Unit 38 Business and the Economic Environment

BUSINESS AND THE
ECONOMIC
ENVIRONMENT

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
Government policies impact upon business ................................................................................3
The impact of government spending on retailing business..........................................................7
Fiscal and monetary policy decisions have affected the business...............................................9
The implications of government policies for a selected business..............................................13
The effects of fiscal and monetary policies in terms of the market it operates.........................13
Elements of fiscal and monetary policies that would help business for achieve its objectives. 14
REFERENCES..............................................................................................................................15

INTRODUCTION
Business is defined as enterprising and organization entity that engaged in commercial,
professional and industrial activities. The term economic environment refers to all the economic
factor which have affected to commercial and consumer behaviours and also known as external
economic factor that influenced buying habits of consumer and business. The terms business
environment also includes external forces, institutions and factor that are beyond the control of
business which have been affected by functioning of business enterprise. These might be also
includes suppliers, competitors, government, legal, social, technology and some other factors
(Chen, Dimitrov and Pun, 2019). Wilko is high street retail chain which sells household goods
and home ware products. Company have wide range of products on household essentials
including textiles, cleaning products, beauty lines, health, per products, kitchen and bath room
goods. Wilko also sells seasonal line products such as gardening products in summer, expanded
toys and game along with Christmas decorations. The organization have increased their retail
chain store in various countries. Wilko has their own first label products that sold under Wilko
brand and own brand products that account for half of their annual sales. This report explain
about government policies impact on business and fiscal as well monetary policy decisions have
affected business. Furthermore, identify impact of government spending on business and also
explain about the implication of government policies that effected fiscal and monetary policies.
Moreover, evaluate the elements of monetary and fiscal policy with the help of business
objective that need to be achieved by organization.
MAIN BODY
Government policies impact upon business
Government policy are likely to have their more impact on business and that might be
also affected to the business for having their more developments. Here are some impacts in
government policy on the basic of business:
Employment and labour law:-
There are also many government policy on business that might be affected the workers
and independent contractor in Wilko. Government try to give their more advantage to labour as

law by Employment Law Advisor. These resources also assists employers for determining which
major federal employment laws apply to Wilko business. As for making their business developed
they might be need to keep record and reporting requirements on which they need to hang in
office or work site (Hoke, Känzig and Surico, 2020). Wages and working hour of their employee
need to be record. These acts effected more private and public employment and some other
employee as contract employee. Workplace safety and health also require for their people and
likely to be free from the serious hazards.
Increasing competition:-
Wilko facing not only challenges of existing player but also facing challenges from new
local entrants and some more to other companies (Young, Hood and Hamill, 2017). For beating
up the competition Wilko need to make their business more developed and make more
orientation along with the liberalization which might be created the situation of all round
competition. Organization when developed them in some other countries they might be followed
up the government policy and always they must be need to work on their policies for having
huge amount of profits. In having increasing competition in market business need to make their
products price low through which the product demand must be increased and that could be
stayed for long term. This could also seem to be more important and being part of every business
without increasing competition no business can easily come to know about the value. The
business also required to understand about all the terms and condition for running their business
and make their goals to be more achieved.
Antitrust laws:-
Due to have more competition Wilko business might be more affected with some small
marketplace price. Conversation with other business regarding their potential or any other
suppliers. Wilko have developed their business in household products that might be need to have
their acquisition of competition and control over their market prices. Pricing strategies of
products is more important for business, and they should also need to make them well-developed
with having more federal trade commission.
Advertising:-
Wilko starting business in Household they need to make sure more about the playing
rules and government regulation. Business should avoid the misleading advertisements and know
more about the specific rule for advertising and selling products over the internet. They should

understand the rules and when working with a lawyer knows more rules of business which might
be had really more benefits to business. While by understanding more rules for marketing and
advertising through phone or mailing (Gavazza, Nardotto and Valletti,2019). Furthermore, learn
more for making environment friendly or green through developing the proper use of advertising
in business.
Email marketing:-
This is closely to advertising and business if engaged with email marketing that could
lead to have their business online and make their more customer. Wilko business for setting up in
developed countries they should also need to make the proper use of email marketing. There are
several policies have been given government in email marketing such as do not make the use of
misleading headers and deceptive headlines. As Wilko must include their business name and
address for showing their customer how to keep out to mails. Government policy must be looked
out before starting business or starting before email marketing in their business.
Environmental regulation:-
Business developing with having various environmental protection laws. This is
especially in Wilko for developing their new business such marketing say, cleaning products and
something else that includes natural, organic and eco-friendly products (Bartik And et.al., 2020).
As being before business they should also make their more profits while by making their more
products eco-friendly, through which they might be had more customer and that could also earn
huge amount of profits. Setting up the business environmental protection agency also make sure
about their needs to meet as required as well.
Privacy:-
Government policy in privacy also plays important roles and make their business working
with having more efficiency. Business with staff employees might be wind up their amassing
sensitive personal information about working employees. If business discloses the information
about the employee staff which might be included social security number, health conditions,
credit cards, bank number or some personal history. Although employee must be clear about
their privacy, and they have right to know about their privacy which could not be leaked at their
workplace or at some other places. The rights balances against the employee to monitor their
business operations. It should also important for business to make sure to employee about their

rights and as business to monitor employees. Furthermore, to be clear and transparent about that
monitoring to your employees.
Licensing and permits:-
Business need to follow federal laws and government regulation on running up their
business s far and that should be more state regulation for considering more about their business
(Elo and Riddle, 2019). Wilko developed their business in various countries as state and local
government have their own requirements for business and it might be more improvement to
understand as their federal counterparts. Permits must be necessary for the business from which
they can make business more well-developed along with this they can also have their more
clients across the worldwide. Licensing and permits seems to be as both are important in running
the business for long term while in following the government polices they are required to make
their business growth and developed their retailing business across the various countries.
Insurance:-
Wilko business also need to take their employee insurance and legally obligated to
purchase workers compensation insurance. Insurance is more important for setting up their more
business with having huge amount of profits. The employee also receive their protects both in
case of accident of jobs or some other cases that have been happened at workplace (Wood,
2020). In government policy insurance also have their impacts, and they might be need to have
their insurance through which they can make business developed. Insurance seems to be more
important for their developing and exporting or importing products this play role for having their
safety towards the goods.
Tax codes:-
Government has set up the regulation in taxes from which business almost being with the
taxes. Knowing which business taxes to pay and not more than taxes needed to pay in business.
When to pay them and how to set up them and also about the business to account for having their
best future tax payments should be come time to write with government checking. Wilko
business have been operated in various countries, and they also have to pay state taxes, it can be
depending on the state in which company is registered. Avoiding taxes or declining them that
could also lead them to having penalties and potential jail time. Income tax and estimated tax
play important role for business from which they can run their business for long term and also

make their market position. Income tax must be pay by organization through they it could be
easier for them in running business without having any conflicts in business.
The impact of government spending on retailing business
Governments spending more and more towards any local, national or regional business.
In most of the countries for example in UK, government spending more for having their
importance of GDP. Spending more in business might be lead to have carried out various areas
such as investments, merger, loans or transfer. The UK government has main areas of spending
are health. Education, debt interest and pensions. Hence, there are many reasons for government
spending more in business. To supply goods and services to private sector while by including
roads, bridges, hospitals and schools etc. To reduce the negative effects the third party can easily
have their effects on arising the production consumption of goods and services for which no
compensation has been paid. Also, help in redistribute income and achieve more equity.
Government spending in business can be occurred in many various ways that can also
include transport, unemployment benefits, giving money to local councils, pensions and health
care. The funding process can be also come from the government borrowing and taxation
through selling out the same government bonds. Current spending means the day to day
expenditure of the economy in their countries (Kumar, Anand and Song,2017). Capital spending
defined as capital projects. The impact of government spending is might the main growth of the
economy through which they can easily their business developed and make their more
employment laws to be followed by their workforce. Spending must be on the finance as Govt.
has power to make the decisions for how much and how expenditure can be financed in business.
The level of spending that can be direct and indirect effect to the business. Wilko selling
products and services to individual customer and to some other firms that might be increased
Govt. spending may be with higher taxes. Along with this higher taxes cab be reduce the
purchasing power and ability of customer towards their products and services.
Government spending has their implication of Wilko business. If sometime their will be
fail in spending of government, it might be lead to less aggregate demand of business goods and
services. This can also be lead to their people learning more about becoming unemployed and if
there will be had fall in consumer spending that might be had direct effect and demand of
products and services will get less causing a fall in sales of Wilko. When income falls, it trends
to be reduced in demand of luxury goods and services such as more expensive products in Wilko

rather than home other brands items (Martin And et.al.,2020). Impact on business towards Govt.
sector that can also lead to have their more growth is often at the expenses of some private sector
and is might being more harmful for firms. On other hand, it can be say that many business being
relied on spending on government for having their huge profits and revenues.
This might be had more impact on Wilko store fir their more efficient results of
government spending. That could impact on allowing them for reducing their costs and increase
their more profits in business through which they can easily have their huge consumer and also
have more development. It can also have their impact on saving money of customer at their
homes, furthermore higher disposable income for spending money on Wilko organization, it
could easily result for high sales. In private sector the government always has their different
investments plans for having their huge profits and if the Govt. invests more in particular sector.
Wilko organization belongs to private sector, spending more on business for Govt. can also be
sometime caused huge amount of loss for them, and they cannot easily afford mush of the loss
towards their countries.
For this they have make their solution and make their various laws through which they
can easily come to know about their stakeholder. It also has impact on country economy which
lead to increase in demand as more people will be hired in organization as indirectly as people
have more income towards their disposable. Wilko have their impact on government spending
towards public sector and if they will help more in new store top open, it will easily create more
jobs in some local area and this might be lead to unemployed decrement in countries (Cummins
and et.al.,2020). Decrease in government spending will also have their indirectly affect them and
not to be provides the same amount of services along with this business should also finance by
their countries government. As sometime they can also lead to have their huge amount of profits
and easily make their more consumer goals towards their sector.
Government spending more to their business while through having their more
development and making their more growth while through which they can make their well-
developed. This might be also leaded to have their high level of stakeholder satisfaction and also
have their growth in developing more products and services. In spending more money that might
be directly to various countries through they can make their large number of customer for having
their growth and developed their business at various developed countries.

Fiscal and monetary policy decisions have affected the business.
Fiscal policy in retailing business by changing the value of disposable income and how
people can spend due to having high taxes or increase in taxable products. Fiscal policy is known
as successful economic managements in which they include taxes, inflation or employment
factor into their gross domestic products. This policy mainly have affected the business through
having their goals to increase their GDP and make their demand more sustainable manner.
Government has also set up the taxes to their business through which that could affect the
amount of investments and profits (Kuligowski, 2020).Low taxes can increase by collective
demand and business investing spends. Fiscal policy needs to make their more changes when the
economy runs low and unemployment level is high in business. Fiscal policy can have their
effects on business are as follows:
Investment opportunities:-
This can be commonly happened when the more money flows into the economy of their
government and from other sources that could also lead to have their balance between price and
meet with their demand of customer. As business can also seem to be had their more investments
from government spending as well as from private investment of their countries. Investing more
can make their opportunities higher and that could be easier for them in developing various
opportunities (Gupta And et.al.,2017). In taking opportunities which led to have their business
growth and large number of data can be increased as sales or profits can be easily increased. In
retailing business many of stakeholder try to invest their more and more while by having this
they can easier make their business and make their more investment opportunities. Through this
might be more important for developing their strategies along with this could also sometime lead
to have huge loss.
Slower growth:-
Business can not be run so easily as they have effected from their government sector and
through which they can also have to pay huge amount of loss. Their growth due to have rising
taxes and take measure about to stay in with the black money flowing towards the economy.
While due to having high growth that could be easily leaded them for having their slow growth
and might be hard level for their business in getting more developed. Slower growth can also
sometime make the business to grow fewer and make their less marketing strategies through
which they can need to work for having their more customer.

Taxation changes:-
Wilko has make their business to be well-developed in various countries. As taxation
changes can be depended on their location of business they are facing several levels of taxation.
It can be also included local, federal or state levels. While due to having business at different
levels that seems to be lead to contend with how their state and local government taxes their
business. In the changes of taxation that could also lead the business for making their
organization new policies and that could also be had their more growth. In making their business
more developed taxation details must be followed by business through which they can work
without having any conflicts. Taxation changes have made their business more developed for
which they are required to work with that taxation which have been given to their business.
Unemployment rates:-
The major objective for fiscal policy for minimize the investments. For example, in
retailing business government make lower taxes to put more money back in consumer accounts.
While through which the people can be able to spend more money and companies can also face
increasing demand. In increasing demand it may come with some additional; production tasks for
Wilko to complete and make their well-developed business. Due to having increasing demand
that could lead to more jobs and hiring more employees (Blankson, Cowan and Darley, 2018).
With having the proper fiscal policy in place, a low unemployment rate may be gradually
increase and organization have more profits in their business. When unemployment rate being
low that might be also led to have their more consumer probably for increasing money to spend
on the good and services. Which can also be feed into their buying and selling of products and
services more likely to purchase goods and services. When seeing an increased demand for their
products and services that make the sense of purchasing confidence by having more investment
into their own business and pursing growth strategies.
Monetary policy is the adopted policy by the monetary authority of nation for making the
control either the interest rate payable for having very short term borrowing or supply of the
money. The economic growth of business and countries must be needed through it could be had
more support by additional supply of money. It involves the main things such as management of
money supply and interest rate and is the demand side economic policy. The RBI implements the
monetary policy through having more open market, bank rate policy and credit control policy.
While making the use of this methods business can lead to changes in the interest rate or money

supply in the economy. Hence, liquidity being more important for making the business well-
developed and make their better economy growth. The potential level of monetary policy is
extreme events because it makes the primary tolls for having short run interest rate and rate
cannot be fail at zero. In retailing business monetary policy can be offset a downturn because
lower interest rates that reduces the cost of borrowing for buying their consumer things. This
might be also led them for having their more growth and make their organization to be well-
developed.
It is used by the government of country for achieving their macro economic objectives
like consumption, growth, inflation and liquidity (Bahaj, 2020). The money injection can be
easily boosts more consumer spending as well as increasing business capital investments for
having their more money. Here are following effected of monetary policy on business:
Stimulation of economic growth:-
This policy in economic expansionary reduces the cost of borrowing. In addition,
consumer also trends to spend more with their business and retailing business try to have their
more encouraged for making large capital investments. While proper economic growth make
sure about the running business in proper line along with this make their more profits in
business. It is most important for economic in having their indicator in sales because spending
drives much on countries' economy. However, sometime that could also lead to uncertain about
their financial future and decide for holding off buying something new from the store. Economic
growth being more important in growth of the country and that could be lead to have their best
strategies. While in making the better strategies business can be run proper and make their
economic growth along with well-developed.
Increased inflation:-
The injection of having some additional money for making their more increases in
inflation levels. Increasing inflation can be also seems to be sometime advantageous and
disadvantageous to economy. While on other hand, increasing inflation may be prevented
possible inflation of economic and that could also lead to have their increasing business policy.
Through which it can be more damaging than reasonable inflation. Retailing business can also
try to cut the prices in an important as way to boost market share. While keeping their prices cut
as for making their opportunities for running promotions or making their special sales in market.

Even some retailers can't make their shifts between products quite so easily that could find out
they can reposition their products to an extent.
Decreased unemployment:-
The stimulation of capital investments could be seemed to be more additional for creating
the jobs in the economy. Therefore, employee in monetary policy can be reduces due to having
unemployment in the economy (Quint and Rabanal, 2017). Hence, for this business might be
make their more capital investments through which they can make their business more developed
and have enough employee in business. It means that more consumer have to make their more
money and spend over to the goods and services as they are required. So low unemployment
means happy consumer who can spend more and which benefits to the business. Rising wags are
seems to be good things but when the unemployment rate is low and wage inflation is not so
good. Smart business managers are more able to read the labour market and try to understand
what kind of talent pool they will be dipping into their business.
Low consumer confidence:-
While having business to be developed with various countries that can also lead to having
less preparation of people commit for their major purchase. For example, Wilko sells household
products because they have made people risk averse in their business for having more
development. Weak expectation that could seem to be effect of rate changes on consumer
demands. Consumer become less certain about their having financial issues, and they begin less
to spend over the products. From this Wilko business has got highly effected, so they begin to
experience of decrease in sales. This means their business have been more effected and cause
less income of the year. Consumer confidence indicates about the measuring of degree that
consumer have regarding the overall states of their country. It must be vital source of their
economic inflation and Wilko consumption contributes more over tot their economic activities in
various countries as those place where they have developed their stores.
The usual goals of both monetary and fiscal policy are to be having their more
achievements or maintain full employment or maintain a high rate of economic growth through
this can be lead to have prices and wages. The development of end as proper goals of economic
policy and the development of tools that could be more with achieving them are their products
and services. While in taxes and expenditure, fiscal policy of action matters that are within their

organization and government immediate control. For example, it will lead to an increase in
consumption and which will in turn that could have their own stimulation effect on the economy.
Steps that are being taken from the tax burden on the corporate sector will investments
and expansionary effect to their business. Reduction in government expenditure or an make their
more increase in tax revenues without their compensatory action and that has directly effect of
contracting the economy. In order for maintaining the balanced budget and taxed at level but
government expenditure were cut back during the such period of declining their economic
activity. Moreover, to be more really effective, as these measures should be financed by
government borrowing rather than having any existing taxes or by cutting other government
expenditures.
The implications of government policies for a selected business
Government policy can be influenced interest rates in rising of costs borrowing in the
business community. While due to having high rate also lead to decreased consumer spending.
The government can also be easily influenced by interest rate in the short term run by printing
more and more money, which might be eventually led to inflation. In having increasing of
competition that could also sometime impact on the business of retailing through which they
cannot be more affected. The policy of liberalization, globalization and privatization of the
government has made an importance impact on the working of enterprises in business (Goyal,
Sergi and Esposito, 2019). Due to increasing competition that can lead to have their more growth
and developed more customer. Insurance and licensing along with permit that could also seem to
have their impact on business in having insurance that make their business for developing more
along with this that could also lead to make their more customer. Products insurance and
workplace insurance being more important. Permit must be required for having their products
import and export from one country to another country that should be significant in business.
Advertising plays important role in making their business more developed from which they are
seems to be that customer being more attracted and select their products. This could also increase
their sales and revenue in profits from which they can hire more employee as well.
The effects of fiscal and monetary policies in terms of the market it operates.
Fiscal and monetary policy effected more to business and make their proper market
position. Having more effected on business that could also have to follow up their business.
Policy makers will help in business for going in the right direction of business and that could

make the business more well-developed. It is important for retailing business when there us
distortion in fiscal policy and monetary policy balanced and investments in the some other
sector. Furthermore, need to understand the nature of interaction between the two policy stands
as they are effect the stock market. Marketer can also help them for having their more investor in
good portfolio and make their more protection from the negative things which are seems to be
going in market. The interaction between the fiscal and monetary policy as it basically effects the
output, interest rate, inflation and by extension the market (Hagedorn, Manovskii and Mitman,
2019). They can be also having some complementary relationship between the both policy.
Moreover, monetary policy will become the weaker when fiscal system become involvement and
sometime that could also lead to higher future inflationary pressure on the economy.
Elements of fiscal and monetary policies that would help business for achieve its objectives.
The goals of business in monetary policy are for promoting the employment, stable prices
of products along with moderate long term interest rates. Retailing business can achieve their
goals in having proper operation open market involve in buying and selling of various
government securities. Open market operation that could lead to have their business to be most
frequently used tools of monetary policy (Freytag and Schnabl, 2017). The discount rate is the
interest rate charged by the bank for running the business and stay in market for long term. The
sources of both the dynamics relationship between them are real exchange rate, interest rate and
stock team for having their more competitive analysis for economic developments.
Fiscal policy is being decision regarding government spending more taxes. If government
wants more growth in economy they can easily increase the spending over the goods and
services. This might be also leaded to have their increasing in demand of goods and services.
Since, the increase in demand will grow up companies will hire more employee and production
must be grown up with using various strategies. Monetary polices decision that make regarding
with money supply and their interest rates. Which might be lead to have their determined and
implementing by various banks. Fewer people will be hired because due to having less demand.
This could be also happened if unemployed people don't have extra money to buy out their
luxury products. Business production will go-slow down which means the decline and huge loss
to organization. Government more over to retailing business for having their more growth and
also help for making their huge development.

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