit taxes- sold trader and partnership- income tax and limited
companies- corporation tax- profits reduced
- Value of premises
- Idirect tax e.g. VAT
- Discourage spending
- Reducing taxes/subsidys- encourage businesses to expand
Business cycle
1. Boom- GDP high- production= max capacity- shortages and prices
increase= wages rise
2. Recession- income and demand down
3. Slump- GDP low- redundancies- unemployment high
4. Recovery- production increase and employment increases
5. Long term- trend line
Business environment can be affected by economic uncertainty
individual consumer
Labour productivity- output per time period/number of employees at work x100
Distinctive capabilities- business strategy by Kay-a valuable businesses
capability that one firm has but other firms struggle to replicate
Expansion- the action of becoming larger
Organic growth- growth a company achieves by increasing output and enhancing
sales internally
Inorganic growth- mergers or takeovers- rather then a increase in a company’s
own businesses activity
Rapid growth- when a business experiences a quick increase of sales and
revenue for a period of time
Gross profit margin- gross profit/revenue x100
Gross profit- revenue-total variable costs
Consumer protection legislation- set of laws that protect consumers from unfair
deception or harmful practices by businesses when buying goods and services
Cutting costs- in when a business will reduce there costs e.g. cost of production
PESTLE: political, economic, social, technology, legal, environmental
PESTLE+C: political, economic, social, technology, legal, environmental and
competition
Sales forecast- a predication for revenue/amount of sales based on previous data
JIT (just in time)- when stock arrives just before it is needed in order to reduce
waste by having as little stock as possible
2.10:
Inflation can happen due to demand or costs rise for business
Inflation= overall increase in the price of goods and services within an economy
Two types:
Demand pull inflation- too much demand then economy can supply
- Fast increase in disposable income- ppl buy more and business cant supply
good quickly enough so increase their prices
- Can make profit margins go up
- Business can put up pirces in response to high demand with costs going
up
Cost push inflation
- When rising costs push up prices
- Employees wages rises can make prices go up
, - Can make profit margins go business if business doesn’t put up their
prices
- Rate of inflation is percentage change in price of goods and servuces in
economy
When inflation is high spending goes up- ppl rush to buy more before prices go
up futher
Makes UK exports expensive abroad
Bad for economy
Deflation
- Decrease in price of good and services
- Opposite of inflation
- Causes fall in productivity- business wont keep endlessly supplying the
market goods nobody wants
Inflation can be tracked using the consumer price index
- Can be used as a mesure of inflation in a country
- Uses numbers to track the changes in average cost
- Index number= average value of the basket/base value of the basket x100
Inflation affects business strategy
- Business producing premium goods- most likely to be affected by inflation
as consumers have less to spend to look at cheaper alternative products
- Reduce prices
- Periods of inflation can be a good time for firms to expand- if intrast rates
are lower then rate of inflation its cheap for them to borrow money to
invest in new premises/machinery
- Business compare uk/forgein rates
Exchange rates
SPICED
Strong
Pound
Imports
Cheaper
Exports
Dearer
WPIDEC
, Weak
Pound
Imports
Dearer
Exports
Cheaper
Exchange rates can be compared using a currency index
- Compare different countries
Can effect price off imported and exported products
Government and the economy
Government spending influences the economy
- Spend things on social services, health, education
- Changes in gov may effect firms within economy controlled by
government
- E.g. infrastructure
Taxation
- Government taxes ppl and businesses
- Income tax- high rates= less disposable income= less money to spend
- Profit taxes- sold trader and partnership- income tax and limited
companies- corporation tax- profits reduced
- Value of premises
- Idirect tax e.g. VAT
- Discourage spending
- Reducing taxes/subsidys- encourage businesses to expand
Business cycle
1. Boom- GDP high- production= max capacity- shortages and prices
increase= wages rise
2. Recession- income and demand down
3. Slump- GDP low- redundancies- unemployment high
4. Recovery- production increase and employment increases
5. Long term- trend line
Business environment can be affected by economic uncertainty
