BTEC Level 3 Business

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BTEC Level 3 Business

• Unit 1 Assignment 2 P5, M2

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What is the economy?

• The economy is the thrifty management of
  resources, including money, human resources and
  land.
• As part of the economics, we will investigate
• Supply and Demand
• Inflation
• GDP
• Economic Growth
• Recession

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Supply and demand

• There is supply and demand for every tangible and
  non-tangible good.
• Supply is how much of the product is available
• Demand is how much want or need there is for a
  product or service
• Supply and demand are affected by a range of
  factors including recession, growth and change
  in natural resources.

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The Economic Environment

• The economic environment will effect a business
  in ways that it can not control.
• The economic environment is made up of
  individuals who buy and sell good and borrow and
  lend money.
• For a business the biggest influencers are
  consumers and suppliers.

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Growth

• In a period of growth
• Incomes rise
• More goods are produced
• More goods are being purchased
• In a period of growth people have more money
  which impacts on how much they buy, this allows
  businesses to grow as they are selling more and
  allows them to employ more people- this in turn
  reduces unemployment and people have more
  disposable income.

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Recession

• This is the opposite to growth.
• People become cautious about spending and save
  instead
• Businesses sell less and therefore make less
  money
• Business make people redundant

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P5- the business environment

• For this assignment you will need to investigate
  two businesses in different countries.
• Choose your two businesses and explain the
  current economic climate in both countries.
• Explain the affect the growth will have on both
  businesses
• Explain the affects that a recession will have on
  both businesses

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Inflation

• This is the general rise in prices.
• Inflation can affect businesses because costs of
  supplies rise, businesses may pass the cost onto
  their customers by increasing the price they
  charge or see profit fall.
• Explain how the businesses could respond to
  inflation in the two contrasting countries

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Labour

• For most businesses wages and labour makes up 70
  of costs. This means when there are any changes
  in labour or the external environment labour will
  be largely affected.
• Labour is essential to businesses as they must
  ensure they recruit the right people at the right
  time.
• In times of growth it is more difficult to
  recruit people with the right skills, this has
  caused businesses in the UK to look abroad for
  the right employees
• In times of recession it is easier to recruit
  because unemployment is high and there are lots
  of people looking for jobs

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Changes in Government Policy

• The government has a huge effect on businesses. A
  good government should ensure
• There is growth and stability
• Inflation is low
• Low interest rates on loans
• Suitable supplies of labour
• The government uses taxes and spending to control
  the economy.
• Monetary Policy is about the government
  controlling interest rates- the government can
  use this to change the amount of money available.
  
• Fiscal Policy this is about the government
  controlling taxes, during a recession a
  government can reduce taxes to encourage spending
  and to improve the profit of businesses

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P5 plan

• Introduction what is economics?
• Economic importance of stability impact on
  business of changes in the economic environment
  (growth, recession, ripple effect) levels of
  inflation availability and cost of credit
  labour changes in government policy (legal,
  fiscal, monetary)
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• Demand influenced by affordability competition
  availability of substitutes level of Gross
  Domestic Product (GDP) needs and aspirations of
  consumers
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• Supply Influenced by availability of raw
  materials and labour logistics ability to
  produce profitably competition for raw
  materials government support
•  
• Changes in supply and demand supply and demand
  curves elasticity of demand price sensitivity
  influence of branding on price sensitivity
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• Global interaction levels and types of
  interdependence (supply chains, ownership of
  businesses, movement of capital and business
  operations, reducing ability of national
  governments to regulate global businesses)
• Conclusion

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M2 Comparison of the two businesses

• compare the challenges to selected business
  activities within a selected organisation, in two
  different economic environments
• Consider
• Economic importance of stability impact on
  business of changes in the economic environment
  (growth, recession, ripple effect) levels of
  inflation availability and cost of credit
  labour changes in government policy (legal,
  fiscal, monetary)