Integration of Economics and Business Decision-Making

This report explores the integration of economics and business decision-making. It discusses macro and micro economic models and their impact on businesses. The reasons for the failure of Mothercare are analyzed and recommendations are provided based on identified problems.

ECONOMIC AND
FINANCIAL
MANAGEMENT

EXECUTIVE SUMMARY
The integration of economics and business decision-making has always been an intriguing aspect
in the businesses. This report will identify the various micro and macro level economic models
that businesses can use for developing strategies. The reasons of failure of the Mothercare
company will be further evaluated and these identified macro and micro economic models will
be implemented to ascertain the exact reasons. Further recommendations will be given on the
basis of identified problems and adequate conclusions will be presented in the report. The
economic market analysis and its integration with business operations will be emphasized in the
following report.

Table of Contents
INTRODUCTION...........................................................................................................................4
Economic Impact on Business Organizations..................................................................................4
Macro Analysis............................................................................................................................4
Micro Analysis.............................................................................................................................5
Impact of micro and macro factors on Mothercare..........................................................................5
Background..................................................................................................................................5
Micro Analysis.............................................................................................................................6
Macro Analysis............................................................................................................................6
RECOMMENDATION...................................................................................................................8
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................1

INTRODUCTION
Economics when used for implication of economic models, tools and methods in the
business environment helps the companies in developing appropriate strategies. There are
various tools like Pestle Analysis for analysing the macro-environment, Swot for analysing
micro environment, Porter's Five Force for analysing competitive environment and collectively it
helps the companies in developing better strategies based on market trends and the
organizational resources (Gürel and Tat, 2017). In the current report, in the initial section the
macro and micro environment analysis will be done on a general basis where the Pestle and Swot
model will be evaluated and in the second part of the report, a macro and micro economic
analysis will be done on the Mothercare company. The report will identify the reasons for its
failure and the causes will be linked to macro and micro environment. Lastly, appropriate
recommendations and conclusions will be presented based on the study conducted in entire
report.
Economic Impact on Business Organizations
Macro Analysis
Analysis of various factors at an economic level that are affecting the entire country i.e. analysis
of factors at a national level often leads to the companies developing a better insight regarding
the current economic position of the country and what are the positive or negative aspects that
are affecting the company (Phadermrod, Crowder and Wills, 2019). The PESTLE Analysis is
one such tool of macro-economic analysis that assists in analysing the current movement in the
economy by ascertaining six major factors.
Factors Analysis
Political Factors After Brexit, the uncertainty in UK has increased and political
chaos has affected the stability. The controversial opinion that it
will either create millions of opportunities or it might create a
chaotic imbalance has increased ambiguity.
Economic Factors Economy of UK is the fifth largest in the world and despite 2007-
08 recession, the economy has restored itself in a fairly stable way.
The rising FDI level also show that the economy is progressive
(Arif and Hossin, 2016).

Social Factors The concept of social classes has affected the economy and
products are often marketed on the basis of different casts, religions
etc.
Technological Factors The technology sector has continuously developed and UK's
economy is regularly investing in upgraded technology (Russell,
2019).
Legal Factors There are a variety of acts that protect the right of consumers,
employees, employers, producers, workers etc. and the practices
such as discrimination etc. are discouraged emphatically.
Environmental Factors The environmental aspect has always been a primary concern and
the activities are developed to protect and encourage sustainable
development.
This factor helps business in identifying what are the strategies to be adopted with the changing
market environment. For instance failure of General Motors to adapt themselves to changing
needs made them loose the market position they once held.
Micro Analysis
Micro Analysis helps in analysing the internal policies that are associated with the company or
business in particular and the different aspects i.e. activities that are adopted in the company as a
micro or individual unit are evaluated regularly (Achinas and et.al., 2019). SWOT Analysis is
one such factor that can be used to conduct micro analysis where the four constituents are
evaluated. Strength helps in identifying what are the key features of the company using which they
can gain competitive advantage over other competitor companies. Weakness is used to identify the fields where the company currently lacks and this might
lead to development of an insight regarding the areas where the company can get beaten. Opportunities factor helps in identifying what are those areas where company can expand
and earn greater profits.
 Threats help in identifying which current policies in the industry can create a negative
impact on the company (Widya Yudha and Tjahjono, 2019).

This is an insightful tool for the company and helps them in developing correct strategies. Dell,
for example, launched products that were in competition with Apple but failed to deliver quality
thus making a lot of their products redundant.
Impact of micro and macro factors on Mothercare
Background
Mothercare is a company which was founded in the year 1961 by Selim Zikha and James
Goldsmith which is a company dealing in products required by the expectant mothers. This also
deals in the products relating to the children up to age of 8. The company shut down because of
the major reason that the competition was high and the latest trend of online shopping attracted
most of the parents. This was the major reason behind the closing down of the company in June
2019.
Micro Analysis
Elements Positive and negative impact
Strength Attractive packaging for kids and this was
positive because of the reason that this
attractiveness of packaging attracted more of
the kids resulting in increase of consumers
(Sheehan, Grant and Garavan, 2018).
Presence in more than 40 countries and the
impact of negative as the company need to
handle so many rules and regulations of
different countries.
Weaknesses Yet to enter in emerging market. This is a
negative impact because this will add on to
the cost of expanding the business to other
countries.
Opportunity Increase in rural penetration and this will have
positive impact because of the reason that if
they will enter into rural market then the
market share and consumer base will increase.
Threat High competition and this will have negative

impact over the working of company as the
sales of the company will decrease as
consumer will go to the competitors.
Macro Analysis
Elements Positive and negative impact
Political factors The political stability is there in UK and this
has a positive impact over the working of the
company. This is because if there will not be
many changes in policies of government then
they will not have to make changes in
working of company.
Economic factor Currently the purchasing power of the
consumers is increasing and this will have
positive impact over working of company.
This is due to the fact that now consumer will
buy the products of the company as they will
buy the product of high quality.
Social factor Currently the latest trend for consumer is
buying good quality product for their babies
and because of this trend the impact will be
positive. As the consumers will be happy
buying the product of Mothercare (Rastogi
and Trivedi, 2016).
Technological factors The technology is expanding fast and this will
have negative impact over the company and
its cost if the technology is implemented. This
is because of the reason that if company
implements the technology then its cost will
increase.
Legal factor The company deals in products relating to
childcare thus, it is necessary for them to

follow all the legal issues to a great extent.
This will have a positive impact as abiding by
all the laws will increase the goodwill of the
company.
Environmental factors Currently the consumers have become much
aware of environment protection so
Mothercare must also formulate strategies
relating to the protection of environment
(Perera, 2017). This will have a positive
impact over the sales as the consumers will
like the fact that company cares for the
environment.
RECOMMENDATION
 Based on the micro analysis, it can be recommended that the company should have
developed appropriate expansion strategies so that the untapped potential of the company
could have been realized and by expansion the company would have been able to
increase its revenue generation thus covering up the declining sales problem.
 The macro analysis help in recommending that the failure to adapt to modern market
trends was he major reason for failure of Mothercare. Lack of proper online mechanisms,
inadequacy of investment in changing technology were found to be the major problems
of the company and therefore it can be recommended that company should work on
developing better insights related to market trends.
CONCLUSION
The analysis of facts in the above report helps in concluding that the economic models
affect the decision-making of the companies and therefore it is necessary to implement proper
tools that will help in analysing the shifting trends in economy and the manner in which these
should be integrated with the policies being formulated. Mothercare's reason of failure was
ascertained to be lack of developing policies that matched the changing environment. Based on
the problems that were identified in the report above, it was recommended that company should
have closely monitored the external environment and the trends should have been adopted
regularly.

REFERENCES
Books and journals
Achinas, S. and et.al., 2019. A PESTLE Analysis of Biofuels Energy Industry in
Europe. Sustainability. 11(21). p.5981.
Arif, T.M.H. and Hossin, M.Z., 2016. A comparative analysis of internal and external
environments between Hotel Hyatt, UK and Hotel The Cox Today, Cox’s Bazar,
Bangladesh. IOSR Journal of Humanities and Social Science. 21(6). pp.13-22.
Gürel, E. and Tat, M., 2017. SWOT analysis: a theoretical review. Journal of International Social
Research. 10(51).
Perera, R., 2017. The PESTLE analysis. Nerdynaut.
Phadermrod, B., Crowder, R.M. and Wills, G.B., 2019. Importance-performance analysis based
SWOT analysis. International Journal of Information Management. 44. pp.194-203.
Rastogi, N.I.T.A.N.K. and Trivedi, M.K., 2016. PESTLE technique–a tool to identify external
risks in construction projects. International Research Journal of Engineering and
Technology (IRJET). 3(1). pp.384-388.
Russell, M.J., 2019. Mother care. Nursery World, 2019(4).
Sheehan, M., Grant, K. and Garavan, T., 2018. Strategic talent management: a macro and micro
analysis of current issues in hospitality and tourism. Worldwide Hospitality and Tourism
Themes. 10(1). pp.28-41.
Widya Yudha, S. and Tjahjono, B., 2019. Stakeholder mapping and analysis of the renewable
energy industry in Indonesia. Energies. 12(4). p.602.
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