Factors Affecting Economic Growth and Business Decision Making

The report concludes that the UK's strong competitive environment leads to many changes in business activities, including those made by Marks and Spencer. The cited firm conducts research on customers' tastes and preferences, ensuring every need is fulfilled. This approach allows them to make informed decisions about new product launches or innovative changes to existing products.

BUSINESS ECONOMICS

Table of Contents
INTRODUCTION...........................................................................................................................1
SUMMARY OF UK ECONOMY...................................................................................................1
TASK 1............................................................................................................................................1
1.1- Explaining the economic problem of scarcity and demand resource allocation in
managing an economy. ...............................................................................................................1
1.2- Discussing the role of supply and demand in an economy and explaining how equilibrium
in the market is achieved. ...........................................................................................................2
1.3- Evaluating the importance of differing market systems in general and evaluating the role
of opportunity costs in determining process of making economic decisions. ............................2
1.4- Explaining what is meant by elasticity of demand and assessing the importance of
elasticity in market interactions. ................................................................................................3
TASK 2............................................................................................................................................3
2.1- Explaining the implication of pricing and corporate objectives on the operations of
company. ....................................................................................................................................3
2.2- Comparing how prices can be set in different market structures and analysing how the
market structure and operational decisions affect the behaviour of the organisation.................4
2.3- Evaluating how UK regulations affect the market power of the cited company. ...............5
TASK 3............................................................................................................................................5
3.1- Analysing how the structure of the UK economy has changed in the 21st century and its
effect on the business environment of the company...................................................................5
3.2- Evaluating the tools which are available to meet macroeconomic policy and its effect on
the organisation...........................................................................................................................6
3.3- Evaluating the performance of the UK economy in the global market and the impact of
economic performance on the business. .....................................................................................6
TASK 4............................................................................................................................................7
4.1- Demonstrating the theory of comparative advantage and justifying the advantages and
disadvantages of free trade. Affect of globalisation on the organisation....................................7
4.2- Analysing the impact of emerging economies on the developed economies and evaluating
the consequences of the recent shocks on the UK economy. .....................................................7

CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business economics is factor which shows the different methods and measures to show
the to analyse and evaluate the organisation. It uses many theories which can evaluate the
economy of company. Business economics is the lifeblood for a wide organisation like Marks
and Spencer. It helps them to analyse the economic conditions in the better manner. This report
includes about the various economic problems of scarcity and demand resource allocation in
managing an economy. Supply and demand plays a very important role in the economy.
Importance of different market systems and role of opportunity cost are evaluated. Elasticity of
demand and importance of elasticity in market interactions are explained (Buckley, 2016).
Pricing is the factor which has many implications on the business operations. There are some
substantial activities which affect the performance of the organisation. Emerging economies also
have some impact on the development of economy and the company.
SUMMARY OF UK ECONOMY
Currently the economy of the UK is decreasing, but in the past years it has grown very
much. It was expected that after the Brexit economy will be decreased but it has increased
unexpectedly. Brexit is the term for exit of UK from the EU. Economy of the UK has grown very
much. This was possible because of the working of the number of organisations. They helped in
making the economy stable and made it grow on the global level. It has grown 2.2% in the past
years. But is the present stage it is expected that economy will decrease in the future years.
TASK 1
1.1- Explaining the economic problem of scarcity and demand resource allocation in managing
an economy.
Resources are the lifeblood for an organisation to make its production process go
smoothly. That's why resources are known as the factors of the production. It is very important to
allocate the resources in better way because they are very scarce. It became scarce because needs
of the consumer never ends. Demand of the resources among the companies is very high. It
creates many problems in managing the economy. In the current economic condition of UK is
decreasing in this situation it will be difficult for the Marks and Spencer to allocate the resources.
Scarcity of the resources is the very big problem because it makes difficult for the company to
manage the uncertain economic conditions in the market (Williams, 2015). This issue makes
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prices of the product and services increased in the market. There are many factors which are
included in the resources like labour, raw material, capital etc. The cited company invests some
amount of money in the resources. Demand of the product rise if the price is low but it decreases
when the prices increases. Equilibrium in the demand and supply is needed to fight or cope with
the problem of scarce resources. It will eventually help in managing the economy in effective
and efficient manner. Government is not handling the matter of allocating resources because they
lack in the money matter and they also don't have enough skills and abilities to manage this
situation in the better manner.
1.2- Discussing the role of supply and demand in an economy and explaining how equilibrium in
the market is achieved.
It is very much important to understand the role of demand and supply to manage the
economic conditions in better and effective manner. There are many diversified products which
are provided by the Marks and Spencer to their customers. Good quality of the products and
services creates its demand in the market which eventually increases the supply too. On the other
hand if the quality of products and services provided is bad then it will decrease its demand and
also the supply. These two factors work hand in hand to determine that how much to produce and
what will be the price (Maryska and Wagner, 2015). This states that role of supply and demand
is to decide the quantity of the product and its prices.
Equilibrium in the market can be achieved if nobody has the power to determine the
prices of products and services. Supply and demand of the products in the market by the cited
organisation should decide the prices. It will make the perfect equilibrium in the market. It will
eventually make the uncertain economy stable. Equilibrium in the market can also be achieved if
the price which is determined or decided is perfect for both company and its customers.
1.3- Evaluating the importance of differing market systems in general and evaluating the role of
opportunity costs in determining process of making economic decisions.
Market system is the type of pool where the companies and customers gather to do the
trade. In the organisations sells their products and services to the consumers by using innovative
measures. It makes the market system. The Marks and Spencer have to make the people
understand about their brand and quality of their products and services (Blair and Sokol, eds.,
2014). It is made to achieve all objective and goals of business in the effective and efficient
manner. There are many factors which are needed to make the better market system. Those are
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products, services, location etc. better system helps the cited company to gain some competitive
advantages among their competitors in the market.
Opportunity cost arrive when the individual has two options to choose from. The person
evaluate and analyses the benefits of both the option and decides to select that one which will be
most beneficial. In this situation the individual gets some advantage but at the same time also
loses something too. Just like this big decisions like investment are also done on the basis of
opportunity cost. This states that opportunity cost plays very important role in making economic
decisions.
1.4- Explaining what is meant by elasticity of demand and assessing the importance of elasticity
in market interactions.
Elasticity of the demand is associated with the price of the product or service which is
determined in the market. Price increases or decreases with the increase and decrease of demand
in the market. Demand is elastic when the prices increases and income of Marks and Spencer
decreases (Anderson And et.al., 2014). It is very important for the cited organisation to know and
understand about the elasticity. It will help the company to determine or decide that whether they
need to increase or decrease the price. There are products for which the demand is inelastic. This
condition arises when the customers do not get affected by the increase in price. Substitute
products are their in the market, if the consumer feel that price of the good is high then he goes
in the direction of using substitute product which is available in the market.
The elasticity of the demand has very much importance in the market interactions. Marks
and Spencer can gain many competitive advantages because of this. Increasing in the prices of
the products of the competitors will increase the chances for the cited organisation. By this the
customers will move towards buying the products of cited business.
TASK 2
2.1- Explaining the implication of pricing and corporate objectives on the operations of
company.
Pricing is the factor which mainly makes the customer to decide about whose product and
service they want to buy. It is necessary to determine the right price to effectively handle the
business operations of the Marks and Spencer. It is seen that mainly stakeholders do not get
involved in the business activities. They only want their share of profit. There is difference
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between the thinking and perceptions of managers and owner of the organisation from a very
long time. The main corporate objective of the cited business is to gain as much competitive
advantages which will increase their market share (Fischer, 2014). The cited organisation
determines their prices on that level which satisfy their customers and increase the demand of
product in the market. It makes the perfect competition which make the company to gain
competitive benefits. This factor of determining the price and corporate objectives impact the
business operations. It makes the company to do the activities which will help them to set the
perfect price and achieve all their corporate objectives. Marks and Spencer have the vision to
become the leading organisation. They set prices of their product in that way which increase its
demand in the market.
2.2- Comparing how prices can be set in different market structures and analysing how the
market structure and operational decisions affect the behaviour of the organisation.
Methods of setting the prices in the various market structure differs from each other.
Monopolistic is the market where products which are being sold are not in accordance with the
customers. In these prices are set according to the various competitors of the company in the
market. Only the brand name of the product is different in the monopolistic market.
On the other hand in the monopoly market structure there is only one organisation in the
who sells the specific types of products in the market (Granger, 2014). Prices which are set for
these products or services are in accordance with the owner, whereas in the oligopoly market
structure many organisations compete to increase their customers and share in the market. In
these prices are set according to the entry and exit of the firm. This market structure is very much
different from the monopoly.
There is the perfect market structure or competition which is used by the Marks and
Spencer. The prices which are under this is in accordance with the demand of the product and
services among the customers in the market (The four types of market structures, 2017). All the
market structures are different from each other, method of setting the price of products and
service is also different.
Market is made up of many working organisations. Share of these companies is affected
by the market conditions. There are many competitions in the UK market. Government changing
some policies will force the cited firm to lose their power in setting the prices. Their operational
decisions will also get changed.
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2.3- Evaluating how UK regulations affect the market power of the cited company.
Market power is the term which is used for determining the prices of the product of
service in accordance with their demand and supply in the market. It is the thing which can make
the organisation to earn many types of profits. Those organisation sets the prices so they have
very much influence on the whole industry. Market structure of perfect competition have no
market power. Organisations can only evaluate and analyse the situation of demand and supply
to organise their business operations (Tietenberg and Lewis, 2016). There are many rules and
regulations which are made in UK. These forces the Marks and Spencer to not to set the prices of
their product and service on their own. The company will have to change their business activities
if there is some change in the rates of exchange. Under the laws of UK no company can carry the
market power of setting the price. They will have to depend upon the rules and regulations of the
government. No power is given to the organisations because it can affect the condition of perfect
competition in the market which is seen as healthy for the uncertain economic situations.
TASK 3
3.1- Analysing how the structure of the UK economy has changed in the 21st century and its
effect on the business environment of the company.
The economy has very much changed from the 20th century. Many innovations had been
made. Standard of living had been increased. Structure of the UK economy has changed from the
last 50 years because of adopting many new technologies which helped in making the economy
more strong and developed. Many new companies had entered the market with innovative and
creative ideas to be adopted in their working style. This was the main factor which had brought
the major change in the economy of UK. By the change in the structure of the economy it has
brought many impacts on the business environment of Marks and Spencer. It had made the
company to use many new and innovative technologies which eventually helped them to increase
their performance. Profits of the cited organisation increased because of this change in the
economy (Atkinson and Stiglitz, 2015). Profits which were gained in the 20th century were very
less. It has been increased in the 21st century. This states that there are various changes which are
brought by the change in economic structure of UK. It had impacted business environment of
Marks and Spencer in the positive way.
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3.2- Evaluating the tools which are available to meet macroeconomic policy and its effect on the
organisation.
Operations which are done in the organisation are on the basis of macroeconomic policy.
The tools which are used to meet this policy are very important to make the economic conditions
strong. The economy is said to be great when it has the various job opportunities, improved
standard of living. Fiscal policy of the macroeconomics is that which works in the direction of
making balanced economy. The changes which are made in the government's cost, tax rates and
loaning activities in the economy are the factors of fiscal policy (Edwards, 2017). On the other
hand there is monetary policy which is regulated by the authorised bank. This policy is
responsible for making the cash rates into the interest rates on the loan's given. Monetary policy
is affected by the capital invested. The difference between the value of currency of various
countries is termed as the exchange rate policy. Marks and Spencer's business will get impacted
if the government will bring some changes in the tax. Decrease in the tax rate will bring positive
impact on the workings of cited company. Their profits will be increased because of this. It can
be further used in their important business activities.
3.3- Evaluating the performance of the UK economy in the global market and the impact of
economic performance on the business.
Main motive of the government is to lower the effect of inflation on the country and
economic conditions. Monetary policy governed by the authorised bank and government's fiscal
policy can promote the growth of economy. Increase in the income and improved systems of tax
helps the making the positive change in the economy. Making the domestic goods help UK to
keep the inflation in control. Growth in the economy make many employment opportunities with
the minimum wage rate (Canto And et.al., 2014). This performance of the UK economy in the
global market will force the Marks and Spencer to increase the rate of wages given to their
workers. It will reduce their profits. There are various indicators which evaluates the
performance of economy like inflation, unemployment, labour force etc. Strength of economy
can also be judged by the rate of loans taken by other foreign countries.
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TASK 4
4.1- Demonstrating the theory of comparative advantage and justifying the advantages and
disadvantages of free trade. Affect of globalisation on the organisation.
Comparative advantage is the term which is used when one country produces the product
in lower cost then the other. This states that the country is able to make the goods which will be
of lower rates then the other countries. It will help in making the economy grow further at the
global level. Decrease in the demand of these good will bring the negative impact on the
economy. The countries who are trading for this good will be affected because of the decrease in
the demand. Marks and Spencer dose not satisfy their customers by making the clothes in
accordance with the latest fashion trends. For this they can trade with other countries to satisfy
the need of their customers (Frank, 2014). It will make the consumers to have the product of
their choice in the rate which will be affordable by them.
4.2- Analysing the impact of emerging economies on the developed economies and evaluating
the consequences of the recent shocks on the UK economy.
Emerging economies is that which make the economic situations open for the other
economies. It is done to make the economy of the country more strong which can be stable in the
uncertain conditions. It makes the organisation to make trade relation with other countries. This
brings some foreign exchange which is very much beneficial for the economic conditions in the
country. Economies will get only emerged when the situation is beneficial for both. The shock
which is faced by the UK in the free capitalism had made great impact on the economy of the
country. The major shock to the economy is from the exchange rates, decrease in the income etc.
Marks and Spencer has been forced by the government to change their business activities which
resulted in the favour of organisation. There are many factors which are responsible for the
change in the business operations of the company. Those are demand and supply of products and
services, customer satisfaction, market share etc. The cited firm had to make decision in their
activities on the basis of demand ans supply of products and services in the market (Rees, 2017).
Marks and Spencer firstly do proper research on their customer and understands their taste and
preferences. This helps them to launch the new product or making some innovative changes in
the existing products. This also makes them to know that what is the demand. Every need of the
consumer will be fulfilled by this method and they will be satisfied.
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CONCLUSION
This report concludes about the factors which are responsible for the increase and
decrease in the economic growth. UK has the very strong competitive environment which make
the Marks and Spencer to make many changes regarding their business activities. Growth in the
economy makes various benefits, job opportunities etc. in the country. There are macroeconomic
policies which are very much important for making the economy grow at the global level. The
cited organisation work in the perfect competition market structure which makes them to take
decisions on the basis of demand of product and services in the market.
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REFERENCES
Books and Journals
Anderson, D.R. And et.al., 2014. Statistics for business & economics, revised. Cengage
Learning.
Atkinson, A. B. and Stiglitz, J. E., 2015. Lectures on public economics. Princeton University
Press.
Blair, R. D. and Sokol, D. D. eds., 2014. The Oxford handbook of international antitrust
economics (Vol. 2). Oxford Handbooks.
Buckley, P. J., 2016. International business: economics and anthropology, theory and method.
Springer.
Canto, V.A. And et.al., 2014. Foundations of supply-side economics: Theory and evidence.
Academic Press.
Edwards, M. E., 2017. Regional and urban economics and economic development: theory and
methods. Routledge.
Fischer, S., 2016. Reflections on Macroeconomics Then and Now. Business Economics, 51(3),
pp.133-141.
Frank, R., 2014. Microeconomics and behavior. McGraw-Hill Higher Education.
Granger, C. W. J., 2014. Forecasting in business and economics. Academic Press.
Maryska, M. and Wagner, J., 2015. Reference model of business informatics economics
management. Journal of Business Economics and Management, 16(3), pp.621-637.
Rees, J., 2017. Natural resources: allocation, economics and policy. Routledge.
Tietenberg, T. H. and Lewis, L., 2016. Environmental and natural resource economics.
Routledge.
Williams, J. C., 2015. The decline in the natural rate of interest. Business Economics, 50(2),
pp.57-60.
Online
The four types of market structures. 2017 [Online]. Available through:
<https://quickonomics.com/market-structures/>.
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