...Economic Environments within Businesses Economy Great Britain is one of the world's leading industrialized nations. It has achieved this position despite the lack of most raw materials needed for industry. It must also import 40% of its food supplies. The UK has been dependant on the export of manufactured goods in exchange for various raw materials and food. The countries manufacturing sector includes; machines tools, electric power, motor vehicles, metals, chemicals,paper, textiles, clothing etc. Economics is concerned with the process of satisfying the needs and wants of the population, by using the limited resources of the economy in the most efficient way. There are generally considered to be four main objectives of an economy: A low level of unemployment A low level of inflation A high level of economic growth A good foreign trading position Gross Domestic Product (GDP) The value of a country's overall output of goods and services at market prices, excluding net income from abroad. GDP can be estimated in three ways which, in theory should yield identical figures. They are; Expenditure basis: how much money was spent Output basis: how many goods and services were sold Income basis: how much income (profit) was earned. The main criticisms of GDP as a realistic guide to a nation's well-being are that; It is preoccupied with indiscriminate production and consumption. It includes the cost of damage caused by pollution as a positive...
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...Macroeconomic and Microeconomic environment Macroeconomics looks at aspects of economies as a whole instead of the individual markets, basically a study looking at the bigger picture of the economy. Offering a broader focus is probably the most important difference between microeconomics and macroeconomics. This branch of economics is one of the two most general fields, particularly looking at the structure, behaviour, decision-making and performance of national, regional and global economies. Through the study of aggregated indicators, macroeconomists understand the functioning of whole economies. By using GOP, unemployment rates and price indices an explanation can be made in regards to the relationships between national income, current unemployment levels, changes in employment, pricing levels, inflation, savings, investment, international trade and the rate of growth. Even though there is a broad field of study where macroeconomics is concerned, two areas of research are of utmost importance: * Understanding the causes and consequences of the business cycle, which include fluctuations in trade, economic activity and trade during periods of rapid economic growth and periods of decline. * Understanding the demands of a particular product, service or commodity during a long period of time in which national income increases. Macroeconomics enables large corporations and governments to analyse variables and behaviour's to find answers to questions such as...
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...ANALYSING THE ENVIRONMENT Analysis of the macro-environment may be analysed into six segments using the PESTEL framework. Political Economic Socio-cultural Technological Environmental Legal THE POLITICAL ENVIRONMENT Government is responsible for providing a stable framework for economic activity and, in particular, for maintaining and improving the physical, social and market infrastructure. Public policy on competition and consumer protection is particularly relevant to business strategy. GOVERNMENT POLICY Government policy affects the whole economy, and governments are responsible for enforcing and creating a stable framework in which business can be done. A report by the World Bank indicated that the quality of government policy is important in providing three things: Physical infrastructure (e.g. transport) Social infrastructure (education, a welfare safety net, law enforcement, equal opportunities). Market infrastructure (enforceable contracts, policing corruption). PUBLIC POLICY ON COMPETITION In a perfect monopoly, there is only one firm that is the sole producer of a good that has no closely competing substitutes, so that the firm controls the supply of the good to the market. The definition of a monopoly in practice is wider than this, because governments seeking to control the growth of monopoly firms will probably choose to regard any firm that acquires a major share of the market as a potential monopolist. Monopoly generally exploits customers, but it may have...
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...normal signature and student number above and on the cover of the exam book(s) used. PART A: Multiple Choice Questions (30%) 1. Market supply curves tend to be more price elastic if the time period is long rather than short because— a. Firms are better able to adapt their output rates to price changes in the long run. b. External economies will be realized. c. Consumers are better able to find substitute goods. d. Input prices would be expected to increase with the length of the time period. e. Economic profits are reduced to zero in the long run. Marginal product exceeds average product when— a. Total product is increasing. b. Average product is increasing. c. Average product is decreasing. d. a and b. e. a and c. A frequently cited reason for increasing returns to scale is— a. Increased input prices. b. Greater specialization. c. External diseconomies. d. Larger fixed costs with a larger plant size. e. Difficulty of managing a huge enterprise. 2. 3. C5, Economic Environment of Business, Final Examination, page 1 of 8 1 4. In determining whether to add an additional flight to an established airline, which of the following costs are irrelevant? a. Depreciation on the existing aircraft. b. The salary of the president. c. Insurance on the aircraft. d. Administrative costs. e. All of the above. If the two assumptions of profit maximization and freedom of entry and exit are satisfied, then in the long run each firm will operate where— a. Price equals short-run and...
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...Global Economic Environment Generally, global economic environment is influenced by various factors such as technological, environment, political, socio-cultural, and demographic that directly affects businesses. Economic environment refers to the nature of economic systems and policies, distribution of income and wealth, and level of income. Indeed, economic environment has a complex and very dynamic nature; it is continually changing along with the changes in political situations and government policies. Global Economic Environment Mainly, global economic environment is comprised of several components including the economic systems, conditions, policies, legislations, and environment. Indeed, the economic policies being imposed in every business unit are significantly influences by the overall condition of economy. This includes the improvements that occurred in economic conditions such as the purchasing power of the public, standard of living, distribution of income, and supply and demand. Mainly, these factors reflect the size of the market. Another factor reflecting the economic condition is the business cycle, which is critical to every business unit. It refers to the different stages such as prosperity, boom, decline, depression, and recovery. The economic condition of a country can be understood through its national income, per capita income, and distribution of income, demand and supply trends, inflation rate, industrial growth rate, trends in industrial sickness...
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...Economic Environment: Markets require purchasing power as well as people. The available purchasing power in an economy depends on current income, prices, savings, debt, and credit availability. Marketers must pay close attention to major trends in income and consumer-spending patterns. Marketers often distinguish countries with five different income-distribution patterns: (1) very low incomes; (2) mostly low incomes; (3) very low, very high incomes; (4) low, medium, high incomes; and (5) mostly medium incomes. Marketers must pay careful attention to major changes in incomes, cost of living, interest rates, savings, and borrowing patterns because they have a strong impact on business and PepsiCo is always aware of economic environment for Pepsi. Natural Environment: In the natural environment, marketers need to be aware of raw materials shortages, increased energy costs and pollution levels, and the changing role...
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...Economic Environment Apple’s domestic environment is the United States of America. While Rostow’s five stages of development can be somewhat helpful, some argue that Rostow’s model was developed with western cultures in mind and is not applicable to least developed countries (Ford, 2004). Because Apple was developed in a westernized culture, the model is slightly more helpful. However, several economists believe the model, as a predictive one is not very helpful, that instead its main use it to highlight the need for investment. Rostow’s five stages of development is essentially a growth model (Ford, 2004). Because of the model being created in the 1960s, some of the stages do not exactly match up to today’s businesses. For example, stage one is labeled as the traditional society. In this stage, the producers consume their own goods. It goes on to explain that when goods were traded, they were traded for other goods, rather than someone paying money for them. At this time, agriculture was the most important industry. Today, Apple definitely does not trade goods directly for other goods. Apple sells directly to consumers in exchange for money. This goes for both domestic and global environments. Stage two becomes slightly more similar to today’s economy. Specialization increases and transportation is accessible and used to support trade. Apple has corned the market with their technological devices and offers store around the country. Also, because of mass transportation...
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...CHAPTER 2 THE GLOBAL ECONOMIC ENVIRONMENT SUMMARY A. The economic environment is a major determinant of global market potential and opportunity. In today’s global economy, capital movements are the driving force, production is uncoupled from employment, and capitalism has vanquished communism. Based on patterns of resource allocation and ownership, the world's economies can be categorized as market capitalism, centrally-planned capitalism, centrally-planned socialism, and market socialism. The final years of the twentieth century were marked by transitions toward market capitalism in many countries that had been centrally controlled. However, great disparity still exists among the nations of the world in terms of economic freedom. B. Countries can be categorized in terms of their stage of economic development: low income, lower middle income, upper middle income, and high income. Gross domestic product (GDP) and gross national income (GNI) are commonly used measures of economic development. The 50 poorest countries in the low-income category are sometimes referred to as least-developed countries (LDCs). Upper middle-income countries with high growth are often called newly industrializing economies (NIEs). Several of the world’s economies are notable for their fast growth; the BRIC nations include Brazil, Russia, India, and China. The Group of Seven (G7), Group of Eight (G-8), and Organization for Economic Cooperation and Development (OECD) represent...
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...Assignment 1 Questions Derrick Shoemaker 10/14/2012 MBA6008 - Global Economic Environment Assignment 1 Questions Question 5 page 21 a) Chart of production possibities, the production function shows the relationship between the quantity of inputs used in production and the quantity of output resulting from production. b) Economy is at "C" then automobile will be at "6" and forklifts would be at "19" Notice that the production possibility curve slopes downward from left to right that means that there is an inverse relationship between automobiles and forklifts. So this would be a representation of its shape. c) In the law of opportunity when the slop is steep there's a high opportunity cost for automobiles and low opportunity for forklifts. But that of that it being flat of 3 automobiles to 20 forklifts the opportunity for forklifts are higher to automobiles. d) 1. No 2. When technology improves, when more resources are discovered it will give more output with the same inputs. What I mean is that when technology improves the entire production possibility curve shifts outward. 3. As with technology this would also increase in international growth which would lead to growth in the production curve. This also would state that current production possibilities could outgrow it production curve. Income per year | | Savings per year | | | | 20,000 | | 1500 | 15,000 | | 1000 | 10,000 | | 500 | 5,000 | | 0 | 0 | | -500...
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...INDIAN ECONOMIC ENVIRONMENT The Economy of India , ninth largest in the world by nominal GDP and third largest by purchasing power parity (PPP), is going to touch new heights in coming years. The history of Indian economy can be broadly divided into three phases: Pre- Colonial, Colonial and Post Colonial. Pre Colonial: The economic history of India since Indus Valley Civilization to 1700 AD can be categorized under this phase. During Indus Valley Civilization Indian economy was very well developed. It had very good trade relations with other parts of world, which is evident from the coins of various civilizations found at the site of Indus valley. Before the advent of East India Company, each village in India was a self sufficient entity. Each village was economically independent as all the economic needs were fulfilled with in the village. Colonial: The arrival of East India Company in India ruined the Indian economy. There was a two-way depletion of resources. British used to buy raw materials from India at cheaper rates and finished goods were sold at higher than normal price in Indian markets. During this phase India's share of world income declined from 22.3% in 1700 AD to 3.8% in 1952. Post Colonial: After India got independence from this colonial rule in 1947, the process of rebuilding the economy started. For this various policies and schemes were formulated. First five year plan for the development of Indian economy came into implementation in 1952...
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...Deregulation is when there is a decrease in the barriers of entry to certain industries. This is done by cutting red tape i.e. reducing the amount of bureaucratic processes. This will enable more firms to enter and compete in that specific industry. A reduction in red tape and government intervention will also lead in increase productivity as they do not have to worry too much about the restrictions by the government. In addition, the government can also remove regulations such as health and safety regulations, environmental regulations, and employment protection. More companies will be able to start up in the industry under consideration and this will increase competitiveness. When there is an increase in competitiveness, efficiency will be increased, quality will be increase, price will be decreased, and possibly there will be technological improvements as well. For example, the aviation industry in Europe has gone through a process of deregulation and this has led to the proliferation of many private airlines, including budget airlines (such as Easyjet, Ryanair, Monarch, BMI, Thomas Cook, FlyTui). This has increased the level of competitiveness in this industry and thus, reducing the cost (or improving the services) for consumers. Evaluation 1 There is an increase in the external cost. For example, as there are so many different airlines, people are flying more often, more planes are using the airspace, and this has increased the amount of pollution caused by...
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...Forecast economic growth 2003 and 2004 for the EU, US and Japan; different views of institutions. [pic] Inhoudsopgave: 1. Inleiding 3 1.1 Instituten 3 1.2 Gross Domestic Product 3 1.3 opdracht 3 2. Groeicijfers CPB, EC, WB en IMF 4 2.2 Het Centraal Plan Bureau (CPB) 4 2.3 De Europese Commissie 5 2.4 De Worldbank 5 2.5 Het International Monetairy Fund (IMF) 6 3. Verklaring van de verschillen. 7 3.1 Publicatietijd 7 3.2 Manier van berekenen 7 3.3 Oorlog in Irak 7 Gebruikte bronnen 8 Inleiding 1.1 Instituten Wereldwijd zijn er veel instituten die zich bezig houden met het voorspellen van macro-economische variabelen zoals de rente, de olieprijs en de dollarkoers. Met de toenemende globalisering worden deze macro-economische factoren steeds belangrijker voor de resultaten van ondernemingen, het bruto binnenlands product (bbp), het consumentenvertrouwen en de gezinsconsumptie. Er zijn nationale instituten, instituten rondom internationale samenwerkingsverbanden en instituten rondom centrale banken. Hieronder een aantal voorbeelden van dit soort instituten. |Nederland |Centraal Planbureau |CPB | |Duitsland |Deutsches Institut für Wirtschaftsforschung |DIW | |UK |The National Institute of Economic & Social Research ...
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...Discussion Board 4 Liberty University Business 620 Global Economic Environment Frank Bentley November 3, 2014 3. Under what condition should a firm continue to produce in the short-run if it incurs losses at the best level of output? Continuing to produce in the short term depends heavily on fixed costs for the company when compared to negative returns. When the profits for a company begin to decrease to the point of negative return they must attempt to minimize those loses while continuing to produce a product for profit. In the short run, a company has at least one fixed cost (Salvatore, 2012). The company should only produce in the short-run if the losses incurred do not exceed fixed costs. At this point production yields zero output and if fixed costs can be covered the company can still produce. If variable costs can’t be eliminated production becomes pointless. 5. As an employer wants to reduce the production cost during the economic recession, he/she could choose to (1) lay off some workers without changing wages or (2) keep all workers but cut wages for all. Which method would you choose? Why?...
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...Summary of article The central bank of Singapore; Monetary Authority of Singapore (MAS), has reported slowing down the pace of the Singapore dollar's appreciation to stimulate the economic growth. During the beginning of the 4th quarter this year, it was reported that Singapore's core inflation had reached a six-month high record of 0.6 per cent in the year, but the possible issue of deflation due to the slow global growth is still the primary concern for most. One of the other reason that why MAS wants to use a more aggressive easing approach to slow the local dollar’s gain against its trading partners could be the need of guarding against the import inflation. Due to high demand, Singapore yearly imports around S$464 billion of goods and major of them are the fruits and vegetables, the weakening of Singapore dollar compared to US dollar makes the prices of most imported perishable items more expensive. The secondary reason could be coming up with fiscal expansionary policy measures to revive the growth mainly because the government’s spending on building infrastructure over the past years have shown positive effects. Lastly, the estimation of unexpectedly stronger advance Gross Domestic Product (GDP) growth in the third quarter could be the reason for slowing the pace of local dollar appreciation. Introduction Due to the scarcity of land and labor, Singapore is facing not enough manpower and at the same time underemployment and...
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...Global Economic Environment In: Business and Management Global Economic Environment Global Economic Environment Generally, global economic environment is influenced by various factors such as technological, environment, political, socio-cultural, and demographic that directly affects businesses. Economic environment refers to the nature of economic systems and policies, distribution of income and wealth, and level of income. Indeed, economic environment has a complex and very dynamic nature; it is continually changing along with the changes in political situations and government policies. Global Economic Environment Mainly, global economic environment is comprised of several components including the economic systems, conditions, policies, legislations, and environment. Indeed, the economic policies being imposed in every business unit are significantly influences by the overall condition of economy. This includes the improvements that occurred in economic conditions such as the purchasing power of the public, standard of living, distribution of income, and supply and demand. Mainly, these factors reflect the size of the market. Another factor reflecting the economic condition is the business cycle, which is critical to every business unit. It refers to the different stages such as prosperity, boom, decline, depression, and recovery. The economic condition of a country can be understood through its national income, per capita income, and distribution of income, demand and...
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