Business Economics Report: Holbrooks Florist and Economic Factors

This report provides a comprehensive business economics analysis centered around Holbrooks Florist, a family-run business. It begins by identifying core economic problems such as scarcity, particularly in the face of increasing competition. The report then evaluates the advantages and disadvantages of operating in the private sector and discusses rational choices for improving business performance, including investment in online systems and technical expertise. Furthermore, it examines the benefits and limitations of operating in a centrally planned economy. The analysis extends to organizational structures, comparing the disadvantages of a flat structure in family businesses and recommending a hierarchical alternative. It also explains the principal-agent problem. The report further explores issues impacting the business, including inflation, wage rates, exchange rates, and economic growth, while also identifying demand and supply-side policies in the UK. Additionally, the report evaluates the reasons for international trade, discusses globalization drivers in the floral industry, and explains different types of tariffs impacting international trade. The conclusion synthesizes the key findings, emphasizing the importance of understanding market conditions and developing appropriate business strategies.

Business Economics

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
QUESTION 1...................................................................................................................................1
a. Explain main economic problems of scarcity by using example from the business................1
b. Evaluate advantage or disadvantage of operating a business in the private sector..................1
c. Discuss the rational choice which organization used to improve in their performance...........2
d. Discus three benefits as well as limitation of the business if they operate in a central planned
economy.......................................................................................................................................2
QUESTION 2...................................................................................................................................3
a. Discuss the five disadvantage of having flat structure in family run businesses.....................3
b. Recommend an alternative organisational structure that could improve the business
performance.................................................................................................................................3
c. Explain the principal-agent problem in organisations.............................................................3
QUESTION 3...................................................................................................................................4
a. Explain the following issues which impact the business.........................................................4
b. Identity the examples of demand or supply side policies in the UK.......................................4
QUESTION 4...................................................................................................................................4
a. Evaluate five reasons where business trade in other country...................................................4
b. Discuss three globalization drivers which influence the floral industry..................................5
c. Explain the different types of tariffs that impact on international trade..................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Business economics is the process where organizations apply the economic theories and
other quantitative method in order to identify the factors which impact the production as well as
profitability. It also helps in understanding relationship between labour, capital or product market
(Cho, Cooley and Kim, 2015). It plays huge role in the decision making process where manager
evaluate all the factors and identify the opportunity as well as threat. This report is based on
Holbrooks Florist company which is a family run business. This report cover various topics such
as economic problems, advantage or disadvantage of operating business, benefits & limitation of
operate business in a centrally planned economy etc.
MAIN BODY
QUESTION 1
a. Explain main economic problems of scarcity by using example from the business
Basic three economic problems which organizations faced such as Holbrooks Florist
company. Due to increase in competition from the big high street supermarket, profit margin of
the company continuously reduce. Because of lack of technical expertise and high cost of wages
impact the profitability of the company (Lindahl, Sundin and Sakao, 2014). Some of the major
economic problems discussed below which Holbrooks company face during this period:
What to produce: Holbrooks already solve this problem that where they produce
flowers with their neighbours.
How to produce: Mr. Holbrooks use park of blossomed flowers where they produce
flowers.
For whom to produce: They sell their products to the customers who based from west
Midlands.
b. Evaluate advantage or disadvantage of operating a business in the private sector
There are some advantage or disadvantage of operations which deals in private sector
business. It is mentioned below:
Advantage:
 Private sector business have limited liability of its shareholders which help them to face
the recession.
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 Restricted trade of shares where shareholders cannot sell their shares outside buyers and
there is low risk of takeover.
Disadvantage:
 One of the disadvantage is the registration process which is very long and it include the
cost as well as huge efforts.
 Private business is restricted on public participation because they are not allow to invite
public to subscribe the shares.
c. Discuss the rational choice which organization used to improve in their performance
In context of Holbrooks Florist company, Jack & Jamie have to take some necessary
steps to improve business performance:
 Initially, Jack & Jamie have to invest in the online processing system to sell online
(Saleem, 2017).
 They have to hire technical experts who help them to modify their business digitally.
 Jack & Jamie have evaluate their business from the starting and reduce the activities
which does not provide any cost.
d. Discus three benefits as well as limitation of the business if they operate in a central planned
economy
Benefits:
 Less inequality: When government control the production , then they determine the
work, where and how much pay for it.
 Low unemployment level: When business operated in central planned economy, then it
provide employment opportunity which reduce the unemployment.
 Common goods: Government provide various benefits on the common goods which is
beneficial for the central planned economy business.
Limitation:
 Lack of competition: When competition is low then it become difficult to innovate
something because they does not have comparators.
 Inefficiency: Efficiency also get impacted when government act as monolith and control
the every activity of the economy.
 Restricted individual rights: Goal of the central planned economy is that everyone
working for the same goal.
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QUESTION 2
a. Discuss the five disadvantage of having flat structure in family run businesses
Holbrooks Florist follow the flat organizational structure which has various disadvantage
and it mentioned below:
 Lose Control: Management can easily lose control over the people if there are less
people in the organization.
 Relationship struggle: Work relationship could struggle because manager have to
manage many people at the time which create burden as well as pressure on single
person.
 Power struggle: Employees often face the situation regarding whom to report when
owner or CEO not around.
 Growth: Due to flat structure, business found difficulty in the overall growth
(Disadvantage of Flat organizational structure, 2019).
 Less Motivation: There are less motivation which affect the individual performance as
well as profitability.
b. Recommend an alternative organisational structure that could improve the business
performance
It is recommended that, Holbrooks Florist company have to adopt hierarchy
organizational structure which help in improving overall business performance. It create a define
structure of communication which help the organization to share information with each member
of the company (Silaghi and et.al., 2014). It offer multiple layer of authority in the business
which employees have to follow.
c. Explain the principal-agent problem in organisations
Principal-agent problem refer to the problem when one party agreed on specific terms in
return of incentives. Such as agreement which include agent cost and it further lead the problem
regarding moral hazard and conflict of interest. It will impact the business operations when agent
make poor decisions, not perform their responsibility in well manner. Holbrooks company have
to make sure that they avoid these kind of problems in their business.
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QUESTION 3
a. Explain the following issues which impact the business
 Inflation: Raising price of commodity will create inflation which impact the cost of
living as well as cost of doing business.
 Low wages of shop workers: It will helps in reducing product cost which increases the
profit margin of the company.
 Rate of exchange between the Pound or Euro: Euro cost is more than Pound, so export
of goods not so beneficial because exchange rate is low .
 Price fluctuation in fuel and other retail products: Increase in the price if fuel and
other products will reduce the profit margin due to increase in cost of manufacturing or
transporting.
 Rate of economic growth in the UK: UK economy grow around 1.2% in 2018 as
compare to the previous year.
b. Identity the examples of demand or supply side policies in the UK
Demand side policy:
 Fiscal policy which is used to adjust government spending and income tax in order to
maintain demand of products (Swanson and Frederick, 2017).
 Monetary policy where government make strategy through increasing or deceasing
interest rate on mortgage payment.
Supply side policy:
 Tax policy which can change according to the demand or supply of goods in the country
or as per the economic condition.
 Regulatory policy where government place various restriction to the organizations to
perform its operations.
QUESTION 4
a. Evaluate five reasons where business trade in other country
There are various reasons where organizations trade in the other country apart from UK,
some of them discussed below:
 It will reduce the dependency on local market and business get the access of unlimited
rage of customers.
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 It will increase the chances of success because high the sale of products will provide
huge profit margin.
 It will increased efficiency through providing benefit from the economies of scale.
 Increase productivity as well, as per the UK statistics trade can improve the productivity
around 34%.
 It provide economic advantage of currency fluctuations when business export the goods
in the another country.
b. Discuss three globalization drivers which influence the floral industry
Competitors: It is the most important factor which affect the floral industry because
when company reduce their cost or sell it to cheap price then they are able to increase their
market share (Globalisation drivers that impact floral industry, 2019). Such as Holbrooks Florist
company affected due to high competition of street supermarket.
Exchange of technology: In order to become global company, organization have to focus
on technology and digitalize their business through adopting online system to sell their products.
In context of Holbrooks Florist, they try to sell their products online but lack of technical
expertise or high cost of operating it will fail the idea.
Information transform: Knowledge or information is the most important or valuable
factor in the current business environment. Information can easily exchange or if business follow
it that means company adopt globe change.
c. Explain the different types of tariffs that impact on international trade
There are various types of tariff which impact the international trade which impact the
profit margin of the company. Some of the tariff discussed below:
Specific tariff: It is a fixed amount of value which based on the weight or units of
commodity import or export (Wirtz, Tuzovic and Ehret, 2015). These duties charged on goods
like wheat, rice, sugar, cloth etc.
Revenue tariff: It is imposed on those organizations which generate more revenue as per
the government tariff standards.
Protective tariff: This tariff used by the government in order to protect the domestic
industry from the competition.
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CONCLUSION
From the above discussion it has been concluded that business economic is very essential
for the organization because with the help of it firm able to understand the market condition.
There are various reason which encourage business to enter in the global market but different
types of tariff will impact the international trade. So organization have to evaluate the economy
and develop their business strategy accordingly.
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REFERENCES
Books & Journals
Cho, J. O., Cooley, T. F. and Kim, H. S. E., 2015. Business cycle uncertainty and economic
welfare. Review of Economic Dynamics. 18(2). pp.185-200.
Lindahl, M., Sundin, E. and Sakao, T., 2014. Environmental and economic benefits of Integrated
Product Service Offerings quantified with real business cases. Journal of cleaner
production. 64. pp.288-296.
Saleem, M. A., 2017. The impact of socio-economic factors on small business
success. Geografia-Malaysian Journal of society and space. 8(1).
Silaghi, M. I. P. and et.al., 2014. Do business and public sector research and development
expenditures contribute to economic growth in Central and Eastern European
Countries? A dynamic panel estimation. Economic Modelling. 36. pp.108-119.
Swanson, D. L. and Frederick, W. C., 2017. Are Business Schools Silent Partners in Corporate
Crime? 1. In Business, Capitalism and Corporate Citizenship (pp. 74-79). Routledge.
Wirtz, J., Tuzovic, S. and Ehret, M., 2015. Global business services: Increasing specialization
and integration of the world economy as drivers of economic growth. Journal of Service
Management. 26(4). pp.565-587.
Online
Disadvantage of Flat organizational structure. 2019. [Online]. Available Through:
<https://connectusfund.org/11-key-advantages-and-disadvantages-of-a-flat-
organizational-structure>
Globalisation drivers that impact floral industry. 2019. [Online]. Available Through:
<https://bookboon.com/blog/2011/10/how-globalization-affects-business/>
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