...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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...Summary The world's biggest miner BHP Billiton (BHP) is cutting jobs at its coal mines after closing a loss-making mine thoroughly in Queensland early this year (Stewart 2012). BHP's job cuts is accompanied by other global mining companies such as Rio Tinto to confront a retrogressive market with falling industrial commodity prices and increasing costs. The future of Australia's mining boom which is largely dependent on Chinese demand for commodities driven by its economic growth is of particular concern (Stewart 2012). Application of Concepts Both economic environment and the concept of corporate social responsibility (CSR) can be demonstrated in this article. In particular, the nature of BHP's mining business, which is regarded as a significant contributor to Australian economy (Maddock and McLean 1987) determines its need to pay close attention to the opportunities and threats posed by the global economic environment (Blainey 2003). For example, slowdown in China's economic growth and recent European economic recession have impact on Australia's resource exports (Stevens 2012). The Australian mining industry which has once benefited from the surge in demand driven by the rapid growth of emerging economies in Asia since 2003 and the shortage of global supply (Stevens 2012) is now facing a difficult period signaled by the drop of China's GDP growth from 10 per cent to a mere 8 per cent (Connolly and Orsmond 2011). China's demand for resources has declined as a result of...
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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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...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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...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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...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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...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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...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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...The two business’ selected by me to complete this criteria are Oxfam and MacDonald’s. I will be explaining both types of each company and i will also explain the purpose of their existence and also describe their type of ownership. Oxfam Oxfam is a company that is run by people who are looking to do some voluntary work or also to get work experience. This company focuses more on raising money to help the less fortunate. They do this by simply gathering human resources from the company and set them on travelling spots or just regular places where people can pass by and generously give their money to this charity organisation. They also pay some shops to have little money savers so they can gather more income in different places. By doing this they are raising money to help fighting poverty in all corners in the world, and this is what Oxfam is about, helping others. As integrated in the business world this company would be very likely to survive in case of no capital flow within the company. This company also has it’s own products in order for the business to be kept alive. Oxfam can also sell second hand stuff people donate to them in order to make money to keep on fighting poverty worldwide. Oxfam has also got its website, which means they can be globally active. They sell all sorts of clothes from shirts to jeans, shoes to accessories and much more for female and male. Oxfam also sells gift sets that can bring the company some more income. The purpose of the Oxfam...
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...GLOBAL When it comes to who takes the lead this year for the global over all best sales, Toyota Motor Corporation takes the crown. It is a three-way race between General Motor, Volkswagen Group and Toyota. Last year Toyota was bumped from the top spot by GM only because GM booked a three percent gain from global sales of 2.28 million in the quarter. VW who was number three last year was reported to have an 11 percent advance, and at the end of March they stayed in third place with 2.26 million; although it is said the VW is going to be the world’s biggest auto maker by 2018. (Automotive 2012) Worldwide sales at the Japanese carmaker surges 32 percent to 2.36 million units in the January- March quarter; the target record sales is said to be of 9.58 million this year. GM or VW has yet to offer a full-year sales forecast (Automotive News 2012). In 2007 is when Toyotas’ global sales peaked at 9.37 million, until it had its worldwide recall crises, which executives blame “reckless expansion” in the early 2000’s, and natural disasters in Japan and Thailand, which is now recovering. They had the biggest percentage jump from the previous years as it came back from a quarter where production was harmed and ruined by Japans March 11 earthquake. President Akio Toyoda is calling 2012 a “fresh start” and expects large improvements in sales, profits, product, and quality. BUSINESS Social media has become a big part of everyday life. Myspace, Facebook, Twitter, Instagram...
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...Online Discussion 1: Environmental Policy under a Parliamentary System As we learned in last week’s lesson, the Canadian system of government can pose challenges to the setting of environmental policy. Let’s explore this issue in our discussion this week by considering the following questions as well as any ideas relevant to this issue that you think of as the discussion progresses. You do not need to address all of these questions in a single post - in fact, it is probably better to limit each post to one or two well argued points. Do you think our federal-provincial system of government makes it impossible to pass effective environmental legislation? Would you change anything about the division of powers between the federal and provincial/territorial governments in order to improve the design and implementation of environmental policy in Canada? Is environmental policy superior in the United States (can we learn any lessons from their approach including things to avoid)? Can you find any examples of successful provincial/federal cooperation on environmental policy implementation in Canada? Finally, do you think that we are in for a new era of environmental policy cooperation with the election of a new government this fall? Post 1: Hi Kristen, In addition to your extensive research on the comparison of both the US and Canada’s differences in environmental policy, I have done some research myself and have read an interesting article that discusses lessons from America...
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...Case Scenario Read the following case scenario carefully and answer all the questions given at the end of the case. Sugar the new oil as prices soar By Andrew Clark The price of sugar on global commodity markets has doubled since the beginning of the year and is close to a 28-year high as hedge funds and speculators jostle to bet on the possibility of an international shortage of the world's favourite natural sweetener. For financiers seeking adrenaline-driven price lurches, sugar has become the new oil. Historically, raw sugar has traded at between 10 and 12 US cents per pound at the New York Board of Trade. But the price briefly touched 24.85 cents last month, its highest since 1981, and sugar is now hovering around the 23 cent mark. The rise has come amid a broader commodity boom. Metals and energy rose sharply today as the dollar weakened and global stock markets moved higher. There are some solid underlying reasons for the upward lurch in the price of raw sugar. Heavy rain has disrupted milling in the world's largest producer of sugar, Brazil, where a sizeable portion of sugarcane has been diverted from food use into ethanol fuel. Meanwhile the biggest consumer of sugar, India, has had a dismal monsoon season and has gone from being a net exporter of sugar to an importer. "The key premise has really come from Brazil and India," said Sudakshina Unnikrishnan, a commodities analyst at Barclays Capital. "The bulk of the problem lies in inclement weather conditions...
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