BMP4003 Business Environment: Microeconomic Impact of BREXIT

This report assesses the impact of increased shipping costs and BREXIT on trampoline prices in the UK, drawing upon an article from BBC. It utilizes microeconomic concepts like elasticity of demand and supply, as well as marginal utility, to explain the price increases and their effects on retailers and consumers. The report also applies the theory of supply and demand to illustrate how shipping costs, influenced by BREXIT and global demand, affect the market equilibrium for trampolines. It concludes that external factors significantly impact business operations and the supply and demand dynamics of products and solved assignments on Desklib.

BMP4003 Business Environment
Assessment 1 - Individual Presentation

Article Review - Economic Concepts And
Models
Name:
ID:

Contents
INTRODUCTION
MAINBODY
Evaluating the main argument through utilization of microeconomic concepts.
Discussing various theories and its application on the main issue.
CONCLUSION
REFERENCES

INTRODUCTION
Business environment refer to the overall collection of all internal ads
well as external factors such as demand and supply, management,
employees along with activities by the government etc. these factors
affect the business operation of an organization and how it functions in
both direct in indirect ways. The understanding of business environment
allows an organization to identify business opportunities along with the
ability to tap into useful resources. In addition to this, it helps a business
improve upon its planning as well as performance and growth.
Moreover, business environment consists of Micro and Macro
environment. The following report will be based on the article by BBC on
the increase in the price of trampoline due to shipping cost relative to
BREXIT. The following repot will highlight the main argument along with
the utilization of microeconomic concepts. Furthermore, it will discuss
various theories and their application on the primary issue in the
selected article.

Evaluating the main argument through
utilization of microeconomic concepts
The main argument that can be concluded for the article is based on the overall increase in
shipping cost and its impact on the cost of trampolines in the UK. The article provides vital
details that the prices of trampoline could reach 40-50% due to high level of shipping cost.
This is a higher financial impact on the retailer such as the owner of Outdoor Toys, James
Owen. Accruing to the article the price of hauler in on a sharp rise and is predicted to not
come down in recent times. In addition to this, the article provide information relative to
Outdoor Toys and how in ore rot lower the prices the organization can produce product in
the UK as it will be economically advantages. Furthermore, the overall demand of chines
good have soared around the world in the recent months which has place immense stress on
the existing shipping capacity .The overall price per container has drastically increased which
has impacted the overall price of the product. In addition to this, the shipping containers are
avoiding Welsh ports in order to avoid BREXIT bureaucracy which has adverse effect on the
overall price of the products and how they are transported as well. According to one haulage
organization the so-called “teething-problem” relative to the new export rules has cased
“enormous strain on staff” which has led to inefficiency as well as unproductivity in business
operations.

Microeconomic concepts:
The concept of microeconomics allows in demonstrating why
various goods have different values along with how individuals
and business conduct and benefits relative to the production
and exchange along with individuals best coordinate and
corporate with each other. In context tot the BBC article there
are various microeconomic force that play a part in influencing
the overall individuals and produces a major impact on retailer
as well as customers .Given below are the concepts of
microeconomic in context to the BBC article:

Elasticity of demand:
This concept focuses on the quantity demand of a particular
products and how changes within it respond to its prices and its
elasticity. The economists have found the prices of some
products are very inelastic. In addition to this, a reduction in
the overall price does not increase the demand or the increase
in price does not impact or hurt the demand either. In context
to the article, the overall price of the trampoline will definitely
impact the overall demand for the product within the market
which will have a negative impact on the existing retailer in the
market. In addition to this, the situation of BREXIT and its new
export regulation also play a huge role in influencing the overall
demand of customers as the prices increase.

Marginal utility and demand:
This concept of microeconomics focus on the marginal utility
and how its added satisfaction that a customer attains from
one more unity if goods or services. In addition to this, the
concept of marginal utility is utilized by economist In order to
determine how much of an item customers are willing to
purchase. In context to the article, overall increase the cost of
trampoline is estimate the rise by 40-50% will lead to negative
marginal utility in customers as the higher price of the products
will pay a major role in lowering the overall marginal utility. In
addition to this, it will also lower the overall satisfaction of
customers.

Elasticity of supply:
This concept of microeconomics helps in determining the
measure of degree relative to responsiveness of the quantity
supplied to the overall change in the prices of a given
commodity. The concept to elasticity of supply is a crucial
parameter in determining how the overall supply of particular
good is influenced by fluctuation in its market price. In addition
to this, it also provides an idea about the overall profit that can
be made from selling the products at different prices. In context
to the article, the situation of BREXIT along with the increase in
demand in chines products have impacted the overall shipping
industry resulting in increased prices of containers. This has led
to an increase of product which will have an impact on the
overall supply of trampolines as it will decrease due to increase
in price. This will negatively impact the retailers as the supply of
the product will constrict till the prices of shipping are reduced.

Discussing various theories and its
application on the main issue
There are various theories within business environment that
play a major role in impacting the overall economics. These
theories help an organization to understand various aspects of
the business environment which allow in the development of
suitable business strategies as well as plans that help in
negating challenges along with unforeseen situations. In
context to the article, there are various theories that can be
applied in order to understand the main issues along with its
impact. Given below are some relevant theories in context to
the BBC article:

Discussing various theories and its
application on the main issue
Demand and Supply:
The theory of supply and demand within business environment helps in
identifying the overall relationship between quantity of a particular good
that is produced to be sold at various prices and the quantity that
consumers wish to purchase it at. It is the primary model of price
determination and is utilized in economic theory. In addition to this, the
overall price of a commodity is determined through tis interaction of
supply and demand within the market. The result price is referred to as
the equilibrium price and helps in representing the agreement between
the producers along with customers of the good .Moreover, the set
equilibrium quantity of a particular good supplied by produced is equal to
the quantity demanded by consumers. In context to the article, the overall
demand of the trampolines is influenced by the increase in its price that
has been a direct impact of increased rates of shipping containers. This has
negatively influenced the markets and reduced the overall number of
customers for the retailers in the market. The demand for the product can
only be increased if the price if shipping in decrease along with situations
such as BREXIT is also avoided.

Conclusion/Summary
From the above report it has been concluded that,
there are various aspects in the business environment that
impact business operations and influence the overall supply
and demand of products as well. The various changes in the
business environment are crucial to be identified as they can
have negative impact on the operations conducted by a
business. In addition to this, the report will able to conclude
that the overall change in the price of the good has a major
impact on its demand in the markets. The external business
situations such as BREXIT also pay a vital role in influencing
business environment that impacts the operations of an
organization.