Understand the impact of the economic environment

The success of a business is affected by many different sections and decision makers in the local, National and global economy. A local, sole trader business cannot think they are only affected by local issues. Every business, even government run businesses are affected by:
Global problems
Unemployment
Suppliers
Government
European Union
Consumers
The Uk has a mixed economy this means we are part a free market and part a planned market A Free MarketResources are owned by an individualPrices are set through demand and supply
The profit motivation and control to be creative and run your own business encourages entrepreneurs ( risk takers) and this is good for the consumer and the economy. Why? |

A Planned Market Resources are owned by the statePrices are set by the stateThe supply of goods and services does not depend on the profit motivation |

The Mixed economyThe UK has a large private sector as well as the public sector which provides education, health and local authority services.Strengths of the private sectorEmployees and employers can create their own personal wealth through profit and hard work.A greater range of products is sullied.People have greater freedom to choose and buy what they want.Competition helps keep prices down and encourages new ideas.Strengths of the public sectorFor public services to operate they do not depend on profit and will often be provided even when they are being run at a loss.The provision of basic services is available to all. |

Whether a business is in the private sector or the public sector stability of the economy is important.
Stability means: being able to make deals with suppliers, other businesses in the knowledge that people you supply to on credit will be able to pay you back at the price agreed in the time span agreed so that your business can make short and long