Impact of Monetary and Fiscal Policies on Business Activities

This report provides an in-depth analysis of the business environment, focusing on the impact of monetary and fiscal policies on business activities, particularly within the context of a retail business like TESCO. It explores how government policies, including taxation, borrowing, and spending, influence economic growth, consumer demand, and investment decisions. The report also examines the effects of global and regional factors, such as the World Trade Organization, BRIC economies, and the European Union, on businesses operating in the UK and internationally. It highlights the importance of understanding international competitiveness and the challenges posed by global competitors. The conclusion summarizes the significant influence of these factors on business planning, resource allocation, and overall performance, emphasizing the need for businesses to comply with relevant regulations and policies to navigate the complexities of the modern business landscape. The report references various academic sources to support its analysis.

Introduction to Business Environment
(IBE)

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19

TABLE OF CONTENT
 INTRODUCTION
 MAIN BODY
 Impacts of the monetary and fiscal policy on the activities of
business
 Global and regional factors shape the business activities
 CONCLUSION
 REFERENCES

INTRODUCTION
 Business environment is a vital aspect in any business. It is a sum of all internal
and external elements. The business environment includes suppliers, customers,
competitors, government, economic condition, investors and media. It also
comprises many other institutions that are working externally.

Business environment also covers various factors such as demand and
supply, customers expectations and needs, activities of government,
market trends and economic changes.
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Impacts of the monetary and fiscal
policy on the activities of business
 Fiscal policy include the several government factors such as direct and indirect
taxation, government borrowing and uses of government spending that can
impact on the growth and level of total demand in the output and economy.
 This policy also assist to alter the way of spending money on products and
services. Fiscal policy also help the organization in properly distribution of wealth
and money according to the resources and benefits.

It will takes necessary concern about improving the money and wealth in
the businesses.
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Alteration in the reserve
requirements
 Monetary policy has main power to alter the reserve requirement and if they
change the reserve requirements, it will create its huge impact on the business
activities.
 Advance reserve requirements will lead to interest rate high and that will
influence the customers towards the deposit money than purchase. Hence, if the
sales quality will decrease, TESCO has to alter the business activities
accordingly.

CONTINUE
 Fiscal policy plays a vital role in the retail business by to encouraging the
company for investment, long term economic development and create jobs.
 Fiscal policies will also effects the cost of conducting business, consumer demand
and investment decisions.
 Increased tax rate will reduced the customers demand because it can expand the
cost of taxable items, making consumer's more conscious about the budget,
decreased the customer's net income and make a mindset to reduce expenditures
according to necessity.
 It can also generate its impacts on the expenses of TESCO (retail business).

Global and regional factors shape
the business activities

 Many global factors such as world trade organisation, Brazil, Russia,
India, china (BRIC) economic, European union (EU) policies and
protectionism. This all the elements and factors can largely affect the
business organisation in UK like TESCO.
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 All the define factors have both negative and positive impacts. World
trade organisation solves many disputes and issues and helps in
providing privileges from the inequitable and unfair trade practices.
 WTO offers better stability and security and also provides a free
platform of trading activities for local as well as international market.
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