Introduction to Business Environment

This presentation provides an overview of the business environment, including internal and external factors that influence business. It discusses the impact of monetary policy and fiscal policy on business, as well as global and regional factors. The presentation concludes with a discussion on the importance of understanding the business environment for successful business operations.

Introduction to Business
Environment

Table of Content
 Introduction
 Monetary policy
 Fiscal policy
 Global factors
 Regional factors
 Conclusion
 References

Introduction
Business environment refers to sum total of internal and
external factors which influence on business. Business
environment can consist factors like suppliers, consumers,
competition, improvement in technology, government
activities etc. It is helpful in determining the business
opportunities, helpful in planning, increase profitability,
make improvement in overall performance etc.

Monetary Policy
 It refers to process
through which monetary
authority of country like
currency board, central
back etc. assure the
stability in price as well
as trust in currency.

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 It is macroeconomic policy that is laid down through
central bank.
 The monetary policy is mainly used through government
in order to regulate money flow in an economy.
 Main objective of monetary policy is to minimize
demand for services and products.

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Impact of high interest rates
 Usually, Central bank enhance the interest rates when
inflation is to be predicted to enhance in inflation target.
 The higher interest rates tend to minimize inflationary
pressures and rate of the economic rates.

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 At the time of high investments, firms can earn the more
money from these kinds of investments.
 The enhancing interest rates can develop the high affect
on the several business due to demand of the credit goes
down and also the customers switch to saving the
money to spending it.

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Impact of Monetary policy on Investment
 Monetary policies is related to strategies which employed
through central bank with regard to money that
circulation in an economy.
 The main aim of the monetary policy is to attain the long
term economic development and the central banks may
have the various stated objectives towards end.

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Control of money supply
Money Quantity circulation
in an economy impact
macro and micro
economic trends.

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 Bank of England can control money supply through
“open the market operations”.
 It will include selling, purchasing and also interest-
bearing bonds.
 If it will sell the bonds then in this case purchasers pay
from through through cheque drawn on commercial bank
accounts of Bank of England.

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Advantages of Monetary Policy
 Reduces interest and mortgage payment rates
 Permit Central Bank to apply quantitative easing

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Disadvantages of Monetary Policy
 Not useful in global recession
 Not guarantee to economic development

Fiscal policy
Fiscal policy refers to means
through which the
government adjusts tax
rates and spending level
to monitor as well as
influence economy of
nation.

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 In context to retail business, fiscal policy impact on
demand of customers, cost of conducting business, ability
to compete and also make investment decisions.
 In related to consumer demand, the tax related fiscal
policy impact retail businesses in UK through make
changes in amount of the income level to spend.

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 Fiscal policy refers to use of spending as well as tax
policies of government to influence on the economic
situations.
 It reflects public expenditure and regime of government.
 Fiscal policy minimizes profit and demand for business.
 It is imposing the high income tax that minimized
available income to buy products.

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Tax policies
 The tax policy is choice through government as to what
the taxes to charge, on whom and in what amount.
 In United Kingdom, taxation include payments at three
different government levels such as local government,
central government and devolved government.

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Government spending
 It refers to the money that spent through government.
 It can be affected through any form of operations of
government funds such as unemployment, health,
government payouts, social services to national defence
and banks.

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Unemployment
 It is a situation of looking for employment but not being
the currently employed.
 Rate of unemployment is measure of unemployment
prevalence and also it is calculate as percentage through
dividing number of the unemployed people by all
included in labour force.

Advantages of Fiscal
Policy
 Unemployment
reduction
 Reduction in Budget
Deficit
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Disadvantages of Fiscal Policy
 Conflict of Objectives
 Inflexibility

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Disadvantages of Fiscal Policy
 Conflict of Objectives
 Inflexibility

Global factors
The business environment is
more influenced through
global trends and forces
that tend to explain that in
what manner forms
interact with consumers
and also respond to the
competition.

Global factors affecting UK businesses
Globalisation- The globalisation helps in expand the
business at large scale. It leads to enhanced competition in
business. It can be related to the target market, cost,
service, adaption of technology etc. When firm develop its
products on minimum cost and it will enhance market
share.

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Fast technological Development- The fast technology have
led to current global grid that driven through information.
The information technology is string force that enhance
communication continuously. The firms are in the unique
position context to leverage technology power for expand
market base through using affordable advertisement on
different media.

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There are some of the global
factors mention below
which develop impact
on shaping business
activities:
 Political factors
 Economic factors
 Social factors
 Technological factors
 Legal factors
 Environmental factors

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Political factors
 It is related to the government policies as well as stability
of government.
 This factor influenced through political firms,
government ideology, extent of bureaucracy, philosophy
etc.

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Economic factors
 This kind of global factor make changes in economy of
country. These factors consist inflation, deflation, tax
rates, currency fluctuation and many others.
 Under this, rise in the living standard will imply in
maximise demand for goods, providing the better
opportunities to businesses in order to make the profit.

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Social factors
 These factors are related with make changes in social
structure.
 They provide an insights in to taste, lifestyle patterns and
behaviour of population.
 The social factors also affect on functioning of business
because the tastes and preferences of consumers are
changing with in short period of time.

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Technological factors
 These factors are variable which are mainly used to
analysing the available alternatives in regards to the
technological capabilities.
 It is most necessary tool in improving the activities,
functions and operations of firm.

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Legal factors
 These factors are related to legislations which are
developed through government of United Kingdom.
 These affects way that business operate and the
customers behave.
 It is necessary for the organisations in UK to follow all
regulations while conducting business.

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Environmental factors
 These factors identified as elements with in economic,
physical, political, cultural and demographic
environment which develop impact on business
operations and activities.
 Under this, government of UK developed some
legislations and rules related to environment.

Regional factors
 The region is area that is divided through physical
characteristics, interaction of humanity, environment
and human impact characteristics.
 These factors mainly impact on location of the business
where the firm is located

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Brexit- On June 23rd, 2016, Britain voted to leave
European Union. United Kingdom is considered as one of
best country to begin business but it could change
because to unknown effect Brexit bring. Brexit slows
economy and raise the risk of job losses. Leaving EU
would have negative affect on EDI flows in UK and
reduce by 22%.

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There are some regional
factors mention below
which impact on the
business activities:
 Labour
 Government
 Cost
 Geographical factors
 Regional policy
 Inflation policy

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Labour
 It is most necessary consideration when evaluating the
location of business.
 For conducting any business operations, there is a need to
company to hire the labour.
 Without right people, firm can not implement tasks which
can drive success.

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Government-
 In United Kingdom, government gives proper assistance
to those areas which have high unemployment.
 The government provide the funds to the firms so that
they can perform their business operations in a proper
manner.

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Cost
 Cost is a necessary component that affecting the
business.
 For conducting the business, there will be need of funds
to the company.
 The direct and indirect both cost develop the impact of
productivity level and bottom line.

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Cost
 Cost is a necessary component that affecting the
business.
 For conducting the business, there will be need of funds
to the company.
 The direct and indirect both cost develop the impact of
productivity level and bottom line.

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Geographical factors
 Under this, geographical conditions which develop the
impact on decision as to kind of industries as well as
business in order to carried in region.
 It is only because of the same taste, needs and
preferences. Mainly the good which are more preferred
through people in one region not liked in other region.

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Regional policy
 At the European Union level, government provide
money to support the regions of more unemployment as
well as social deprivation.
 Under this, regional policy set fr compensate for fact
that with development of more necessary part of
European Union.

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Inflation policy
 In this, government seeks to assure that there are not
sudden enhancement in cost.
 They will only do this by Monetary Policy Committee
(MPC) of Bank of England that set interest rate.

Conclusion
 It has been recommended from the above mention
report that business environment consists internal and
external factors which develop the negative or positive
impact on the business activities.
 There has been studied about the fiscal policies that help
in enhance the employment and also maintain healthy
money value.

References
 Arrow, K. J. and Kruz, M., 2013. Public investment,
the rate of return, and optimal fiscal policy. RFF
Press.
 Bekaert, G., Hoerova, M. and Duca, M. L., 2013. Risk,
uncertainty and monetary policy. Journal of Monetary
Economics. 60(7). pp.771-788.

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