Economic and Financial Management: Impact on Business Organizations

This project examines the impact of macro and micro economic factors on business organizations and their operations. It discusses the use of PESTEL and SWOT analysis to evaluate external factors and formulate strategies. The case study focuses on Patisserie Valerie Cafe and its poor waste management practices. Recommendations are provided for improving operational performance.

Economic and
Financial
Management

EXECUTIVE SUMMARY
Financial management is the process of maintaining liquidity of cash in the organization
which meet the need to economic management and ensure about the spendings which further
provide the development or growth to the business. In order to perform well in the market,
company should have knowledge about economy. This project is about micro or macro economic
factors which affect the organizations and close down the operations. This assessment cover the
various topics to discuss such as external factors which impact the business operations.
Organizations analyse these factors with the help of appropriate model such as PESTEL or
SWOT. It unable the business to identify those elements and formulate strategies accordingly.
There are some recommendations as well that how organizations can improve their operational
performances to achieve desired goals & objectives. This project select the Patisserie Valerie
Cafe due to inability or sustainability in business operations because of poor waste management
practices. Cafe takes too much time to make any decisions to introduce new products in the
market for the overall growth.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................4
ECONOMIC IMPACT ON BUSINESS ORGANISATIONS........................................................4
1. Macro economic factors...........................................................................................................4
2. Micro economic factors...........................................................................................................5
3. How these factors affect the operations to close down the business.......................................5
IMPACT OF MICRO & MACRO ECONOMIC FACTORS ON THE COMPANY....................5
1. Overview of selected organization...........................................................................................5
2. Micro Economic Analysis of the selected company................................................................6
3. Macro Economic Analysis of the choose organizations..........................................................6
RECOMMENDATIONS.................................................................................................................7
CONCLUSION................................................................................................................................7
REFERENCES ...............................................................................................................................8

INTRODUCTION
Business economics include the various analysis of external factors which impact the
operations and further affect the decision making process of the company. Change in the
government regulation will impact the strategic decisions (Asher, Bali and Kwan, 2015). Sudden
changes in the industry regulation can lead to change the price of raw material which influence
the overall production. It further impact the productivity as well as profitability of the company.
In order to make effective decisions, management follow the various economic models such as
PESTEL, SWOT, Porter's Five Forces etc. With the help of PESTEL analysis, company able to
evaluate the external factor such as political, social, economical, technological, environmental or
legal. SWOT analysis used to measure company's strengths, weakness, opportunities & threats
and with the help of Porter's model management identify the external forces which affect the
business operations through generating competition. This report cover the various topics such as
micro or macro factors which affect the organizations and its operations.
ECONOMIC IMPACT ON BUSINESS ORGANISATIONS
1. Macro economic factors
It is an force of external factors which influence the natural or geographical event which
further affect the economy of the country. These factors includes the economic output such as
inflation rate, unemployment rate, economic performance, government rules & regulations etc.
With the help of PESTEL analysis, organizations able identify those factors which affect the
production as well as profitability.
Political factor which required to analyse before making any strategy and it includes
political stability, government rules & regulations regarding trade, corruption etc. Social factor
cover the growth rate of population, age distribution, lifestyle, culture etc. Economic factors
includes the interest rate, exchange rate, inflation, disposable income, unemployment rate etc.
Similarly, change in the technology has greater impact on the business operations and legal
factors includes various laws such as employment law, consumer protection, copy right,
discrimination etc (Hammoudeh and McAleer, 2015). In addition, environmental factors includes
the change in weather, climate, environmental policy etc.

2. Micro economic factors
There are various micro economic factors which affect the organizations in terms of
productivity as well as profitability. These factors includes the consumers buying habit,
availability of employees, distribution channels and suppliers, level of competition in the market,
availability of investors, etc. With the help of SWOT analysis, company analyse that above
factors in terms of their strengths, weaknesses, opportunities and threats. This model help the
management to make strategic decisions and also ensure that it helps in maximising productivity
or profitability of the business. Managers of the company should prepare strategies by using
company's strengths and focus on the opportunities which they can grab. In addition, make
decisions which helps in minimising the risk for the business operations. So before formulating
any goals or strategies, company need to evaluate these micro economic factors and take
necessary actions accordingly.
3. How these factors affect the operations to close down the business
Micro or macro economic factors affect the business as well as force the management to
close down the operations. Due to heavy tax on importing or exporting goods will affect the
overall product cost which further maximise the price of products (Korol and Poltorak, 2018).
Old technology, lack of customer interest or change in the taste & preference will affect the
demand which further minimise the production or profitability and lead to close down the
business. Low wages influence the employees, high price of product reduces the demand,
disposable income etc. These factors affect the organizations to close down their business
because they are unable to implement changes as per the market or consumer's requirement.
IMPACT OF MICRO & MACRO ECONOMIC FACTORS ON THE
COMPANY
1. Overview of selected organization
Patisserie Valerie is an UK based chain of Cafes which specialised in cakes and they also
offer continental breakfasts, teas, coffees and lunches in their menu. Company went into
administrated in 2019 January but before that management funded by the Causeway Capital
Partners. Cafe founded in 1926 by Madame Valerie and its headquarter situation in Birmingham,
England, United Kingdom. Patisserie Valerie Cafe only served in the UK at 96 location of the

nation. In 2014 April, company announced to raise £ 33 million on Alternative Investment
Marker of London with the help of reducing their debt.
2. Micro Economic Analysis of the selected company
With the help of SWOT analysis, Patisserie Valerie evaluate their strengths, weakness,
opportunities and threats. This evaluation further helps the management to make strategic
decisions or perform accordingly to get the growth in the economy and achieve their desired
goals and objectives.
Strengths: Geographic presence of Patisserie Valerie Cafe in the different location
positively impact the business (Kosov and et.al., 2016). Along with this, online presence on
social media sites maximise the demand but they have to provide effective customer services
otherwise it negatively impact the cafe as well.
Weaknesses: Poor inventory management of Patisserie Valerie Cafe negatively affect the
business or maximise the overall produce due to wastage of raw material. Cafe spend less
amount on research & development activities, so if they invest more to identify customers need
than it will positively affect the operations.
Opportunities: Change in the customer needs & preferences is the opportunity for the
company if they build further strategies accordingly. But due to lack of ineffective research team,
it may negatively impact the Patisserie Valerie.
Threats: Change in the regulations negatively affect the business and make legal
compliances more complex. Shortage of labour skills influence the operations so company need
to provide effective training to make them skilled which is a positive factor for the cafe.
3. Macro Economic Analysis of the choose organizations
Political: UK's government is stable which positively affect the business in terms of
stable rules & regulation. Bust some of the policies such as tax will affect the overall cost of
products & services which negatively affect the cafe.
Social: Improve in the customers lifestyle influence the Patisserie Valerie in negative
way, so they have to build strategies accordingly to get advantage from it. But high product
quality improve the brand loyalty and helps in improving their performance in the competitive
market.

Economic: Workforce diversity positively affect the business but increase in the inflation
rate will automatically raise the cost of production which minimise the profit margin of Patisserie
Valerie that negatively impact.
Technological: E-commerce and social media trend is the greater opportunity for the
Patisserie Valerie which positively impact (Oláh and et.al., 2019). But it required enough
investment which become barrier for the company to implement changes.
Environmental: Patisserie Valerie have their intellectual property rights that is positive
aspect for cafe because they offer unique or exclusive services. On the other hand, due to poor
waste management cafe face the criticism.
Legal: Due to change in the regulations, it negatively affect the cafe because of increases
the complexity in the legal standards. In order to minimise this complexity, they need to hire
professional person to handle all the legal activities.
RECOMMENDATIONS
On the basis of above discussion there are some recommendation for the Patisserie
Valerie Cafe and it mention below:
 In order to expand customer base company should maintain proper budget for
promotional or marketing activities (Valaskova, Kliestik and Kovacova, 2018).
 Patisserie Valerie should work on customer service in order to make satisfy their
consumers with the products & services they consume.
 Cafe should manage their waste in appropriate way and have to implement effective
management practices to improve individual as well as entire operations performance.
CONCLUSION
From the above discussion it has been concluded that, there are various economic factors
such as micro or macro which affect the overall economy in terms of productivity as well as
profitability. With the help of PESTEL or SWOT analysis organizations able to identify
opportunities or threats and further formulate strategies with the help of these analysis. Along
with this, management need to make sure that business perform well or achieve operational goals
& objectives.

REFERENCES
Books & Journals
Asher, M. G., Bali, A. S. and Kwan, C. Y., 2015. Public financial management in Singapore: key
characteristics and prospects. The Singapore Economic Review. 60(03). p.1550032.
Hammoudeh, S. and McAleer, M., 2015. Advances in financial risk management and economic
policy uncertainty: An overview. International Review of Economics & Finance. 40.
pp.1-7.
Korol, I. and Poltorak, A., 2018. Financial Risk Management As A Strategic Direction For
Improving The Level Of Economic Security Of The State. Baltic Journal of Economic
Studies. 4(1). pp.235-241.
Kosov, M. E. and et.al., 2016. Economic practicability substantiation of financial instrument
choice. Journal of Applied Economic Sciences. 11(8). pp.1613-1623.
Oláh, J. and et.al., 2019. Analysis and comparison of economic and financial risk sources in
SMEs of the visegrad group and serbia. Sustainability. 11(7). p.1853.
Valaskova, K., Kliestik, T. and Kovacova, M., 2018. Management of financial risks in Slovak
enterprises using regression analysis. Oeconomia Copernicana. 9(1). pp.105-121.