A-Level Business: Global Business and the External Environment

Everything in this part of the course happens to a firm rather than being decided by it, and the questions are written that way: something moves, and the firm has to work out what it has just become and what it can still choose.

The something that moves first is the pound. A machine priced at twenty pounds cost a eurozone buyer twenty-four euros and now costs thirty, and nobody changed a price — which is the whole lesson, and the reason the firm's margin per machine is exactly what it was while its sales are not. The wrong option here is the division rather than the multiplication, thirteen euros thirty, because it carries the belief that produces it: that a strong currency is good news for an exporter.

Then the same movement is put to a firm that buys its components in euros and sells a third of its output into the eurozone, where it pulls in both directions at once. A thirty-euro component drops from twenty-five pounds to twenty, and the machine gets dearer abroad in the same breath, so whether the firm is better off depends on the balance between what it buys abroad and what it sells there. "Pricing in pounds protects us" is offered as an answer, because a sterling price staying still while the euro price moves under it is precisely what has just happened.

Three questions are about a thing being cheaper than it looks. A firm moves production abroad for wages and finds the infrastructure and the skills were part of the cost too. A tariff is imposed and the question is who hands over the money — the importer, to their own government, which is why it reaches the domestic shopper and not the foreign exporter. And a firm signs fixed-price contracts for a year and then meets twenty per cent on its inputs, discovering that a fixed price is not protection from inflation but exposure to it.

The rest are decisions with a stated constraint. A firm with capital, no local knowledge and a brand it will not risk has to pick an entry method, and the answer turns on which method fails one of those three rather than on which is cheapest. An interest rate rise lands on three firms placed differently, and the one with the debt is exposed directly rather than through demand. A campaign fails because of what a symbol meant in a place nobody asked about. A cheap supplier is weighed against an audited one — a certain cost now against an uncertain cost avoided later, with both "ethics always pays" and "ethics is only a cost" available and both wrong. And a factory closure that raises the dividend and empties a town is put to the shareholder-primacy view and the stakeholder view as two positions, not as a question with an approved answer.

Every firm, product and person described is invented, no real company is named, and no country's actual trade policy or tariff is described. Nothing is reproduced from any exam board specification, past paper or mark scheme.

Zestly is an independent study tool. It is not affiliated with any exam board and it is not an exam centre.

• Convert a price across a currency movement in the right direction, and say what it does to volume rather than margin
• Work out how an appreciation affects a firm that both buys and sells abroad
• Match a market entry method to stated constraints on capital, knowledge and risk
• Say who pays a tariff and where the cost lands
• Read an interest rate rise as a direct cost for some firms and a demand effect for others
• Explain why a fixed-price contract is exposure to inflation rather than protection from it
• State the corporate responsibility decision as a certain cost against a risk reduced
• Set out shareholder primacy and the stakeholder view as two positions on one decision

Ten invented cases: a twenty-pound machine that becomes thirty euros without anybody changing a price, a manufacturer pulled both ways by the same movement, a firm with capital and no local knowledge choosing how to enter a market, an offshoring decision where wages were not the whole cost, a tariff and the question of who hands over the money, three firms meeting one interest rate rise, a year of fixed prices meeting twenty per cent on inputs, a campaign that failed on a symbol, a cheap supplier against an audited one, and a factory closure that raises the dividend. Twelve flashcards carry the vocabulary — appreciation, depreciation, licensing, joint venture, foreign direct investment, tariff, quota, multinational, corporate social responsibility, stakeholder, shareholder primacy.