EC4F11FB Introduction to Business Environment: UK Economy Presentation

This presentation provides an overview of the UK business environment, focusing on key factors that influence business operations. It begins with an introduction to the business environment, emphasizing its dynamic nature. The main body of the presentation delves into monetary policy, discussing its impact on inflation, interest rates, and consumer behavior. It also examines fiscal policy, including deflationary measures and their effects on demand and government spending. Furthermore, the presentation explores global and regional factors, such as economic conditions, industrial clusters, and their influence on businesses, with Lotus Cars as a case study. The presentation concludes by summarizing the discussed factors and their significance. References from academic journals and online resources are provided to support the analysis.

Introduction to business environment

Table of content:
Introduction
Main body
 Monetary policy
 Fiscal policy
 Global factors
 Regional factors
Conclusion
References

INTRODUCTION
A business does not exits in a vacuum place but is surrounded by many external
factors that have a bearing and impact on its business operations and functions,
this surrounding is termed as business environment which is quite dynamic and
keeps on changing. The current presentation is focused on the business
environment of UK and the selected organisation from this PPT is Lotus cars.

Monetary Policy
Monetary policy is a basically a macroeconomic tool used by an central bank or
financial head of a state for management of money flow in nation through
adjudicating and modifying internet rate and other banking rates to achieve the
various macroeconomic objectives like control on inflation, consumption,
liquidity and stable growth.

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The monetary policy creates a
significant effect on business
operations as it is the one that
decides the much prices are
rising and set a level and
base for rate of inflation.

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Thus, the main aim of Monetary policy is to create and ensure a stable price
and built a confidence on currency and banking system and also facilitates
achievement of inflation target of companies thus, directly effects the
purchasing power and demand in the business environment.

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The monetary policy effects the buying habits of customers that lead to create
signifiant impact overall productivity and sales of business organisation like
Lotus car Ltd as change in Interest rate effects saving and buying habits of
consumers as if interest rate are high they like to save more to earn better
interest but if interest rates are low they started bending towards making
purchase.

Fiscal Policy
The fiscal policy is mainly related with use of government spending and tax
policies that creates significant influence over economic conditions including
overall impact over demand for goods and services, inflation rate, employment
opportunity and economic growth of the nation.

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Deflationary fiscal policy- use of this type of fiscal policy is made by
government of United kingdom at the time of high inflationary pressure in
business environment and overall economy. The main aim of deflationary
fiscal policy is to reduce the aggregate demand through adopting a policy of
lower government spending and higher taxes that also facilitates fall in
government borrowings.

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Thus, it can be evaluated that fiscal policy lead to a significant impact on various
factors like tax rates and other spending which decides the level of demand in
the business environment thus exert direct influence over productivity and
profits of an organisation.

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In 2009, the UK experienced a deeper
recession than in the 1930s, real GDP
fell 6%. In response, interest rates were
cut from 5% to 0.5% however, the
economy remained depressed.

Global factors
Global factors are those that are associated with international interactions and
uncontrollable components of global environment that significant influence
over activities and strategies of a business. Following are the global factors
that are creating impacts and shaping business activities of Lotus car Ltd: