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Business flashcards

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Topic 1: Understanding business activity

Needs and wants: A need is something essential for survival, such as food and shelter. A want is something desired but not essential, such as a particular brand or a luxury item.
Scarcity: The basic economic condition that resources are limited compared with unlimited wants. It is why every choice has an opportunity cost.
Opportunity cost: The next best alternative given up when a choice is made. Only the single next best alternative counts.
Specialisation, and one drawback: An individual, business or region concentrates on a narrow range of goods or services. Output and efficiency tend to rise, but it creates interdependence: the producer relies on others for everything it does not make.
Added value: Added value = selling price − cost of bought-in inputs. It is not profit, because rent, wages and other costs still have to be paid from it.
A loaf sells for $2.10 and its ingredients cost $0.60. What is the added value?: 2.10 − 0.60 = $1.50 per loaf.
Ways to add value without simply raising the price: Branding, better quality, convenience, design, after-sales service, speed, attractive packaging.
Primary, secondary and tertiary sectors: Primary: extracting natural resources (farming, mining, fishing). Secondary: making goods from raw materials (manufacturing, construction). Tertiary: providing services (retail, banking, transport).
Classify an oil refinery, a fishing boat and a call centre: Oil refinery: secondary. Fishing boat: primary. Call centre: tertiary.
How does the balance of sectors change as an economy develops?: It shifts from primary towards secondary and then tertiary. Developed economies have a large tertiary sector; a decline in the secondary sector is called deindustrialisation.
Private sector: Owned by individuals, with a profit motive.
Public sector: Owned by government; provides essential services and may run at a loss for social benefit.
Is the public sector the same as a public limited company?: No. The public sector is owned by the government. A public limited company is a private sector business owned by shareholders.
Characteristics of successful entrepreneurs: Willing to take calculated risks, self-motivated and determined, creative or innovative, organised and able to decide under pressure, good with people, and resilient.
How does a business plan help an entrepreneur?: It helps raise finance, gives targets to compare results against, shows up weaknesses early, and reduces the chance of costly surprises.
Why and how do governments support business start-ups?: Why: more jobs, more output, more tax revenue and more competition. How: grants, training schemes, advice and cheaper loans.
Methods of measuring business size, and what is not one: Number of people employed, value of output, and capital employed. Profit is not a measure of size: it shows performance.
Internal (organic) and external growth: Internal: using the business’s own resources (new products, outlets, selling online); slower, lower risk, easier to control. External: merger (two firms agree to combine) or takeover (one firm buys control of another); faster but costly.
Why do some businesses remain small?: Demand is limited to a small or local niche, the owner wants a manageable workload and full control, finance is hard to get, the owner wants to avoid risk, or personal service would be lost.
Business failure cause: lack of management skills: Poor decisions on pricing, stock or hiring, and weak financial control.
Business failure cause: liquidity problems: Not enough cash to pay bills when due, even if the business makes a profit on paper.
Business failure cause: changes in the business environment: New competitors, changing tastes, higher costs, recession and new technology.
Limited and unlimited liability: Limited liability: an owner can lose only the amount invested in the business. Unlimited liability: an owner is personally responsible for all the business’s debts.
Unincorporated business and limited company: Unincorporated (sole traders, partnerships): the business and owner are treated as one, with unlimited liability. Limited company: a separate legal entity owned by shareholders, with limited liability.
Sole trader and partnership: main strengths and weaknesses: Sole trader: full control and all the profit, but unlimited liability, little capital and a heavy workload. Partnership: more capital and skills and a shared workload, but unlimited liability, disputes and shared profit.
Private and public limited company: the key difference: A public limited company can sell shares to the general public through a stock exchange; a private limited company cannot.
Public limited company: strengths and weaknesses: For: very large capital, shares easy to trade, limited liability. Against: costly to run, more must be published, takeover risk, control spread widely.
Franchise and joint venture: Franchise: the franchisee buys the right to use one brand and its methods, paying fees and royalties and following rules. Joint venture: two or more businesses combine for a project, sharing cost, risk and profit.
Public corporation: A public sector organisation owned by the government and run by appointed managers, mainly to provide a service to the public.
A trader owes $160,000 and selling the assets raises $95,000. What happens to the shortfall?: Shortfall = $65,000. As a sole trader, the owner could have to pay it from personal assets. A limited company owner who invested $30,000 loses only that $30,000.
Business objectives: examples and why they matter: Examples: survival, growth, profit and market share. They give direction, allow results to be compared with targets, help managers choose between options and motivate staff.
Market share formula: Market share (%) = business sales ÷ total market sales × 100
A firm’s sales rise from 54,000 to 63,000 while the market grows from 360,000 to 420,000. What happens to its market share?: It stays at 15% (54,000 ÷ 360,000 and 63,000 ÷ 420,000), even though sales grew by 16.7%.
Social enterprise: A business whose main aim is social or environmental, with most profit reinvested in that aim. It still sells goods or services to cover its costs.
Internal and external stakeholders: Internal: owners and shareholders, managers, employees. External: customers, suppliers, lenders, government, the local community.
Give two pairs of stakeholders whose objectives conflict: Shareholders (higher profit) and employees (higher pay). The local community (quiet, clean surroundings) and managers (a bigger factory).
Private and public sector objectives: Private sector: profit, growth, survival, market share. Public sector: a service for all, affordable prices, jobs and social aims; losses may be covered by government.

Topic 2: People in business

Benefits of a well-motivated workforce: Higher labour productivity, reduced absenteeism and lower labour turnover.
Labour productivity, absenteeism rate and labour turnover formulas: Labour productivity = total output ÷ number of employees. Absenteeism rate = working days lost ÷ working days available × 100. Labour turnover = leavers in the year ÷ average number employed × 100.
Maslow’s hierarchy of needs, lowest to highest: Physiological (a living wage), safety (secure job, safe conditions), social (friendship, teamworking), esteem (respect, recognition, promotion), self-actualisation (reaching one’s potential).
Herzberg: hygiene factors and motivators: Hygiene factors cause dissatisfaction if poor but do not motivate if good (pay is mainly a hygiene factor). Motivators give real satisfaction, such as achievement and responsibility.
Taylor’s theory of motivation: Workers are motivated mainly by money. Break work into small tasks, set output targets, link pay to output and supervise closely. It ignores social and esteem needs.
Wage and salary; bonus and commission: Wage: tied to hours worked. Salary: a fixed yearly amount paid monthly. Bonus: rewards meeting a target. Commission: a percentage of each sale.
Job rotation and job enrichment: Job rotation: moving employees between tasks at a similar level (sideways). Job enrichment: giving employees more responsibility and challenge (upwards).
Output rises from 200 to 220 items per worker. What is the percentage change in productivity?: (220 − 200) ÷ 200 × 100 = 10%
Span of control and chain of command: Span of control: the number of people reporting directly to one manager or supervisor. Chain of command: the line of authority from the top to the bottom of the business.
Tall and short structures compared: Tall: many levels, narrow spans, slower communication, close supervision, higher management salaries. Short: few levels, wide spans, faster communication, looser supervision, lower salaries.
Delegation: Passing authority to carry out a task, and to make decisions about it, to someone lower in the hierarchy. The manager stays accountable.
Benefits and risks of delegation: Benefits: frees managers for planning, uses staff skills, motivates, trains future managers. Risks: mistakes, lack of skill or time, a task done differently from how the manager would do it.
The five functions of management: Planning, organising, coordinating, commanding and controlling.
Commanding versus controlling: Commanding gives instructions before the work; controlling checks results afterwards.
Autocratic, democratic and laissez-faire leadership: when each fits: Autocratic: urgent decisions, inexperienced staff, emergencies. Democratic: skilled staff and complex decisions needing commitment. Laissez-faire: expert or creative staff.
Trade union: An organisation of workers formed to protect and improve its members’ pay, conditions and interests, acting together.
Effects of a trade union on the business: Higher costs from pay and conditions agreements, possible disruption and slower change; but a single channel to talk to staff, fewer unresolved disputes and often lower labour turnover.
Recruitment and selection: Recruitment: attracting suitable applicants for a vacancy. Selection: choosing the best applicant from those who applied.
Job description and person specification: Job description: what the post involves (title, duties, responsibilities). Person specification: the skills, qualifications and qualities wanted.
When to recruit internally and when externally: Internal: when speed and low cost matter, reliability is known, or you want to reward loyalty. External: when new skills or ideas are needed, no suitable person is employed, or the business is expanding fast.
Induction, on-the-job and off-the-job training: Induction: introduction for new starters. On-the-job: learning while doing the work; the trainer’s output falls and bad habits can pass on. Off-the-job: learning away from the workplace; suits specialist skills but costs more.
Dismissal and redundancy: Dismissal: the employer ends the contract because of the employee’s conduct or performance (about the person). Redundancy: the job is no longer needed, for example after automation (about the job).
Part-time and full-time employees compared: Part-time: matches cover to busy periods and pays only for hours needed, but means more people to train and manage. Full-time: reliable, committed cover, but paid even in quiet spells.
Legal controls over employment (in general terms): Employment contracts, unfair dismissal, discrimination, health and safety, and the legal minimum wage.
Effective communication; internal and external communication: Effective: the message is received, understood and acted on. Internal: within the business. External: with customers, suppliers and others outside it.
How do you choose a communication method?: By urgency, complexity, the number of receivers, and the need for a record or feedback.
Email: one strength and one weakness: Strength: fast, detailed and recorded. Weakness: overload, and it can be ignored.
A closure must reach 40 staff within the hour. Which method suits?: A text or messaging app for speed and reach, followed by a short email for a record. A letter would be too slow.
Communication barriers and their fixes: Jargon or language: plain words or translation. Long chain: fewer levels. Overload: prioritise and summarise. Wrong method: match method to message. Technical failure: a back-up channel.
Problems caused by poor communication: Mistakes, delays, low morale, lost customers and orders, and conflict.

Topic 3: Marketing

Role of marketing: Identifying and satisfying customer needs, maintaining customer loyalty, and building customer relationships. Loyalty is the repeat buying; a relationship is the contact that encourages it.
Why do markets become more competitive?: Easier entry for new firms, online selling, global rivals, price comparison websites and better-informed customers.
Niche and mass marketing: Niche: a small, specific market; fewer rivals and a higher price possible, but small sales and risk if tastes change. Mass: a large, general market; high volumes and lower unit costs, but more rivals and price competition.
Market segmentation, and the examples in the syllabus: Dividing a market into groups of customers with similar characteristics or needs. Examples: age, socio-economic grouping, location and gender.
Benefits of market segmentation: Products, prices and promotion aimed at each group, less wasted spending, gaps in the market found, and possibly higher sales and loyalty.
Primary and secondary research: Primary: new data collected first-hand; specific and up to date, but slow and costly. Secondary: existing data collected by others; cheaper and quicker, but may be out of date or not specific.
Primary research methods: Postal questionnaires, online surveys, interviews and focus groups.
Secondary research methods: Online research, government sources, and paying for commercial market research reports.
What affects the accuracy of market research?: Sample size and how representative it is, clear non-leading questions, honest and unbiased researchers and respondents, recent data from a reliable source, and enough people responding.
45 of 150 respondents choose option B. What percentage is this, and what is its pie chart angle?: 45 ÷ 150 × 100 = 30%. Angle = 45 ÷ 150 × 360 = 108°.
Stages of the product life cycle: Development (no sales), introduction (low sales), growth (rising fast), maturity (peak, flat), decline (falling).
Extension strategy, with examples: An action to lengthen the life of a product before it declines: new packaging or design, new variants, new markets, new uses, a price change, fresh promotion.
Cost-plus, competitive, penetration, skimming and promotional pricing: Cost-plus: unit cost plus a mark-up. Competitive: in line with many similar rivals. Penetration: low launch price to gain share fast. Skimming: high launch price, lowered later. Promotional: short-term cut to clear stock or boost sales.
A unit costing 12 sells at 15. What is the mark-up on cost, and the profit as a share of price?: Mark-up = 3 ÷ 12 × 100 = 25% of cost. Profit = 3 ÷ 15 × 100 = 20% of the selling price.
Price elastic and price inelastic demand: Elastic: quantity demanded changes proportionately more than price; a price cut can raise revenue. Inelastic: quantity demanded changes proportionately less than price; a price rise can raise revenue.
Distribution channels: via wholesaler, via retailer, direct: Wholesaler: wide reach and holds stock, but several margins and less control. Retailer: shops reach customers, but take a margin. Direct: the producer keeps the whole margin and customer data, but pays delivery and has less reach.
Advertising and sales promotion: Advertising: a paid message that builds awareness and image over time. Sales promotion: a short-term incentive such as discounts, samples, loyalty cards or competitions.
E-commerce: opportunities and threats for the business: Opportunities: wide reach, open all hours, lower costs, customer data. Threats: heavy competition, security and website failures, delivery costs.
Marketing strategy: The plan for how a business uses the marketing mix to reach its marketing objectives with its target customers. The four parts must be consistent with each other and the budget.
Misleading promotion, faulty goods and dangerous goods: Misleading promotion: claims, prices or images that give a false impression. Faulty goods: do not work as they should or as described. Dangerous goods: could harm the user or others.
Effects of legal controls on marketing strategy: Claims must be provable and adverts checked, more testing and quality control, refunds, replacements and recalls, so costs rise; but customers trust the business more and honest firms are protected.
Problems of entering foreign markets: Cultural differences (language, tastes, religion, customs, symbols), lack of knowledge of customers, rivals, rules and distribution, the cost of distance, and established local brands.
Joint venture and licensing as ways into a foreign market: Joint venture: local knowledge and shared cost and risk, but shared profit and possible disagreements. Licensing: another firm makes or sells the product for a fee or royalty; low cost and risk, but weaker control of quality and image.
A licensee sells $800,000 of goods and pays a 5% royalty. What is the royalty?: 0.05 × 800,000 = $40,000

Topic 4: Operations management

Production and productivity: Production is how much is made. Productivity is output compared with the resources used, such as labour productivity = output ÷ number of workers.
1,800 loaves with 9 workers, then 2,200 loaves with 10 workers. What happens to labour productivity?: 1,800 ÷ 9 = 200 and 2,200 ÷ 10 = 220 loaves per worker, a rise of 10%.
Ways to increase efficiency: Automation and technology (faster, steadier output, but costly and jobs may go) and improved labour skills through training (fewer mistakes, but trained staff may leave).
Lean production, just-in-time and Kaizen: Lean production: producing with as little waste as possible. JIT: very low inventories, with materials arriving as needed; depends on reliable suppliers. Kaizen: continuous improvement through many small changes suggested by workers.
Job, batch and flow production: Job: one item to a customer’s order (high unit cost, very flexible). Batch: identical items in groups, then the process is reset (medium cost). Flow: continuous production of standard items on a line (lowest unit cost, inflexible).
CAD and CAM: CAD: computer-aided design; designs and tests products on screen. CAM: computer-aided manufacturing; computers control machines and robots. Linked, a design goes straight to production.
Why hold inventories, and the cost of doing so: Why: buffer against late supplies, meet unexpected demand, bulk-buying discounts, seasonal peaks. Costs: storage, insurance, damage or going out of date, and money tied up.
Fixed, variable, total and average cost: Fixed: do not change with output. Variable: change directly with output. Total cost = fixed costs + total variable costs. Average cost = total cost ÷ output.
Fixed costs $27,000, variable cost $12 per bag. Find average cost at 1,500 and at 3,000 bags.: 1,500: (27,000 + 18,000) ÷ 1,500 = $30. 3,000: (27,000 + 36,000) ÷ 3,000 = $21. Fixed costs are spread over more bags.
Economies of scale: the five types: Purchasing (bulk discounts), marketing (advertising spread over more units), financial (lower interest for larger firms), managerial (specialist managers), technical (large equipment at high output).
Diseconomies of scale: Average cost rises when a business becomes too large, through poor communication, lack of commitment from employees and weak coordination.
Break-even output and margin of safety: Break-even output = fixed costs ÷ contribution per unit (price − variable cost per unit). Margin of safety = expected or actual output − break-even output.
Price $30, variable cost $12, fixed costs $27,000, expected sales 2,100. Find break-even, margin of safety and profit.: Contribution = $18. Break-even = 27,000 ÷ 18 = 1,500 bags. Margin of safety = 600 bags. Profit = 18 × 2,100 − 27,000 = $10,800.
What moves break-even output?: Higher fixed costs or higher variable cost per unit: break-even rises. A higher price or lower fixed costs: break-even falls.
Limitations of break-even analysis: It assumes all output is sold, a constant price and variable cost per unit, and fixed costs that stay fixed; it normally covers one product, and forecasts may be wrong.
Quality: How well a product or service meets customer needs and expectations. It is not the same as luxury or a high price.
Quality control and quality assurance: Quality control: checking products to find faults, at checkpoints or at the end, mainly by inspectors. Quality assurance: organising the whole business so faults are prevented at every stage, involving everyone.
Why does quality matter?: Repeat custom and a stronger reputation, fewer refunds and scrapped items, less risk of legal action, keeping business customers, and possibly a higher price.
A sample of 400 tiles has 14 cracked. Estimate the cracked tiles in an output of 8,000.: 14 ÷ 400 = 3.5%. 8,000 × 0.035 = 280 cracked tiles (assuming the sample is representative).
Quality assurance methods: Written standards, supplier checks, training, workers checking their own work, planned machine maintenance and using customer feedback.
Location factors for a manufacturer: Land and building costs, labour (skills, wages, availability), nearness to materials and to markets, transport links, utilities and room to expand, and government help.
Location factors for a service business: Closeness to customers and footfall, competitors, visibility and access, rent, and staff. For online services, customer location matters little.
Factors in choosing a country to locate in: Labour cost and skills, market size and growth, transport, tariffs and trade barriers, exchange rates, political stability, language and culture, government incentives and legal controls.
How can legal controls affect location?: Limits on land use (keeping factories out of residential or protected areas), permission needed to build, environmental rules, safety standards, and incentives to locate where jobs are needed.
Relocation: reasons and risks: Reasons: premises too small, rising rent, customers or suppliers moving, better access to labour or markets. Risks: moving costs, disrupted production, staff leaving, customers not following.

Topic 5: Financial information and decisions

Three main reasons a business needs finance: Start-up capital, capital for expansion, and additional working capital.
Internal and external sources of finance: Internal: retained profit, owner’s savings, sale of assets, reducing stock or collecting debts sooner. External: bank loan, overdraft, trade credit, share issue, grants, micro-finance, crowd-funding.
Debt and equity: Debt: provided by a lender, repaid with interest, control unchanged, interest still due in a bad year. Equity: provided by owners or shareholders, no set repayment, rewarded by dividends, control may be shared.
Micro-finance and crowd-funding: Micro-finance: very small loans, often to people who cannot get bank loans. Crowd-funding: many people each giving a small amount, usually online; it also tests demand.
Four factors in choosing a source of finance: Size and legal form of the business, the amount required, the length of time needed, and existing loans.
A company needs $120,000 for ovens that last ten years. Why a long-term bank loan rather than an overdraft?: The loan matches the length of the need. An overdraft is short-term and can be withdrawn. Shares would avoid interest but share ownership.
Cash-flow forecast: A prediction of cash expected to come in and go out over future months, with the expected balance each month.
Net cash flow and closing balance: Net cash flow = inflows − outflows for the month. Closing balance = opening balance + net cash flow, and becomes next month’s opening balance.
Opening balance 1,500, inflows 4,200, outflows 4,500. Find the closing balance.: Net cash flow = −300. Closing balance = 1,500 − 300 = 1,200.
Ways to overcome a short-term cash problem: An overdraft, delaying supplier payments, asking debtors to pay sooner; also delaying a purchase, selling an unused asset or the owner adding money.
Working capital, and an example: Working capital = current assets − current liabilities. Inventories 9,000 + receivables 3,000 + cash 500 = 12,500; payables 4,000 + overdraft 1,000 = 5,000; working capital = 7,500.
Is a negative cash balance the same as a loss?: No. A negative balance is a cash shortage. Profit and cash differ: a credit sale adds to profit now but brings in cash later.
Profit, and why it matters: Profit = revenue − total costs. It is a reward for the owners’ risk and enterprise, and retained profit is a source of finance with no interest and no new owners.
Layout of an income statement for a limited company: Revenue − cost of sales = gross profit − expenses = profit − tax − dividends = retained profit
Why can profit and cash move in opposite directions?: Credit sales count as revenue before the cash arrives; buying a non-current asset uses cash but is not a cost against this year’s revenue in the same way; a loan brings in cash but is not profit.
Gross profit and profit; profit and retained profit: Gross profit is before expenses; profit is after expenses. Retained profit is the profit left after tax and dividends.
Limitations of an income statement: It covers a past period only, does not show cash, forecasts based on it rely on assumptions, and it does not show what the business owns or how it is financed.
Classify: premises, inventories, payables, bank overdraft, five-year bank loan, share capital: Premises: non-current asset. Inventories: current asset. Payables: current liability. Overdraft: current liability. Five-year loan: non-current liability. Share capital: equity.
Net assets and equity: Net assets = total assets − current liabilities − non-current liabilities. Equity = share capital + retained profit, and equals net assets.
Capital employed (standard form): Capital employed = equity + non-current liabilities, which also equals total assets − current liabilities.
Non-current assets 200,000, current assets 60,000, current liabilities 80,000, bank loan 50,000. Find net assets and working capital.: Net assets = 200,000 + 60,000 − 80,000 − 50,000 = 130,000. Working capital = 60,000 − 80,000 = −20,000, a weak short-term position.
What happens when inventories are sold at cost for cash?: Inventories fall and cash rises by the same amount, so current assets stay the same but are more liquid. The cash can reduce an overdraft.
Profitability and liquidity: Profitability: how well a business earns profit compared with its revenue or the capital invested in it. Liquidity: the ability to pay short-term debts when they are due.
Gross profit margin, profit margin and ROCE formulas: Gross profit margin = gross profit ÷ revenue × 100. Profit margin = profit ÷ revenue × 100. ROCE = profit ÷ capital employed × 100.
Current ratio and acid test ratio formulas: Current ratio = current assets ÷ current liabilities. Acid test ratio = (current assets − inventories) ÷ current liabilities.
Revenue 90,000, cost of sales 54,000, profit 13,500, capital employed 90,000. Find the GPM, profit margin and ROCE.: GPM = 36,000 ÷ 90,000 × 100 = 40%. Profit margin = 13,500 ÷ 90,000 × 100 = 15%. ROCE = 13,500 ÷ 90,000 × 100 = 15%.
Current assets 36,000 (inventories 18,000), current liabilities 24,000. Find the current ratio and acid test ratio.: Current ratio = 36,000 ÷ 24,000 = 1.5. Acid test = 18,000 ÷ 24,000 = 0.75.
Which ratios do a lender and a supplier look at?: A bank or other lender: liquidity and profit, to decide whether and on what terms to lend. A supplier: the current ratio and acid test, to decide whether to give credit.

Topic 6: External influences on business activity

The business cycle: four stages: Growth (GDP rising steadily), boom (GDP rising fast, very low unemployment), recession (GDP falling), slump (GDP very low, weak demand).
Gross Domestic Product (GDP) and economic growth: GDP: the value of all output of goods and services made within a country over a set time. Economic growth: a rise in GDP over time.
Government economic objectives: Increasing GDP (economic growth), low unemployment, and low, stable inflation.
Effects of a rise in interest rates: Dearer loans, so less borrowing and spending by businesses and customers. Firms with large variable-rate loans see profit hit directly.
A $100,000 loan’s interest rate rises from 6% to 9%. What is the change in interest?: $6,000 rises to $9,000: up $3,000, or 50%. The rate rose by 3 percentage points, not 50%.
Effects of a rise in income tax and in sales tax: Income tax up: households have less to spend, so demand falls. Sales tax up: prices rise, so demand may fall.
Business responses to a recession: Cut costs, run promotions, add cheaper lines, look for new markets, hold less stock and delay investment. Each has a cost.
Externality, external cost and external benefit: Externality: a cost or benefit of a business decision that falls on people outside the business and its customers. External cost: pollution harming local health. External benefit: jobs and better roads in the area.
Sustainable development: Meeting the needs of today without reducing the ability of future generations to meet theirs.
Ways a business can contribute to sustainable development: Switch to renewable energy, cut waste and recycle, use resources from managed sources, design products to be repaired, and reduce transport distances.
Pressure group, and its methods: A group that tries to influence business or government decisions on a cause. Methods: publicity, petitions, protests, calls for boycotts and lobbying government.
Legal duty and ethical choice: A legal duty is something a business must do. An ethical choice is something it ought to do, beyond the law, such as auditing suppliers for child labour or paying suppliers a fair price.
Globalisation: causes, opportunities and threats: Causes: cheaper transport, faster communication, lower trade barriers, growth of MNCs. Opportunities: bigger markets, cheaper inputs, spread of risk. Threats: more competition, lost home sales to cheap imports.
Import tariff and import quota: Tariff: a tax on imported goods; raises tax revenue. Quota: a limit on the quantity that may be imported; raises no revenue directly.
A 25% tariff is placed on a Rs 800 imported item. What is the new price?: 800 × 1.25 = Rs 1,000
Multinational company (MNC): host country gains and losses: An MNC is a business that operates in more than one country. Gains: jobs, exports, more choice, investment. Losses: local businesses lose sales, profits are repatriated, possible pollution, jobs can leave quickly.
Home currency appreciates: effects on exporters and importers: Exporter: the foreign price rises, so it is less competitive. Importer: inputs are cheaper, so costs fall. Depreciation has the reverse effects.

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Written for Cambridge O Level Business Studies (7115), syllabus 7115 (2026).

Cards by Marlbridge Academic Team; 10 restate definitions from the 7115 revision notes. This deck was reviewed by Salman Ahmad on 2026-11-05. Report an error.

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