Economic Environments and other external factors

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Presentation transcript:

Economic Environments and other external factors

PESTLE Present current external factors with your group include: A definition Some current information on that factor How the factor might impact business and it’s stakeholders

Economic Environments

How does the business cycle impact business? Growth is likely to… Recession is likely to… Instability elsewhere can cause a ripple effect because… Inflation can cause uncertainty as…, cost change means…, menu costs are… Banks also respond to the cycle by tightening or loosening credit so… The government stabilisation policies might affect business - legal change… tax… spending… interest rates…

Business Cycle Output Spending Income Real GDP Time

Add to your graph Easy Medium Hard Boom/ growth Period Recovery High Public spending Bust/ slump period Recession Low Public spending High Unemployment Government target path Low inflation Low unemployment More household spending High inflation Low business investment Less household spending Interest rate low High business investment Interest rates high Why is stability so important?

Demand and elasticity

Supply and elasticity

P5 -2 economic environments Britain remains in the EU Britain leaves the EU Key terms to include: Growth, recession, stability, inflation, employment, Labour shortages, trade balance, Investment in the UK

M2 - Challenges to business activity stay in EU Cockermouth School Iggesund paper board Think about: Staffing, Sales of exports, imported raw materials, Demand, affect on Demand and supply diagram, investment decisions

M2 - Challenges to business activity Leave EU Cockermouth School Iggesund paper board Think about: Staffing, Sales of exports, imported raw materials, Demand, affect on Demand and supply diagram, investment decisions

Changes in markets New competition arrives in a market A product has a strong brand and increases price New technology makes production cheaper Firms move into ecommerce Recession hits Europe

Globalisation and interdependence How do our two businesses fit within a globalised market How is the market changing for the businesses – think about changes to their D&S and elasticity. How might the economy and government policy influence the Business? Does the EU situation have any bearing on the businesses you are studying?