External influences on business activity IGCSE Business Studies

External influences on business activity is an IGCSE Business Topic for which we have put together lessons and online test to get you ready for your exams.

6.1 Economic issues

6.1.1 Business cycle:

• Main stages of the business cycle, e.g. growth, boom, recession, slump
• Impact on businesses of changes in employment levels, inflation and Gross Domestic Product (GDP)

6.1.2 How government control over the economy affects business activity and how businesses may respond:

• Identify government economic objectives, e.g. increasing Gross Domestic Product (GDP)
• Impact of changes in taxes and government spending
• Impact of changes in interest rates
• How businesses might respond to these changes

6.2 Environmental and ethical issues

6.2.1 Environmental concerns and ethical issues as both opportunities and constraints for businesses:

• How business activity can impact on the environment, e.g. global warming
• The concept of externalities: possible external costs and external benefits of business decisions
• Sustainable development; how business activity can contribute to this
• How and why business might respond to environmental pressures and opportunities, e.g. pressure groups
• The role of legal controls over business activity affecting the environment, e.g. pollution controls
• Ethical issues a business might face: conflicts between profits and ethics
• How business might react and respond to ethical issues, e.g. child labour, paying fair prices to suppliers

6.3 Business and the international economy

6.3.1 The importance of globalisation:

• The concept of globalisation and the reasons for it
• Opportunities and threats of globalisation for businesses
• Why governments might introduce import tariffs and import quotas

6.3.2 Reasons for the importance and growth of multinational companies (MNCs):

• Benefits to a business of becoming a multinational and the impact on its stakeholders
• Potential benefits to a country and/or economy where a MNC is located, e.g. jobs, exports, increased choice, investment
• Potential drawbacks to a country and/or economy where a MNC is located, e.g. reduced sales of local businesses, repatriation of profits

6.3.3 The impact of exchange rate changes:

• Depreciation and appreciation of an exchange rate
• How exchange rate changes can affect businesses as importers and exporters of products, e.g. prices, competitiveness, profitability (exchange rate calculations will not be assessed)