Unit 7

External Influences

The intention of this unit is to develop ideas on the factors external to a business that influences
its decisions. It is intended that students will understand the impact that external factors have on
business behaviour, but not a detailed understanding of economic issues or the law. So, for
example, students should understand how interest rates impact on decisions, and why
Governments need to change them, without any detailed understanding of monetary economics.
The intention is that, where possible, the focus is on the students own country.

These topics have been left to the end of the course as they are probably less accessible for
students and require prior knowledge of the main function areas of business such as marketing,
production and finance.

Teaching can be focused on Government issues in the students own country with substantial use
of newspapers and other media.

The topics will require access to a suitable textbook. For this purpose, IGCSE Business Studies
by Karen Borrington and Peter Stimpson is recommended. Chapters 4, 5, 25 of IGCSE Business
Studies Second Edition are relevant, particularly for case studies and exercises. The
accompanying CD-ROM has useful class activities and worksheets.

This is a difficult area to assess, so multiple choice questions and case studies are useful options.

Topics covered in this unit are:

7.1 Mixed and market economies
7.2 Key features of own national economy
7.3 Business reactions to market change
7.4 Competition and business
7.5 Business cycle
7.6 Government influence over decision making by using economic policy measures
7.7 Impact of business decisions on people, the economy and the environment
7.8 Government economic policy measures
7.9 Impact of technology on business
7.10 Ethical issues
7.11 Workforce and the working environment
7.12 The consumer
7.13 International trade
7.14 Problems of entering new markets abroad
7.15 Exchange rates
7.16 Concept of exchange rates and how changes in them affect businesses
7.17 External costs and benefits
7.18 Revision

The Scheme is neither intended to be prescriptive, nor complete as local conditions will
vary: time and resource availabilities are likely to differ considerably. More, the Scheme is
intended to give ideas to teachers upon which they can build. It is certainly not intended
that teachers undertake all of the activities shown in the various units that would be
impossible in the time usually available but rather to offer choices which could depend
on local conditions. Timings for topics have not been given as there is a great deal of
variability in time available for the qualification from centre to centre.

Topic Specification Chapter Activities Resources Glossary
7.1 Mixed and
market
economies
4 Descriptive teacher
lead work
www.tutor2u.net Market economy
Mixed economy
Planned economy

7.2 Key features of
own national
economy
Demonstrate an
awareness of the
impact that
business activity
can have on the
environment

4 Fact finding,
internet based.
Visit national government sites e.g
www.economy.gov.ae (United Arab
Emirates),
http://ncb.intnet.mu/govt/index.htm ,
(Mauritius),
http://www.gksoft.com/govt/en/pg.html
(Papua New Guinea),
www.fedfin.gov.ae (United Arab
Emirates), www.mop.gov.kw (Kuwait),
http://www.mof.gov.sa/index_e.html
(Saudi Arabia). Also see resource list.


7.3 Business
reaction to
market
changes.
7.4 Competition
and business
Show
understanding of
market changes
and how these
might be
responded to by
business
4 Best handled
through a study of
developments in
students own
country.
A suitable Assignment to get students to
study the impact of changes in markets,
competition and economic structure of
their own country. National Government
web sites could be used.

Business cycle
Boom
Recession

7.5 The main phases
of the cycle

Impact of
boom/recession
on business


Business cycle
Show
understanding of
the changing
importance of
categories of
business within
their own national
4

Topic Specification Chapter Activities Resources Glossary
economy, in
terms of
employment and

contribution to
national wealth.
7.6 Government
influence over
decision
making
by using
economic
policy
measures

State the role of
the government
in influencing
decisions within
local, national
and international
contexts and
explain how
businesses may
react

Exercise to find
out extent to
which government
intervenes in own
country, perhaps
with a comparison
with other
countries.
This can be
extended to cover
location decisions
(see 3.5), and can
also cover 7.7

www.jusbiz.org International Debt role
play (go to link for resources).
Visit national government sites e.g
www.economy.gov.ae (United Arab
Emirates),
http://ncb.intnet.mu/govt/index.htm ,
(Mauritius),
http://www.gksoft.com/govt/en/pg.html
(Papua New Guinea),
www.fedfin.gov.ae (United Arab
Emirates), www.mop.gov.kw (Kuwait),
http://www.mof.gov.sa/index_e.html
(Saudi Arabia)
National Government websites including
www.ipa.gov.pg (Papua New Guinea),
www.boi.go.th/english/business
(Thailand), www.investinspain.org
Marketing issues on www.asa.org.uk or
national equivalent, www.admedia.org
also there are international marketing
issues on www.tka.co.uk/magic

Development area
Exchange rates
Interest rates
Inflation
Monopolies
Planning
permission
Unemployment

7.7 Impact of
business
decisions on
people, the
economy and
the
environment.
Explain why
intervention in
business activity
is required so that
social and
economic
objectives of the
state can be
4,5
Topic Specification Chapter Activities Resources Glossary
better achieved.
Showan
awareness
of how business
decisions have
an
impact on others
(society,
environment and
people)

Showan
awareness of the
main methods of
government
intervention
4,5
7.8 Government
economic
policy
measures.
Demonstrate an
awareness of the
impact that tax
and interest rate
changes might
have on business
decisions
4 Economic Policy IGCSE Business Studies CD-ROM
class activity on
IGCSE CR-ROM



Explain the
impact that
technological
change has on a
business
7.9 Impact of
technology on
business.
Internet and e-
commerce
5 Assignment to
explore the impact
of technology on
business.
www.ecomfocus.com
7.10 Ethical issues Show an
awareness
of ethical
considerations in
business activity
5 Business Ethics
worksheet on
IGCSE CD-ROM.
Or Web based
exercise to find
IGCSE Business Studies CD-ROM
www.greenpeace.org.uk
www.cooperativebank .
co.uk www.novo.dk
www.mcdonalds.com and follow links

Topic Specification Chapter Activities Resources Glossary
some organisations to ethical issues.
that influence
business
behaviour. May be
worth developing
into ethical
questions (e.g. see
McDonalds, Co-op
bank)

7.11 Workforce and
the working
environment.
Demonstrate an
understanding of
health and safety
requirements
5 Link in with HRM
unit
Use local websites to explore local H & S
issues.

7.12 The consumer Understand how
and why
consumer
interests are
protected.
5 Link in the
marketing unit
Use local websites to explore local
consumer issues.

7.13 International
trade
Show an
appreciation of
how international
trade influences
an economy and
its business
sector by creating
opportunities for
growth, increased
competition and
consumer choice
International trade
game. Teacher
explanation.
Any economics textbook.
7.14 Problems of
entering new
markets abroad
Demonstrate an
understanding of
the problems of a
business when
entering a new
market abroad.
25
Suitable for
investigating
opportunities and
problems in own
economy.

Balance of
payments
Exchange
rate
appreciation
Exchange
rate
depreciation
Exchange
rates
Imports
Exports

Topic Specification Chapter Activities Resources Glossary
7.15 Exchange rates Understand how
importing/
exporting
decisions might
be affected by
changes in
exchange rates.
Exchange rates
worksheets on
IGCSE CD-ROM

IGCSE Business Studies CD-ROM


7.16 Concept of
exchange rates
and how
changes
in them affect
business

Appreciate the
implications of
tariff
barriers, quotas
and
exchange rate
changes for
businesses that
trade
internationally
www.wto.org , www.worldbank.org ,
information on the single European
currency can be found at UK business
education sites such as www.tutor2u.net ,
www.bized.ac.uk


7.17 External costs
and benefits
Appreciate the
concept of social
costs and
benefits.
Showan
understanding of
how business
activity can
create them.
Social/
environmental
costs and benefits
class activity on
IGCSE CD-ROM
or the Tourism
Game

IGCSE Business Studies CD-ROM.
The Tourism Game at www.jusbiz.org
through link to resources (aimed at
younger students but suitable)

Cost-benefit
External
benefits
External
costs
Social costs
Opportunity
costs
Private
benefits
Private costs
Social
benefits

Apply such
concepts to a
given business
decision.
5, 6
Topic Specification Chapter Activities Resources Glossary
7.18 Revision End of unit test Test for students at
end of unit
Multiple choice questions and case
studies e.g. IGCSE CD-ROM, revision
websites such as www.learn.co.uk ,
www.revision-notes.co.uk and
www.bbc.co.uk/schools/gcsebitesize/busi
ness/ and revision questions at end of
chapters of IGCSE Business Studies
textbook.