External Influences on Business Growth

External Influences on Business Growth

NCFE Level 1/2 Award in Business and Enterprise

Multiple Choice

External influences on a business refer to

• Factors that are good for the business

• Factors that are bad for a business

• Factors that are outside the control of the business

• Illegal actions by a business

External Influences

External Influences affect business activities, Some of these influences are unpredictable (take the recent COVID Pandemic)

External influences change regularly, therefore Businesses must take action to cope. The best action will vary depending upon the situation they face and upon the business type

Multiple Select

An appreciate in the exchange rate of the UK pound to US dollar will mean goods sold in the US will be

• more expensive for customers in the US

• less expensive for customers in the US

• lead to less demand of the UK product in the US

• lead to more demand of the UK product in the US

Multiple Select

If businesses choose to act ethically it can lead to

• increased costs

• decreased costs

• good publicity

• bad publicity

Multiple Select

An increase in interest rate can affect business activity by:

• customers spending more on goods

• customers spending less on goods

• businesses with overdrafts having lower costs

• businesses with overdrafts having higher costs

Multiple Select

Extra government spending and lower taxes will lead to

• lower output

• higher output

• lower employment

• higher employment

Multiple Choice

tax on company's profit is known as

• gift tax

• income tax

• capital gains tax

• corporation tax

Multiple Choice

Tax on factory workers weekly wage is known as

• gift tax

• income tax

• corporation tax

• VAT

Open Ended

Examination Question One

A village shop employs two part-time staff. They are paid 5p per hour more than the current living wage. The shop has recently taken out a bank overdrat of £5,000

Explain how the changes in the external influences below may affect this shop

(A) An increase in the living wage by 12p per hour (2)

(B) A decrease in interest rates (2)

Open Ended

Examination Question Two

The Government has announced that it is going to reduce the rate of coroporatin tax by 2%. Explain how this reduction in corporation tax may affect FCFA Ltd (2)