Business Economics Report

This report explores the relationship between the UK economy and business decisions, analyzing the impact of economic changes on firms. It also examines different market structures and their influence on firm production and strategic decisions.

Business economics

Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK ..............................................................................................................................................1
CONCLUSION ...............................................................................................................................5
REFERENCES ...............................................................................................................................6

INTRODUCTION
Economics is function related to the country in the whole which includes the market, the
customer and various factors effecting supply and demand in the economy. The economy of a
country also effects on the government of the country and the formation of laws relating to the
trade and service in the country.
The report will study the changes in an economy of UK and its affects on the business
decisions and the behaviour of firms of UK. The changes in economy can be through the people
of UK, the government increase of taxes, inflation, shortage of the raw materials etc.
Furthermore more report will study the various operation of market and the impact of
market structure on firms production and strategic decisions.
TASK
Changes in the economy can affect business decisions and the behaviour of firms.
Economics is the study of market functions which effects the customer in the market and
the firms operating in the market. It studies the needs of the customer which is known as demand
and there fulfilment by the companies that is known as supply. The company supply goods for
some consideration in response to the demand raised by the customers.
All over the world there are different types of economy which is mainly created by the
type of industries in that country and the type of people living in that country. The people have
varied living standards, housing, education etc. there are some economics in which the people
have high living structure, skilled and educated. Whereas there are some countries in which
people are poor, lack of education and resources. Also in these type of industries there are
unskilled labours and lack of resources. The people in UK are educated and having high living
standards (Albort-Morant and Ribeiro- Soriano, 2016).
Also there is difference in the government and there policies regarding the taxes, flow of
money in the economy and also the controlling of the flow of money etc. these varied policies
are due to the different people and different types of industries in the country. There are different
sectors in the country through which the business operates. There are three types of business
operations that are Primary, Secondary and tertiary. Primary sectors deals with the supplying of
raw materials to the industries manufacturing the goods. Secondary sectors is responsible for the
manufacturing of the goods through the use of raw materials provided by the primary sectors.
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And at the last the tertiary sectors provide the services which include retailing the finished
products (Anderson and et. al., 2016).
There can be widespread effect of the changes in the economy on the business decisions
of the firm. The decisions of the business are crucial and includes the questions like- What to
produce, How to produce and for whom to produce. In deciding the services to be offered and
the product to be manufactured, this will depend on many factors like cost of raw materials, the
technological changes in the industry, the taxes on such products and the changing government
policies for such industries in UK. After the selection of the product there is issue of what
product can be manufactured by the firms. The changing of the product also have effect on the
product decision of the firms. The factors which effect the product decision are – the resources
which require less capital, premises available and equipment and labour in the country UK. As
there are skilled labour in UK there can be production of quality products (Böhme, R. and et. al.,
2015). At the last the business decision includes the question for whom the product is to be
manufactured by the firms in UK. The production of the Goods and providing of services both
depends on the present and the future aspect of the customers. Therefore the firms in UK have to
take decisions according to the consumer of the goods. These decisions are taken by evaluating
the price of the product, its demand in the market by the customers, the product can be
manufactured for local as well as foreign customers (Brickley, Smith and Zimmerman, 2015).
However there are many more business decisions to be taken by the firms in order to
survive and propagate in the changing economies. Changing economies can cause insufficient
amount of raw material which effects the production of goods, growth in interest rates by the
government can decrease the purchasing power of the people in UK there by decreasing the
production of the products, if there is growth in the unemployment rate and people are less
willing to do work there will be less labour capital for the industries.
There can be change in economy which can affect the business firms. The economy of UK have
great impact on the business firms in the country (Devine, and et. al., 2018).
With the increase in Inflation levels there is increase in the prices of the products of the
firms. Thus during the inflation the business firms in UK have to increase there products price
too which results in the lowering of thee customer base as the people possess the same level of
income and there purchasing powers reduces.
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With the lack labour skills in the economy there is problem of the low quality
production in the business firms in UK. The labour forces in UK effects mostly on the
production process of the firms as the company is not able to achieve its product goals in the
longer time duration (Moore and et. al., 2016).
The government policy changes can also have the major impact on the policies and there
operation of business. As the companies in UK are bound to adapt the changes directed by the
government which can be change in the production process, sale of any specified commodity and
the implementation of the taxes in export and import which makes it difficult for the company to
accept and change their policies. For example- if government suddenly banned the sale of any
specified product, there can be massive loss to the firms making those products.
Operation of market and the impact of market structure on firms production and strategic
decisions.
Market structures- there are different types of market structures in the economy in UK.
These economies relates to the countries growth and development. There are four types of
market structures in the economy which are- perfect competition market, monopoly market,
monopolistic market and the oligopoly market. The perfect competition market are the market
in which there is perfect competition among the sellers of UK. It includes large number of buyers
and the large number of sellers in the market (Salvatore, 2015). In the monopoly market there is
single seller in the market selling the products and the large number of buyers. Also in the
monopolistic structure there is competition between large number of the firms. The product in
this structure are slightly differentiated. In oligopoly structures there are small number of firms
in competition.
Strategic decisions-These refers to the decisions which are to be decided by the
companies in UK to operate the business functions. Strategic decisions are the long-term
decisions and are concerned with the future of the business firm. Also the strategic decisions are
taken on the basis of the organisation goals and the organisation growth. These decisions are to
be taken by the top level of management (Savard and et. al., 2019).
Market Accessibility and segmentation- The market structure determines the type of
consumers to whom the product of the company will be sold. Also the type of market
determines the competition in the market for that product. The forces of market that is demand
and supply helps in the evaluation of the product required in the m,market. The segmentation of
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the market of UK includes the division of the customers according to their needs. Therefore the
market structures and market segmentation impact on the firms production and strategic
decisions in UK.
Market Size and Characteristics- Market size can have greater impact on the production
process and the strategies of the business firms as the increase in the market size can increase the
production of the firm which requires formation of more strategies and plans (Savard and et. al.,
2019). If the market structure is small there will be less sales of the products and lesser
production in the firms of UK.
Competitive structure- The competitive structure of the economy will increase the
competition in the market and there can be greater supply in the market thereby creating the
lower price of products and the company may suffer. In the competitive market the company
needs to be highly innovative and adopt the good strategies in order to meet the companies goals
and promote growth of the company. The competition in the market helps in the evolution of
new techniques of production by the companies in that industry.
Therefore it is studied that the operations of the market have major impact on the
business firms in UK. The operation of market and market structure determines the firms output
levels, its input requirement and also the policies and plans (Schaltegger, Hansen and Lüdeke-
Freund, 2016). If there is increase in the demand of the product the firm have to prepare itself in
the formation of the extra products to meet to requirements of the customers and also to achieve
maximum profit. Also if there is decrease in demand of the products the company which is
producing high product will have to mange there product and the minimum cost of operating the
business. In the perfect competitive market the firms have to be very innovative and advanced to
compete with other firms in the market. In the monopoly an monopolistic market there is need to
generate the products in different ways so the firms needs to makes plans and procedures
(Webster,2018).
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CONCLUSION
The report concludes that there is different type of economies in the market which can be
primary, secondary and tertiary sectors. These form the economies of the country UK. In order to
survive in the economy the business firms have to make many decisions regarding the product
making and make it efficient. Also the report studies the affect of the change in the economy on
the business and decision making of the firms in UK.
Thereafter the report studies that there are four different types of market structures which are
perfect competition market, monopoly market, oligopoly and the monopolistic market. The
report states the impact of the market structures on the business firms in UK. Also the
government policies and operations of market such as demand and supply also affects the
business firms in the country UK.
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REFERENCES
Books and journals
Albort-Morant, G. and Ribeiro-Soriano, D., 2016. A bibliometric analysis of international impact
of business incubators. Journal of Business Research.69(5). pp.1775-1779.
Anderson and et. al., 2016.Statistics for business & economics. Nelson Education.
Böhme, R. and et. al., 2015. Bitcoin: Economics, technology, and governance. Journal of
Economic Perspectives.29(2). pp.213-38.
Brickley, J., Smith, C. and Zimmerman, J., 2015.Managerial economics and organizational
architecture. McGraw-Hill Education.
Devine, P. J., and et. al., 2018. An introduction to industrial economics. Routledge.
Moore, D. S. and et. al., 2016. The practice of statistics for business and economics. WH
Freeman.
Salvatore, D., 2015. Managerial economics in a global economy. OUP Catalogue.
Savard, C. and et. al., 2019. Global Journal of Business, Economics and Management: Current
Issues.
Schaltegger, S., Hansen, E.G. and Lüdeke- Freund, F., 2016. Business models for sustainability:
Origins, present research, and future avenues.
Webster, T. J., 2018. Introduction to game theory in business and economics. Routledge.
ONLINE-
How Does a Market Structure Positively or Negatively Affect a Firm.2019.[online]. Available
through <https://smallbusiness.chron.com/market-structure-positively-negatively-affect-
firm-78927.html>
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