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IB Business and Management - 2016 Syllabus > External environment > Flashcards

Flashcards in External environment Deck (16)
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A general increase in prices and fall in the purchasing value of money (you can buy less with your money).

It affects a business because the products prices increase and so do the wages of any employees the company has.


currency depreciates

Refers to the decline of the price of one currency against another.

Such fluctuations in exchange rates significantly affect a wide range of companies. The effects can range from mild to dramatic depending on the product or service supplied by the business and the competitive landscape.


consequences of (rising) unemployment

1. Increased taxes must be paid by the company.
2. Consumer demand falls due to less disposable money in people's hands.



A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.


exchange rate

The price of a nation’s currency in terms of another currency.
An exchange rate thus has two components, the domestic currency and a foreign currency, and can be quoted either directly or indirectly.


interest rate

The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets. Interest rates are typically noted on an annual basis, known as the annual percentage rate (APR).


monetary policy

Refers to the actions of central banks to achieve macroeconomic policy objectives such as price stability, full employment, and stable economic growth.


fiscal policy

Refers to the tax and spending policies of the federal government.


3 Examples of Political Changes:

• Laws were changed
• Laws were removed
• Laws were added
- Regulatory laws
- Labour laws
- Tax laws
- Reporting laws


3 Examples of Economic Changes:

Exchange rate


3 Examples of Technological Changes:

• Internet allows faster communication (ergo, outsourcing, collaboration)
• More people own digital devices, making some products less attractive such as newspapers. Such devices also makes more information available to them, forcing companies to be transparent and conform to CSR.
• Computers become faster, which as many consequences including faster transactions and calculations of any kind.


3 Examples of Environmental Changes:

• Earthquake destroyed a production facility
• Environmental Interest Groups
• Climate change causes sea level rise and increases water scarcity


3 Examples of Ethical Changes:

• Age of workers
• Salary of employment
• Working hours
• Safety procedures of your employments
• Safety of your products


3 Examples of Social Changes:

• Increasing environmental awareness: people want to leave a smaller carbon footprint, hence want electric cars etc.
• Increasing empowerment of women: more women in the world are now empowered to work, adding to the global workforce. Women who have not achieved that yet, are have louder voices than ever.
• More physically aware: people monitor what they eat


3 Examples of Legal Changes:

• A company name is taken and cannot be used again due to its legal protection
• Violation against patents
• Changing workers right, such as working hours, force companies to conform to them



social, technological, environmental, ethical, political, legal, economical