External Influences is a core part of GCSE Business Studies. Revise the key concepts and common mistakes below, then lock them in with the free games.
Key concepts
Interest rateCost of borrowing or reward for saving (%)
Exchange ratePrice of one currency in another
InflationGeneral rise in prices over time (%)
Strong pound£ buys more foreign currency — imports cheaper
Weak pound£ buys less foreign currency — exports cheaper
Real incomeIncome adjusted for inflation
CompetitionRival firms targeting the same customers
RecessionTwo quarters of negative economic growth
GlobalisationWorld trade and culture becoming more linked
TariffTax on imports raising their price
SubsidyGovernment payment to lower business costs
Pressure groupGroup lobbying firms to change behaviour
PoliticalGovernment policy and stability affecting business
EconomicGrowth, interest rates, inflation, unemployment
Common mistakes to avoid
Questions where students often pick the tempting wrong answer — make sure you know the right one:
What are the four Ps of the marketing mix?✗ The four Ps are Product, Price, Profit, and People. ✓ Product, Price, Place (distribution), and Promotion — the controllable variables a business uses to satisfy customers and achieve objectives.
What does break-even output represent?✗ Break-even is where the business makes the most profit. ✓ The level of output where total revenue equals total costs — neither profit nor loss. It is NOT the level where profit is maximised; profit grows beyond break-even.
Do all businesses aim only to maximise profit?✗ Yes, profit is every business's only goal. ✓ No — aims vary: survival, growth, market share, social aims.
Does a sole trader have limited liability?✗ Yes, sole traders have limited liability. ✓ No — sole traders have unlimited liability for business debts.
What is the difference between profit and revenue?✗ Profit and revenue are different words for the same thing. ✓ Revenue is total income from sales (price x quantity sold); profit is revenue minus total costs — what is left after paying for everything.
Practise External Influences — free games
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