1. Business and the Economic EnvironmentP
E** S T

2. The game plan explained….
Mrs Reid
Mr Cole
4.2 The Relationship between Businesses and the Economic Environment
4.1 Understanding Mission, Aims and Objectives
4.4 The Relationship between Businesses and the Social Environment
4.5 The Relationship between Businesses and the Technological Environment
4.3 The Relationship between Businesses and the Political and Legal Environment
4.10: Key Influences on the Change Process: Culture (part one)
4.6 The Relationship between Businesses and the Competitive Environment
4.7 Internal Causes of Change
4.8 Planning for Change
4.10: Key Influences on the Change Process: Culture (part two)
4.12 Implementing and managing change
Supporting learning for the pre-release theme (Ongoing)
Revision (BUSS4)
4.9 Key Influences on the Change Process: Leadership
4.11 Making strategic decisions
PESTE

3. The Relationship between Businesses and the Economic Environment•
assessing the effects of the following factors on business organisations:
impact of economic factors
trends in key economic variables
globalisation of markets
developments in emerging markets
evaluating the strategies businesses might deploy in response to these changes.
Knowledge of the determinants of macroeconomic factors is not required.
Candidates should be familiar with the following economic factors: the business cycle, interest rates, exchange rates, inflation, unemployment and economic growth
The Relationship between Businesses and the Economic Environment

4. The Relationship between Businesses and the Economic Environment
Between now and half term we will focus on the impact on the following areas on business strategy:
The Business Cycle
Interest Rates
Exchange Rates
Inflation
Unemployment
The International Economic Environment and Economic Growth

5. Objectives Analyse the effects of the business cycle on businesses
Explain appropriate strategies for firms at different stages of the economic cycle
Overview of economic growth, inflation, unemployment and exchange rates

6. Analysing the business cycle
Article – “Understanding the business cycle”
Questions
Briefly describe the main changes in growth, inflation and unemployment from
Describe the effects of a recession on:
The construction industry
The pharmaceutical industry

7. Groups Inflation and Interest rates Unemploy-ment Exchange Rates
Economic growth
Ellie
Carly
Chloe
Clemmie
Fran
Danielle
Nicole
Laura
Sophia
Hanne
Aimee
Annabel
Katie

8. Government’s main economic policy objectives
Low inflation
Steady and sustained economic growth
High levels of employment
Acceptable balance of payments position

9. Government economic policy objectives:
Economic growth
An _______ in the value of goods and _______ produced in a country or area
Full employment
When the demand and _______ for ______ in an economy are in __________ at the price of market ______
Inflation
The general or persistent _______ in ______ over time
Balance of payments
The value of _______ minus the value of imports
Balance of payments deficit: when _______ > _______
Balance of payments surplus: when _______ > _______

10. Government economic policy objectives: Definitions
Economic growth
An increase in the value of goods and services produced in a country or area
Full employment
When the demand and supply for labour in an economy are in equilibrium at the price of market wages
Inflation
The general or persistent increase in prices over time
Balance of payments
A record of currency flows into and out of a country
The value of exports minus the value of imports
Balance of payments deficit: when imports > exports
Balance of payments surplus: when exports > imports

11. Measuring Economic Growth
The rate of increase in the size of an economy over time
Gross Domestic Product (GDP)
The value of a country’s output over a period of time
A rising level of economic activity will be reflected in a higher level of GDP

12. Measuring inflation
CPI (Consumer prices index)

13. Measuring unemployment
Claimant count

14. Measuring current account
Deficit as % of GDP

15. Group work
In your groups find out the trends over the last 10 years for all the macroeconomic variables
For each of the indictors explain two advantages and two disadvantage for UK businesses

16. A case study: Beaconsfield
Plenary
A case study: Beaconsfield
Conclusions:
The local population are well educated, so likely to have well paid jobs, and thus income to purchase a number of luxury goods
Many homeowners, again indicating wealth
As a business, property prices and rent are likely to be high, so costs may be higher than another location, but the customer base locally will support higher prices
Question
Consider the state of the current UK economy. What impact will this information have on businesses in Beaconsfield?