Economic Theory and Business Operations

The assignment provided is an analysis of economic theory and its relevance to business operations. It explains how economic theories can help businesses understand customer behavior, market trends, and make informed decisions. The document also references various academic sources and provides a summary of the key points.

Poundland and the liquidity -Economic
and financial management-Economic
and the business

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Impact of economy and macro and micro economic facotrs has on Poundland and on business
organisation.................................................................................................................................1
Economy theory with context to different business....................................................................5
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

explain INTRODUCTION
Business economics is a field in economics that utilise the economics theories and
quantitative methods in order to evaluate business enterprises. It enables the managers and
leaders of organisation to monitor and measure the performance of organisation and make
decisions accordingly. To better understand this concept, Poundland organisation is being
selected for this report. It is a British variety store chain which is selling most items at price GBP
1. There are different economies factors which can make impact on Poundland, is being
discussed in this report. The different economies theories has been discussed in this report with
organisational context. Beside this micro and macro economics factors has been evaluated on
contemporary business.
MAIN BODY
Impact of economy and macro and micro economic facotrs has on Poundland and on business
organisation
The economy of country make great impact on the businesses which are running in that
country. As it is very important for companies to analyse the economy condition of country in
order to make effective strategy for sustainability. An economy country faces various phases
such as recession and boom etc. which make directly impact on business of organisations. There
are different economies issues which make impact on Poundland are discussed as below:
Impact of BREXIT:
BREXIT refers to the British exit from European Union in June, 2016. There were
various big personalities out which some of were supporting to this step and some of were
against this step. But after the voting share percentage finally this exit has taken place. As this
exit has made huge impacts on the various sectors of country and business was one of them.
After this exit Poundland has started this scheme of giving almost everything at GBP 1 in order
to be sustainable in market. The positive impact of this reform is that now organisation like
Poundland is free to make trade agreements with country like China (Hyde, 2013). There will be
lesser rules and regulations which business have to comply, as before BREXIT companies had to
comply with EU regulations but after the exit they have to only comply with UK regulations.
There is not any roadmap to follow or analogy to invoke as a valuable guide or system for the
brexit vote will reverberate in the months and years. UK has remained the most stable
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international economy, but the uncertainty spread among EU and US has enhanced drastically.
The fragmentation of financial services sectors comes with a hefty price system. On the level of
individual financial institution there are specific course of relocation. It would assist the overall
implication of the business growth of the company.
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As from the above income statement it can be said that the profit of Poundland has increased
after the BREXIT. It can be seen that company had the profit of GBP 27253 million for the year
2014 and after that in year 2016 – 2017 it has increased to GBP 30332 million which means
company had the positive impact of BREXIT.
Labour market:
This exit from Europe of UK has made the huge impact on employment sectors of
country. As the number people who are looking for jobs outside country have increased after this
economy step. But this exit has not made huge impact on the service sector industry as .6% job
fall has been seen in inner London and overall UK region has only shortfall of .2% which means
there is not any huge impact on service sector of country (Hofstad and Torfing, 2015). It is the
place where workers and employees tends to interact with one other. In the labour market, most
of the employers accomplish to hire the best and workers used to complete for the best satisfying
job opportunity.
Inflation:
Inflation is a rate at which prices of products and services gets increases. It also increases
the business expenses such as rent, utilities and cost of material used in production. As this rise
in cost also force business organisation like Poundland forces to increase their products prices in
order to maintain a level of profitability. This reduces the purchasing power of consumers and
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this make impact on profitability of business. The inflation rate of UK has risen up to 2.7%
which considered as highest of last six months. It is basically related with the prices rise for
energy, food, commodities that entire economy is affected. It also impacts the costs of living,
cost of operating business, borrowing money and corporate as well as government bonds.
Technology changes:
The technology is very dynamic and it changes very frequently with time changes. It is
very important for organisations to cop up with the changes so that competitive advantages can
be taken in market. There are different technologies are used in a business such as for making
payments there are digital payment method which make instant transfer of amounts. Apart from
this Poundland needs to come up with online delivery of goods and services for convenience of
consumers. The competitors of Poundland has also providing the online delivery of products and
services to their consumers in order to get growth in business market. These medium of
technology helps organisations for sustainability in longer period of time.
Political stability:
The political condition of country is also part of macro-economic factor of country. As
UK has stable political condition which is a positive aspect for various business organisation and
organisation like Poundland should utilise the maximum benefit out of it in order to get
competitive advantage.
Competition:
The competition is very high in every industry and companies are trying to make every
possible move in order to attain competitive advantage. A large number of competition shows a
high demand for customer’s products and services. The Poundland has its competitors like Tesco
which has good market share so Poundland needs to plan their strategy accordingly in order to
attain the business growth. Policies to promote competition is more high on the political agenda
at global level. In constantly changing marketplace, the effects of more intense competition on
firm used to conduct, market structure in order to analyse the performance of the company.
Investors:
Investors are also coming under the micro economic factors and it helps company by
funding the business to make growth. It requires some funds to make growth of business and its
operations. As Poundland needs to look for some investors who can support their business in
order to be sustainable in the market. It is very important to get fund from those source where
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company does not need to pay higher interest because interest creates a burden on the operations
of business. Poundland is a running business and due to some economic crisis it has faced the
falling in their business. So in order to get back in position company needs to get some
investment from investors so that they sustain for longer period of time (Graham and Morrell,
2016).
So these are the economy situation which made impact on the various business
organisation of UK and affected large number of job aspirants.
Reason of Poundland fail
The company has been closing some of their stores in UK due to various reasons which
forces company to close down their stores in market. These are different which are discussed as
below:
Decrease sales:
The company was facing decrease in sales for some years which leads to decline in their
profits and revenues. As the company cannot work in loss so due to heavy losses and sales
declined higher authority of company has decided to shut down their some of stores in UK.
Competitive pricing:
There is huge competition in market which leads to low profitability and decrease
turnover for companies. Due to heavy competition and economic crisis the Poundland has set up
their price to 1 GBP almost for every item. So this step was not fulfilling expectations of higher
authority in market and company decided to close their stores.
As it cannot be said that company has failed in all aspect and going to liquidate because it
shown some good number profits for which helps them to sustain in market. The company is
closing their some of stores due to economic and financial reasons.
Business performance analysis: It refers as the wide range of techniques which would be
best used to quantify the overall performance of a Poundland company over a given period of
time. It could be taken into accounting just about any specific areas of a business. A key
performance indicator can be used in best manner that can depict the overall performance of a
particular areas of a business. KPI allow for a proper analysis to be done independently of
outside purpose.
The best interests of organisational success:
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There are some leaders that stand out performing in better than their peers during the
attainment of better outcome. 87% of the employees in global market are not associated in their
jobs or their work. Because of this issues which used to creates massive losses for businesses
large and small in every industry. All leaders must have tried to make decision that goes with the
job which is performed by the employees. Extraordinary leaders cannot hesitate in all such
condition in which the issues are beyond their control.
The impact the economy has on Poundland and on the business organisations: This
company is booming through the recession. With the bargaining hunting shoppers are queueing
to as a 12-deep at the tills which is having baskets brimming over the period of time. Most of the
happy retailers are few as a full-priced frock that leads to overall growth and sustainability of the
business in coming period of time. It will assist in protecting essential independent reporting that
can continues to deliver the rigorous investigation which would keep the power to account and
make modification according to the specific changes.
Analysis of micro and macroeconomic factors that caused the failure of Poundland
Serial no. Macro factors Micro factors
1 Due to Political instability in
UK tax policy has been
changed as a result Poundland
have to pay more taxes and its
profits has been reduce. It can
be the cause the failure of
organisation.
Due to heavy competition and
economic crisis the Poundland
has set up their price to 1 GBP
almost for every item. So this
step was not fulfilling
expectations of higher
authority in market and
company decided to close their
stores. It is the cause the
failure of Poundland.
2 The inflation rate of UK has
risen up to 2.7% which
considered as highest of last
six months. It is basically
related with the prices rise for
Poundland is a running
business and due to some
economic crisis it has faced the
falling in their business. So in
order to get back in position
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energy, food, commodities that
entire economy is affected. It
also impacts the costs of
living, cost of operating
business, borrowing money
and corporate as well as
government bonds. It is cause
the failure of Poundland.
company needs to get some
investment from investors so
that they sustain for longer
period of time. But it has to
high interest which does not
afford by the organisation. So
it is cause the failure of
Poundland.
3 Due to the technology changes
business of organisation has
been affected. Other
companies are selling its
products online but Poundland
has sales its products in its
store as a result sales has been
decreased. So profits has been
minimize which is the main
cause the failure of Poundland.
There are two types of
consumers which are B2B and
B2C but organisation is
emphasis only B2C that's why
sales does not increasing and
market share has not
expanding. So it is cause the
failure of Poundland.
Economy theory with context to different business
Economy theory refers to the formal explanation of the relationship between economic
variables, why something happens and offers a cause and effect relationship for set of events.
This also shows the impact of one variable when another changes. It is important to analyse this
theory and make important decisions accordingly. This theory states that when economic
conditions are favourable than the business and economic growth takes place in market. As
theory emphasise on that economy incentives are major motivators for growth of business and
business related activities. There can be different incentives of economy which attract the
company like Poundland. These incentive includes tax policy of country, subsidies for business
operations, infrastructure availability and proper access to market conditions and opportunities.
These incentives need to provide by UK government in order to increase the growth rate of
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country and develop a business hub. The policy states that lack of incentives, unattractive
economy policies and unfavourable market conditions might be major cause for business failure
and decreasing growth. With help of this theory Poundland can make prediction about the future
market conditions of country and plan their strategy accordingly. The company can also predict
about how does the consumption changes when the price changes, in other words it can also be
said that it helps companies to know the attitude of customers regarding the consumption
changes when there is a change in price of company's products and services.
CONCLUSION
In the conclusion it can be said that the economy has huge impact on business operations.
The favourable economic conditions are always considered as beneficial for growth of business
and industry. The economy theory states that company can come to know about attitude of
customers in regards to change in the price of company's product and services. There are
different micro and macro economy forces on contemporary business which needs to analysed
by organisation.
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REFERENCES
Graham, A. and Morrell, P., 2016. Airport Finance and Investment in the Global Economy.
Routledge.
Hofstad, H. and Torfing, J., 2015. Collaborative innovation as a tool for environmental,
economic and social sustainability in regional governance. Scandinavian Journal of
Public Administration. 19(4). pp.49-70.
Hyde, W. F., 2013. Timber supply, land allocation, and economic efficiency. RFF Press.
Johns, J., 2015. Location of international business activities: Integrating ideas from research in
international business, strategic management and economic geography.
McFarlin, D. and Sweeney, P. D., 2014. International management: strategic opportunities &
cultural challenges. Routledge.
Shogren, J., 2013. Encyclopedia of energy, natural resource, and environmental economics.
Newnes.
Warner, M., 2016. How Chinese managers learn: Management and industrial training in China.
Springer.
Online
Economic theory. 2018. [Online]. Available through <http://lexicon.ft.com/Term?
term=economic-theory>
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