Presentation is loading. Please wait.

Presentation is loading. Please wait.

LO3 - Know the impact of the economic environment on businesses THE BUSINESS ENVIRONMENT.

Similar presentations


Presentation on theme: "LO3 - Know the impact of the economic environment on businesses THE BUSINESS ENVIRONMENT."— Presentation transcript:

1 LO3 - Know the impact of the economic environment on businesses THE BUSINESS ENVIRONMENT

2 Scenario Criteria Tasks Assessment12345 Learning Outcome (LO) The learner will: Pass - The assessment criteria are the pass requirements for this unit. The learner can: Merit - For merit the evidence must show that, in addition to the pass criteria, the learner is able to: Distinction - For distinction the evidence must show that, in addition to the pass and merit criteria, the learner is able to: 1Know the range of different businesses and their ownership P1Describe the type of business, purpose and ownership of two contrasting businesses M1Analyse the type of business, purpose and ownership of two contrasting businesses D1Evaluate the effect of a selected business changing its ownership status P2 Describe the different stakeholders who influence the purpose of two contrasting businesses 2Understand how businesses are organised to achieve their purpose P3Describe how two businesses are organised P4 Explain how their style of organisation helps them to fulfil their purposes 3Know the impact of the economic environment on businesses P5Describe the influence of two contrasting economic environments on business activities within a selected organisation M2Analyse the impact of changes in demand and supply on a selected business D2Evaluate to what extent a selected business is likely to be affected by changes in the economic environment 4Know how political, legal and social factors impact on business P6Describe how political, legal and social factors are impacting upon the business activities of the selected organisations and their stakeholders LO2 - Assessment Criteria

3 Scenario Criteria Tasks Assessment12345  P5 - Learners could write a report for the management team of an organisation. They should describe the influence of two contrasting economic environments upon business activities within the selected organisation.  M2 - Learners will need to go on to consider changes in demand and supply on the business, and analyse the impact of those changes.  D2 - Learners will need to evaluate the extent to which a business is likely to be affected by changes in the economic environment.  In earlier learning outcomes, learners were required to focus on two businesses. In learning outcome 3 they just need to be concerned with one. Learners need to understand that any business does not exist in isolation but is affected by a range of possible economic factors.  They could undertake a group task where the key economic variables that can affect a business are identified and researched. Learners should then use the data that they have obtained and look for changes in the behaviour of businesses using examples from newspapers or news websites. Each group could then be asked to present their findings  Assessment Criteria P5, M2, D2

4 Scenario Criteria Tasks Assessment12345 Focusing on ONE of the businesses selected during LO2, you need to provide evidence for the following 5 tasks within this case study: 1.Economic EnvironmentsEconomic Environments 2.Business DemandsBusiness Demands 3.Supply for the BusinessSupply for the Business 4.Comparing Economic EnvironmentsComparing Economic Environments 5.Evaluate Economic EnvironmentsEvaluate Economic Environments Focusing on one of the businesses selected from the two selected during ao2 Task 1 (P5.1) – Focusing on a business, describe the influence of two contrasting economic environments that impact a business, based on:  Ownership of Business  Business Operations - Functionality of Businesses Activities  Movement of Capital Importance of Stability Impact on business of changes in the economic environment GrowthGrowth, Recession, Ripple EffectRecessionRipple Effect Levels of Inflation Availability and Cost of CreditLabourChanges in Government Policy

5 Scenario Criteria Tasks Assessment12345 Economic factors sometimes play the biggest part in business change ◦ Importance of Stability ◦ Impact on business of changes in the economic environment – Growth, Recession and the Ripple Effect ◦ Levels of Inflation - such as minimum wage introduction or regulation of wages ◦ Availability and Cost of Credit – such as the availability of loans and the interest rate ◦ Labour – the availability of the correct people to work ◦ Changes in Government Policy – legal, fiscal and monetary  Globalisation – integration of national economies into international economy through trade, foreign direct investment, capital flows, migration, and the spread of technology

6 Scenario Criteria Tasks Assessment12345  Businesses 'stability' rests on how successfully a business ensures its 'on-going ability' to harvest value from its assets (i.e. 'protect' its income generating capability and 'retain' its value as a business).  Ever wonder what makes one company more financially stable than another? ◦ Financial Statements provide information on a company's profitability, equity, available cash, and other financial data that illustrate how well a company is doing.  A good marker/measurement of a business achieving stability, is when a business is operating in a steady manner where it can be deemed as self-sustaining with finances generated allowing the business to independently co-exist without the need for additional funding ◦ Good examples of this is Arsenal Football Club, where they have managed to buck the trend of depending on the owners to fund the operations of the business. Instead they are operating within there means and investing for the future without impacting the short- term goals

7 Scenario Criteria Tasks Assessment12345 Business Growth can be measured and monitored in various ways, such as:  Increase, from period to period, for the value/production of goods and services  An increase, as in size, number, value, or strength; extension or expansion: There are only two ways to grow a business: I N C R E A S E SALES and D E C R E A S E COSTS Measurements and Monitoring of growth can be performed through:  Assess your Options - Planning growth strategies including finance options, diversification, new product development and consolidation  Strategic Planning - Formulate and implement a clear strategy to drive business  Business Plan - Monitoring progress, reviewing plans, setting targets and allocating resources  Action Plan – Identify areas your business will need to work on to grow  Acknowledge the Challenges  Utilise the knowledge from within the business

8 Scenario Criteria Tasks Assessment12345 RECESSION = DEPRESSION???? Let’s have a look at this statement:  Economists officially define a recession as two consecutive quarters of negative growth in gross domestic product (GDP)gross domestic product  A loss of jobs, a decline in real income, a slowdown in industrial production and manufacturing and a slump in consumer spending - spending that drives more the economy  Disposable income is reduced considerably because sales revenues and profits decline  manufacturer will cut back on hiring new employees  In the last century there has been a recession every 7 to 10 years and these last on average 2 years. Post War 1918, great Depression , Post War depression , 4 Day week 1974, Housing collapse 1990, Dot.com bubble burst, 1999, Companies cannot predict when the recession will happen and often do not prepare for it. When the going is good then why rock the boat.  Other countries face similar recessions but this can be spurred on by political change or regime change.

9 Scenario Criteria Tasks Assessment12345  Where business decisions/choices impact other areas of the business (internally or externally).  The ripple effect is a term used to describe a situation where, like the ever expanding ripples across water when an object is dropped into it, an effect from an initial state can be followed outwards incrementally.  Ripple Effect Example – Building Trade ◦ A labourer (electrician, plumber, plaster, builder) that would normally fix up house(s) are sitting tight ◦ This in turn impacts Do-It-Yourself retailers (B&Q, Wickes, Focus, etc...) with” fix it” people ◦ So Do-It-Yourself retailers buy less from their suppliers ◦ The suppliers need to lower staff in order to make ends meet ◦ Staff can’t find jobs so they start to hold on to their money and hence the cycle repeats ◦ Ripple effects can be predicted by managing suppliers and watching the market but their influence takes time to get over.

10 Scenario Criteria Tasks Assessment12345  Inflation is a general rise in prices, or a fall in the value of money. It means that year after year, £100 buys gradually less and less.  In simple language, inflation means rising prices and it shows the increase in cost of living. In economics, inflation is explained as rise in the general level of prices of goods and services in an economy over a period of time. With the rise in price levels a unit of currency will buy fewer goods and services. As a result, the purchasing power of money will be reduced with inflation. In other words the real value of money will be lost day by day along with inflation.  Inflation is measured by the Rate of Inflation or Inflation Rate which is the percentage change in a general price index calculated as an annualized figure.  A low inflation rate is beneficial to a country and zero or negative inflation is considered as bad. Also, a high inflation is harmful to an economy and it affects an economy in many ways. How is Inflation Measured?  Inflation is measured by the Retail Price Index (RPI). This is like a huge shopping trolley which Government inspectors take round the shops every month. They fill it with a representative sample of all the goods and services that people typically buy. Then they add up the prices and compare them with the previous month’s prices. Although figures are collected monthly, they are normally quoted annually e.g. inflation is 2% pa which means average prices are rising by 2% every year.

11 Scenario Criteria Tasks Assessment12345  Inflation is given as an index number. This means the first year’s calculation is set at 100, and every year after is measured in relation to that. So if 1990 = 100, and 2000 = 110, we know instantly that prices have risen 10% over the 10 years. This is just a way of making the data quicker to understand.  The RPI is a good measurement but not 100% accurate, so it is possible sometimes that the Government under- or over-reacts to inflation data. What’s Wrong With Inflation?  It’s a matter of degree; 25% inflation is much worse than 5% inflation. Some countries (e.g. Russia and Serbia) have recently had hyper-inflation with prices rising by up to 1000% pa! Low inflation, such as the 2% or so the UK has at present, is not a real problem.  The UK has had a big problem with inflation in the past. It rose to 28% in the late 1970s. This caused significant problems with growth and employment. The memory of this time makes the Government very determined now to keep inflation under control.  If inflation rises too quickly, however, it can cause problems. How quick is 'too quick' is not easy to specify. In the UK a rate of inflation over 3% might give cause for concern. In the mid 1970s, inflation in the UK reached 25%. In other countries such as Germany between the two World Wars and in the former Yugoslavia in the 1990s, inflation rates of thousands and even millions of percent were recorded. Such cases are extreme but the danger of letting inflation get out of control is something that most Governments want to avoid.

12 Scenario Criteria Tasks Assessment12345 The dangers of inflation are as follows:  Difficulties for businesses to plan ahead - especially when inflation starts to get out of control. This affects not only the amount the business receives from sales but also the prices of inputs - raw materials and so on  Businesses may face pressure from employees organisations for pay awards to keep up with inflation and this can affect costs of production  It affects spending power if wages do not rise by the same rate as inflation  It especially affects those who may be on certain types of fixed incomes like company pensions  Savings can fall in value if the rate of interest is lower than inflation  Inflation in the UK at a higher rate than in other countries affects businesses who try and sell abroad. It makes it harder for them to sell goods and services because they are less competitive

13 Scenario Criteria Tasks Assessment12345 The availability of credit is determined by any bank that provides more credit for businesses to start or continue trading and providing a product/service to the consumers  Business credit is a measure of an business's ability to obtain goods or services based on a promise to pay for them later. This term can refer to the ability of a business to secure loan money as well.  The goods, services, or cash obtained using business credit are usually not personally guaranteed by the owner or representative of the organization BUT borrowed against the assets of the organization  The availability of credit is historically tied to the price of homes and other assets simply because of supply and demand. The more credit there is available, the more demand will exist for assets of all types.  Just as a greater availability of credit will increase the price of homes, the reduction of credit will just as quickly reduce the prices of homes. There are a number of reasons why banks may suddenly stop or slow lending activity, this may be due to:  An anticipated decline in the value of the collateral used by the banks to secure loans  A change in monetary conditions (for example, where the central bank suddenly and unexpectedly raises reserve requirements or imposes new regulatory constraints on lending)  The Central Government imposing direct credit controls on the banking system  An increased perception of risk regarding the solvency of other banks within the banking system The cost of credit shows you the real cost of borrowing - it is the difference between the amount you borrow and the total amount you will repay including the interest by the end of the loan period.

14 Scenario Criteria Tasks Assessment12345 Availability of employees???  Based on....Quality of....Employable candidates with relevant skills  In the current climate the quality of potential employees are RARE because key positions are prepared/catered for low paid positions in third word countries where they can carry out simple/mundane tasks  Cheaper Labour  Profit For The Business  Well Qualified Labour  Efficiency Of Workforce  Less Mistakes/Good For Business (Higher Costs)  The balance between quantity and quality of employees within the workforce is ALWAYS a significant factor in how the business succeeds, due to the reliance of the knowledge and technical ability and also the huge costs

15 Scenario Criteria Tasks Assessment12345 Legal – A tool available to the Government (and one that has an enormous ripple effect to ALL directly or indirectly involved (businesses/public consumer) is the legal policy.  The term legal policy refers to the governing rules that a Government undertakes to ensure that all products and services are adhered to a minimum standard Costs and Broad Appraisal Issues Impact Assessment Public Sector Impacts Sustainable Development Scientific Evidence RiskLegal European Union International Treaty Obligations Transfers Environmental Appraisal Rural Proofing Equal Treatment Appraisal Health and Safety Consumer Impact Assessment ecommerce

16 Scenario Criteria Tasks Assessment12345 Fiscal - Another tool available to the Government (and one that is used by all levels of Government) is fiscal policy.  The term fiscal policy refers to the expenditure a Government undertakes to provide goods and services and to the way in which the Government finances these expenditures.  A Government's taxation policy. Tax enables the Government to raise revenue in order to provide public goods which would not otherwise be provided by the market, such as a police force, national defence, and so on. The tax system may also have an effect on the distribution of income, and the allocation of resources in the market. A Government's fiscal policy will have a broader effect on economic activity, unemployment, and inflation.

17 Scenario Criteria Tasks Assessment12345 Monetary - Monetary policy is the process a government, central bank, or monetary authority of a country uses it to control: One of the Bank of England's two core purposes is monetary stability, to attain a set of objectives oriented towards the growth and stability of the economy. Monetary stability means stable prices - low inflation - and confidence in the currency.  A principal objective of any central bank is to safeguard the value of the currency in terms of what it will purchase. Rising prices – inflation – reduces the value of money.  Low inflation is not an end in itself. It is however an important factor in helping to encourage long-term stability in the economy. Price stability is a precondition for achieving a wider economic goal of sustainable growth and employment. High inflation can be damaging to the functioning of the economy. Low inflation can help to foster sustainable long-term economic growth. 1.the supply of money2.availability of money 3.cost of money or rate of interest

18 Scenario Criteria Tasks Assessment12345 The demands placed on a business influence (dictate) the performance of the business by acting on the needs of the customers: - Click on the links below for additional information ◦ Influenced by affordability Influenced by affordability ◦ Competitive Pressures – such as emerging markets from abroad or new entrants to markets (e.g. Supermarkets selling electronics or clothing) Competitive Pressures ◦ Availability of Substitutes Availability of Substitutes ◦ Level of Gross Domestic Product (GDP) Level of Gross Domestic Product (GDP) ◦ Needs and Aspirations of Consumers Needs and Aspirations of Consumers Task 2 - P5.2 – Based on the two contrasting economic environments selected describe the influence of customer demand for the product/service – focusing on: Affordability Competitive Pressures SubstitutesGDP Needs / Aspirations of the Customer

19 Scenario Criteria Tasks Assessment12345 The influence of the affordability aspect for the business demand, the following issues must be addressed:  Budget Constraints – what have you got?? / what can you spend on?? ◦ Is the appropriate level of funding in place to cover the expense of the project? ◦ In respect of capital works, is there a revenue budget allocation to cover on-going costs (maintenance etc.)?  Providing information to bidders about your “affordability” criteria  Financial Pressures  What is the likely cost of the goods, service or works? ◦ Adverse impact on Services ◦ Legal Implications ◦ Reputational Damage

20 Scenario Criteria Tasks Assessment12345 Competitive pressure is the pressure one feels when competing against someone else for a prize or to achieve a goal that is available only to the winner.  Entry of competitors – how EASY or HARD is it for new businesses to start trading and compete against other similar businesses?  Threat of substitutes – introduction of imitations/substitutes of the product/service – how will they impact the business and others?  Bargaining power of buyers – how strong is the position of the buyers? ◦ can they work together to achieve and maintain the needs of the consumers  Bargaining power of sellers – how strong is the position of the sellers? – ◦ are there other suppliers that can provide the product/service required or is it monopolised?  Rivalry among existing players – is there competition? ◦ Is it equal in strength and size?  Government – governing rules and changes – how will they impact the business and others?

21 Scenario Criteria Tasks Assessment12345 SUBSTITUTES = IMITATION OF PRODUCT???? In terms of demand (that is, substitute-in-consumption), organisations that offer similar products/services can either lead to an increase or decrease in:  Price, based on the quality, branding, marketable base of the goods  Sales, based on the demand of the product The availability of the substitute(s) will compete against each other based on their reputation, pricing, features, etc...  E.g.1 - MP3 Players (iPod, Sony Walkman, Phillips MP3, etc...)  E.g.2 – Laptops (Samsung, HP, Sony, Macs, etc...)

22 Scenario Criteria Tasks Assessment12345 GDP, or Gross Domestic Product, is arguably the most important of all economic statistics as it attempts to capture the state of the economy in one number. What is GDP? - GDP can be measured in three ways:  Output Measure: value of the goods and services produced by all sectors of the economy; agriculture, manufacturing, energy, construction, service sector and the Government  Expenditure Measure: value of the goods and services purchased by households and by Government, investment in machinery and buildings. It also includes the value of exports minus imports  Income Measure: value of the income generated mostly in terms of profits and wages In theory all three approaches should produce the same number.  In the UK the Office for National Statistics (ONS) publishes one single measure of GDP which, apart from the first estimate, is calculated using all three ways of measuring.  Usually the main interest in the UK figures is in the quarterly change in GDP in real terms, that is after taking account of changes in prices (inflation).

23 Scenario Criteria Tasks Assessment12345 How is GDP calculated?  Calculating a GDP estimate for all three measures every three months  The output measure - is considered the most accurate for the short term – involving surveying tens of thousands of UK firms. ◦ The main sources used for this are ONS surveys of manufacturing and service industries ◦ Information on sales is collected from 6,000 companies in manufacturing, 25,000 service sector firms, 5,000 retailers and 10,000 companies in the construction sector ◦ Data is also collected from government departments covering activities such as agriculture, energy, health and education. ◦ This is augmented by a wide range of sources which ensure that activity in the economy is well covered GDP = private consumption + gross investment + government spending + (exports − imports)private consumptiongross investmentgovernment spendingexportsimports

24 Scenario Criteria Tasks Assessment12345 What is GDP used for?  GDP is the principal means of determining the health of the UK economy  Used by the Bank of England and its Monetary Policy Committee (MPC) as one of the key indicators in setting interest rates each month ◦ So for example, if there are concerns the rate of GDP growth is too great and could be inflationary, the MPC is more likely to consider raising interest rates.  The treasury also uses GDP when planning economy policy. ◦ When an economy is negative, tax receipts tend to fall, and the government adjusts its tax and spending plans accordingly to increase/improve customer sales  UK GDP is used internationally by the various financial bodies such as OECD, IMF, and the World Bank to compare the performance of different economies.  The European Union also uses GDP estimates as a basis for determining different countries' contributions to the EU budget.

25 Scenario Criteria Tasks Assessment12345  External economic influences on demand can have an impact on sales within companies and have an impact on price and what the customer is willing to pay.  Price – goods can be seen as overprices in comparison to the past, ruse beyond inflation rates, be seen as too expensive or too cheap. Economies of scale can force product price drops and rises, Memory Chips dropped 700% in one year but Stamps went up 300% is the same year. This can have a positive or negative impact on companies depending on their product ranges.  Price of substitutes and complements – Force of demand, Xbox drops its price so Sony must but what of companies with fewer rivals. Cheap imports can reduce down the price of home goods jus the same as next doors shop sales.  Income – Standard of Living increases reduce down in a recession but prices of good continue to rise, causing a ripple effect in sales and price marking within supermarkets. Similarly the price of goods in certain areas is dependent on the wage within that area, McDonalds on in Chelsea is twice what it is in Corby.  Advertising – Advertising drives sales, unless a company cannot afford it, advertising is a key feature in most companies product drives but success and failure can be driven by a number of factors, location, image, target audience etc.  Tastes and preferences – Tastes change, this can have a major impact on product sales, fur was popular, then Burberry, fashions come and go in any product driven field.

26 Scenario Criteria Tasks Assessment12345 Supplying a service/products to the consumers from the business plays a big part in business supply chain - Click on the links below for additional information ◦ Influenced by availability of Raw Materials and Labour Influenced by availability of Raw Materials and Labour ◦ Logistics Logistics ◦ Competition for Raw Materials – such as the cost of electricity, sometimes related to oil/gas etc Competition for Raw Materials ◦ Ability to Produce a Profit Ability to Produce a Profit ◦ Government Support – such as limitations on taxation, importing and exporting of products/services Government Support ◦ But these wax and wane with the economy. Elasticity of supply is how companies react to the change in conditions. Task 3 (P5.3) – Based on the two contrasting economic environments selected describe the influence of supplying the product/service to the business and customers – focusing on: - Logistics Availability of Raw Materials and Labour Competition of Raw Materials and Labour Profitability Government Support

27 Scenario Criteria Tasks Assessment12345 Availability of Raw Materials  Reliance on resources available, such as oil, fossil fuels, gas, crops, etc…  Depending on explorations by refineries, seasonal weather and harvesting of businesses within the PRIMARY sector Availability of Labour  Reliance on the quality of education, training and experience of the prospective employees  During a recession, the number of employees applying for a position are high with a wider range of education, training and experience available to choice from ◦ Although the range is greater, unfortunately that does not mean better choices to make from

28 Scenario Criteria Tasks Assessment12345 Reliance on the business area of transportation for products/services to businesses and consumers, can be affected by:  Importing embargos/restrictions ◦ QUOTAS used to monitor the amount of products/services invested into the country  Exporting restrictions/constraints ◦ QUOTAS used to monitor the amount of products/services provided to other countries  Petrol/Diesel costs ◦ Government increases on TAX and price increases  Postage firms With businesses and consumers heavily dependant on deliveries of products/services within a short period of time, the dependencies on the logistical aspect is colossal

29 Scenario Criteria Tasks Assessment12345 Competition of Raw Materials  Depending on the availability of the resources from different suppliers for oil, fossil fuels, gas, crops, etc… ◦ High Levels of Resources leads to leads to greater amount of choices to the consumers at low and competitive costs ◦ Low Levels of Resources leads to leads to limited choices for the consumers at high and non-negotiable costs Competition of Labour  For businesses recruiting, this can be deemed as a very good thing because of the wider range of education, training and experience available and possibly the higher caliber of quality to choice from

30 Scenario Criteria Tasks Assessment12345 The ability of a company to earn a profit. It is a relative measure of success for a business.  Profitability of the business is dependent on different aspects, such as: ◦ Consumer Satisfaction ◦ Consumer Loyalty ◦ Meeting Customer Demand ◦ Reducing Costs (BUT NOT QUALITY) for overheads and materials ◦ Reputation with Suppliers ◦ Good Communication links between Businesses and Suppliers to manage the stock inventory and ordering through a Management Information Systems (MIT)  The above aspects might be linked together, such as: ◦ Reducing costs to consumer satisfaction, reputation and meeting customer demand ◦ Reputation with suppliers to loyalty and good communications

31 Scenario Criteria Tasks Assessment12345 The government provides support to help businesses to:  start up, grow and succeed  overcome current financial and economic challenges  innovate  trade internationally  There is a wide range of government support available to businesses, not only through grants and other funding but also through numerous advisory, guidance, information and other services, including training.  Availability of grants base don good practice is one form the government uses to level companies into good practice. There is also grants for youth training, disability and race and for job creation. Companies use these to their advantage.  Ability of national governments to regulate businesses – Ofcom, Ofwat, Ofsted and Oftel are there to monitor companies and business practices but have little power to stop utility companies raising prices. However they can lever the companies into paying tax, abiding by safety rules, equal pay and hiring policies etc.  They can also give tax incentives to companies who create local work, car manufacturers, steel industry and transport included.

32 Scenario Criteria Tasks Assessment12345  Supply-side measures, such as enhancing the skills of the working population through initiatives in education, training and research is something the government has been trying to encourage for years. Bargaining with local Academy’s to teach skill based subjects that are linked to local businesses like Engineering and manufacturing Courses in Corby or Industrial Design and Manufacturing in Luton and Bedford.  Similarly there is a heavy government push to promote apprenticeships in the fields of local commercial industry to bring the local population up to a workable labour force for industry. Examples include apprenticeships in woodwork in Chesterfield, Boat Building in Rutland, Saddlers in Winchester etc.  The continued 2 tier approach to education still stands, NVQ versus A Level subject based courses to accommodate University versus workforce learning. The push is now on for IT, Programming, App Invention and Chemistry in Britain as the turn of small firms comes around again.

33 Scenario Criteria Tasks Assessment12345 Task 4 - M2.1 – Based on the TWO contrasting economic environments selected analyse and compare the impact of changes in demand and supply on a selected business. ◦ Consider the market they are in, what they exist for and the size of the business  Consider the structure - Tall, wide, small, big departments...  Strategic plans for the future to achieve the aims of the business ◦ Inter Dependencies of the departments  Consider the departments your organisation has, why they exist and what they perform – how are they affected by the departments that exist ()  Changes in the Supply Chains of Operations Development of Internal StructuresFunctional Areas

34 Scenario Criteria Tasks Assessment12345 Many different things influence (impact) the structure and the functional areas of an organisation.  Some examples are below but many others exist ◦ Organisation Size - For example smaller organisations tend to have fewer functional areas performed by fewer staff ◦ Business Environment - A fast moving business environment will lend itself to a flexible flat less rigid structure. Perhaps with functional areas being more team based and smaller ◦ Strategic Plans - What are the organisations short and long term plans, do they focus on innovation therefore needing a larger more proactive R&D and marketing department who need to communicate ◦ Changes in Supply and Demand – S & D Curves, Elasticity of Demand, Price Sensitivity and Branding ◦ Global Interaction – Supply Chains, Ownerships, Capital and Business Operations and Government Regulation

35 Scenario Criteria Tasks Assessment12345  Business Activities – How the business operates (dealing with suppliers / customers) ◦ has it forced your company to downsize, change its ethos, change its plans or way of dealing (like going purely online)  Business Strategy – business changed and impact it has on the business operations  Internal Structures – organisation structure ◦ Would they  hire more or less? / retrain or lay people off? ◦ Would they find a different way of doing things like training staff to do multiple jobs or cut our one section of their company altogether?  Functional Activities – department function / link together (how would the change)  Stakeholders – change in the focus and/or management of the business  Task 5 - D2.1 – Evaluate to what extent a selected business is likely to be affected by changes in the economic environment Business Activities Business Strategy Internal Structures Functional Activities Stakeholders

36 Scenario Criteria Tasks Assessment12345 Assessment Outcome – P5 Task 1 - P5.1 – Focusing on a business, describe the influence of two contrasting economic environments that impact a business, based on: Task 2 - P5.2 – Based on the two contrasting economic environments selected describe the influence of customer demand for the product/service – focusing on: Task 3 - P5.3 – Based on the two contrasting economic environments selected describe the influence of supplying the product/service to the business and customers – focusing on: Assessment Tasks Ownership of Business Business Operations (Functionality of the Business Activities) Movement of Capital Affordability Competitive Pressures SubstitutesGDP Needs / Aspirations of the Customer Availability of Raw Materials Competition of Raw Materials Logistics Availability of Labour Competition of Labour Profitably Government Support

37 Scenario Criteria Tasks Assessment12345 Assessment Outcome – M2 Task 4 - M2.1 – Based on the TWO contrasting economic environments selected analyse and compare the impact of changes in demand and supply on a selected business Assessment Outcome – D2  Task 5 - D2.1 – Evaluate to what extent a selected business is likely to be affected by changes in the economic environment Assessment Tasks Development of Internal StructuresFunctional Areas Business Activities Business Strategy Internal Structures Functional Activities Stakeholders


Download ppt "LO3 - Know the impact of the economic environment on businesses THE BUSINESS ENVIRONMENT."

Similar presentations


Ads by Google