Economic Environment

8 Key excerpts on "Economic Environment"

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  Financial Enterprise Risk Management

  • Paul Sweeting(Author)
  • 2011(Publication Date)
  • Cambridge University Press

    (Publisher)

  5.3 Political environment This leads neatly into the discussion of the political environment in which firms operate. There are two aspects to this type area. The first is the broad underlying environment. For example, to what extent is a firm operating in a free market environment, and to what extent is there government control and regulation? Is there a culture of redistribution of wealth, as seen through systematically high taxes and government spending? How great is the require- ment for disclosure, in relation both to the organisation and to its customers, policyholders or members? These factors can affect the very attractiveness of operating in an industry in a particular country; at the very least, they can affect the target market for customers. The second aspect of the political environment that is of interest is the political climate, which can change over time. As discussed above in rela- tion to stakeholders, public and media sentiment can turn against particular institutions. This frequently affects the political climate and can lead to stricter regulation, higher taxes or other restrictions on organisations. 5.4 Economic Environment In this context, the Economic Environment refers to the point in the economic or business cycle rather than any capitalist/socialist comparison – this is discussed 5.4 Economic Environment 63 Expansion Contraction Peak Trough Greed Correction Fear Revival Figure 5.1 The business cycle under the political environment. There are a number of depictions of business cycles, as well as time scales, with the longest being over fifty years; how- ever, the business cycle of interest here has a span of around a decade and is characterised by periods of expansion and contraction in gross domestic product (GDP), with associated peaks and troughs.

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  Financial Enterprise Risk Management

  • Paul Sweeting(Author)
  • 2017(Publication Date)
  • Cambridge University Press

    (Publisher)

  The second aspect of the political environment that is of interest is the political climate, which can change over time. As discussed in Chapter 3, public and media sentiment can turn against particular institutions. This frequently affects the politi- cal climate and can lead to stricter regulation, higher taxes or other restrictions on organisations. 5.4 Economic Environment In this context, the Economic Environment refers to the point in the economic or business cycle rather than any capitalist/socialist comparison – this is discussed under Section 5.3. There are a number of depictions of business cycles, as well as time scales with the longest being over fifty years; however, the business cycle of interest here has a span of around a decade and is characterised by periods of 64 The External Environment Expansion Contraction Peak Trough Greed Correction Fear Revival Figure 5.1 The Business Cycle expansion and contraction in gross domestic product (GDP), with associated peaks and troughs. As shown in Figure 5.1, expansion can include both a recovery and a ‘greed’ phase, the former being a return from a trough to some measure of equi- librium and the latter being a continued expansion beyond that point. Similarly, contraction can include both a correction and a ‘fear’ phase, the former being a return from the peak to some measure of equilibrium and the latter being a con- tinued contraction beyond that point. There are a number of events that can trigger a move from one phase to another – low interest rates and easy credit can cause expansion, whilst the opposite can cause contraction; catastrophes, stock market shocks. Over-reaction in both directions is a key feature of these cycles, a factor that is particularly clear in financial markets.

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  eBusiness

  • Paul Beynon-Davies(Author)
  • 2017(Publication Date)
  • Red Globe Press

    (Publisher)

  193 7 e Business environment Learning outcomes Principles Understand the relationship between the organisation as a system and the environment of the organisation. The organisation as a value-creating system interacts with actors within the wider environment. It is useful to consider four major aspects of this environment: economic, social, political and physical. Describe the nature of the Economic Environment of the organisation. The primary environment of a commercial organisation is the economy. Economies are systems for coordinating the production and distribution of goods/products and services. Commerce is the term normally used for that process which deals with the exchange of goods and services from producer to final consumer. Describe the nature of the social environment of the organisation. There is clear evidence that modern Western societies are now information societies. The definition of the information society relies on a critical mass of the populace using what we have called electronic delivery as their preferred method of accessing the services and products of public and private sector organisations. A number of pre-conditions exist to the successful uptake of electronic delivery: awareness, interest, access, skills, use and impact. Understand the political environment of the organisation. Traditional conceptions of law are being challenged by electronic commerce, such as the use and enforcement of contracts and intellectual property rights. Describe the nature of the physical environment of the organisation. Any activity has an impact upon the physical environment. An increasing focus has been given to the proper management of ICT to mitigate effects upon the physical environment and to reduce an organisation’s carbon footprint.

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  Introduction to Business

  • Lawrence J. Gitman, Carl McDaniel, Amit Shah, Monique Reece, Linda Koffel, Bethann Talsma, James C. Hyatt(Authors)
  • 2018(Publication Date)
  • Openstax

    (Publisher)

  Business owners and managers have a great deal of control over the internal environment of business, which covers day-to-day decisions. They choose the supplies they purchase, which employees they hire, the products they sell, and where they sell those products. They use their skills and resources to create goods and services that will satisfy existing and prospective customers. However, the external environmental conditions that affect a business are generally beyond the control of management and change constantly. To compete successfully, business owners and managers must continuously study the environment and adapt their businesses accordingly. Other forces, such as natural disasters, can also have a major impact on businesses. While still in the rebuilding stage after Hurricane Katrina hit in 2005, the U.S. Gulf Coast suffered another disaster in April 2010 as a result of an explosion on the Deepwater Horizon oil-rig, which killed 11 workers and sent more than 3 million barrels of oil into the Gulf of Mexico. This event, which played out for more than 87 days, severely affected the environment, businesses, tourism, and people’s livelihoods. Global oil conglomerate BP, which was responsible for the oil spill, has spent more than $60 billion in response to the disaster and cleanup. Seven years after the explosion, tourism and other businesses are slowly recovering, although scientists are not certain about the long-term environmental consequences of the oil spill. 7 C O N C E P T C H E C K 1. Explain the concepts of revenue, costs, and profit. 2. What are the five factors of production? 3. What is the role of an entrepreneur in society? Chapter 1 Understanding Economic Systems and Business 17 Exhibit 1.4 The Dynamic Business Environment (Attribution: Copyright Rice University, OpenStax, under CC-BY 4.0 license) No one business is large or powerful enough to create major changes in the external environment.

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  Think Strategically

  • X. Gimbert(Author)
  • 2011(Publication Date)
  • Palgrave Macmillan

    (Publisher)

  The growth (GDP) of a country or an area, unemployment and the ability to obtain funding are all economic factors, as are interest rates, exchange rates, inflation and per capita income. Economic factors are usu- ally present in the day-to-day running of the business, as practically no company can help being related to economic health (GDP and per capita income) or inflation in their area of action. Similarly, very few can escape from being influenced by the situation of the interest rate or the exchange rate, as practically all companies are in debt to some degree and trade with (buy from or sell to) areas that have different currencies. Continuing with our original example, unemployment can also be con- sidered a social variable, as can the fear of an uncertain future, resulting in lower consumption. Other social variables that can influence compa- nies greatly are the birth rate (if the company targets babies, children or teenagers) and life expectancy (if it targets senior citizens). Other social factors that may affect a company are demography, migratory movements, changes in life style (far-reaching in recent years), income distribution, level of education, industrial conflict (and the strikes that may be associated with it) and the attitude towards work and free time. Another important change of environment occurs when a new regula- tion appears in the industry, whether on a local, national or supranational (e.g. European Union) level. This new regulation may come as a “change of pack,” a new set of rules to play by. Such changes form part of the political and legal environment, together with any law that might affect the Macro Environment 49 industry, such as labor, environmental or patent legislation, tax policy, tariffs or subsidies. Lastly, when we refer to the technological environment we mean hori- zontal technologies, not those restricted to one industry (which we will find in the industry environment).

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  Managerial Economics for Decision Making

  • John Adams, Linda Juleff(Authors)
  • 2017(Publication Date)
  • Red Globe Press

    (Publisher)

  However at appropriate junctures the key relationships which exist between business and the general Economic Environment will be pointed out and explained in some detail. In addition you will be asked, using self-assessment questions, to identify some of the relation-ships yourself and to assess the strength of the connections between the general Economic Environment and business. A Note of Caution This chapter in the book utilises a number of mathematical concepts and techniques in order to enable you to better understand the nature of the relationships between macroeconomic variables. The mathematics used do not assume any previous knowledge of a high level of mathematics. They are presented clearly and in sequence to aid your understanding. It is NOT the purpose of this chapter to teach mathematics but rather to use it as a tool in economic analysis. 23 2 The Economic Environment ■ 2.2 The Economic Framework Imagine the task you would face in being asked to put together the pieces of a jigsaw numbered in the millions. To make matters worse none of the pieces of this framework have a straight edge! Of course, like us you would not even know where to start and if by some stroke of luck you did manage to get started you would certainly never finish it. This is because of another feature of this particular jigsaw – its total shape and the shapes of many of its individual pieces can and do change – all the time! What we have just described to you is probably a reasonable description of the nature of the Economic Environment within which you and we and billions of other people live and work. Its complexity is staggering and yet day in and day out it appears to work as if, as Adam Smith put it in 1776, it is guided by some ‘invisible hand’. How well it works for you or us or anyone else depends very much on where we live, how we earn a living and what we choose to spend our earnings on.

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  Available until 25 Jan |Learn more

  Business Economics

  • Rob Dransfield(Author)
  • 2013(Publication Date)
  • Taylor & Francis

    (Publisher)

  6 Business strategy in an economic context

  Chapter Outline

  6.1   Introduction

  6.2   What business strategy involves

  6.3   The ingredients of strategy

  6.4   The criteria for an effective strategy

  6.5   How an environmental analysis helps to determine the suitability of a strategy

  6.6   The nature of strategic vision, objectives, focus and architecture

  6.7   Business strategy in an economic context

  6.8   Summary

  Chapter Objectives

  By the end of this chapter you will understand:

  • Why businesses need to have an effective strategy
  • The components that need to be in place to create a business strategy
  • How to judge a strategy in terms of suitability, acceptability and feasibility
  • How to create a PEST analysis
  • Why it is important to evaluate the Economic Environment and its impact on business strategy

  6.1  Introduction

  Businesses need to have a sense of the direction in which they want to move. Once they are clear about this they can formulate their plans – strategies to achieve their desired goals. However, the process is not as simple as it sounds. Businesses operate in uncertain environments. They need therefore to be continually prepared to adjust their strategies to accommodate for environmental change.

  Perhaps the biggest uncertainty in the business environment is economic change. This is one of the reasons why an understanding of economics is so important to business students. You need to be able to understand the impact of major macro-economic changes such as changes in the gross domestic product (GDP) of a country, and the relative growth of different economies. This chapter therefore explores corporate strategy in the context of an uncertain Economic Environment. It illustrates the sorts of strategies that businesses have employed to survive and prosper against a background of economic uncertainty.

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  Business Practice NQF3 SB

  TVET FIRST

  • A Suresh, M Ronaldson, A Berman, TL Krul(Authors)
  • 2013(Publication Date)
  • Macmillan

    (Publisher)

  (www.treasury.gov.za , 2007) It would follow that a large business has over 200 employees and more than R50 million in income. Note : Businesses may fall under more than one of the above-mentioned types of business. For example, Supplyline mentioned previously, is both a Close Corporation and a small business. Unit 17.2 The business environment The business environment refers to all those factors that may have an affect on the business. This includes issues within the business as well as outside of the business. The business environment is made up of the microenvironment, market environment and macroenvironment. The macro- environment The market environment The micro- environment (the business) The microenvironment has limited influence on the market but no influence on the macroenvironment The macroenvironment has an influence on both the market and the microenvironments The business environment Adapted from Bates et al (2006: 13) Which other types of business do the organisations mentioned earlier in this unit fall into? Think about it Which other types of business do the organisations mentioned earlier in this unit fall into? Think about it 137 Module 17: The structures and roles of different types of organisations The microenvironment The microenvironment considers all factors inside of the business. Decisions made by management affect the microenvironment. Included here are the goals of the business, the functions of the organisation, factors of production and management tasks and the strategy of the organisation. Let us look at some aspects of the microenvironment in more detail. • The goals of an organisation may be to make a profit, to aid in charitable causes, etc. • The functions of an organisation will be explained later in this unit. • Production factors are those resources that a business needs to create goods and services that it will sell to customers.

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