Economic Concepts & Models: Analyzing the Business Environment Context

This report examines the business environment through the lens of microeconomic concepts, focusing on the impact of factors like customer behavior, employee availability, competition, and investor confidence. It uses the example of Brexit's effect on transportation costs and port congestion to illustrate these concepts. The report explains the theory of demand and supply, highlighting how price changes affect consumer behavior and market dynamics, particularly in the trampoline market. It also explores different market structures, including perfect competition, monopoly, monopolistic competition, and oligopoly, detailing their characteristics and implications for businesses. The analysis concludes that understanding economic models is crucial for observing, interpreting, and articulating economic trends and adapting business strategies accordingly. Desklib offers a wealth of resources for students seeking similar solved assignments and past papers.

Business environment
(Economic concepts and
models )

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Discussing main arguments related to article by use of micro economic concepts....................1
CONCLUSION................................................................................................................................4
References:.......................................................................................................................................4

INTRODUCTION
The business environment is collection of all the factors which comprises of Micro and
Macro environment that helps in influencing the functioning of business organisation. This
comprises of the factors such as customers, suppliers, government etc. With the help of business
environment there is determination of business opportunities along with this assist in planning,
improving overall performance, growth and profitability of business. The useful resources are
tapped with careful scanning of business environment which helps the firm in tracking resources
and convert them into goods and services (Bejtkovský, Rózsa and Mulyaningsih, 2018).
Economics is considered as social science which relates to distribution, production and services.
The economics in of two types micro and macro that have focus on economy behaviour and
individual people & business. The presentation covers Brexit issues related to high transport
costs and port congestions. It involves detail study of micro economic concepts and related
issues. Further it covers economic concepts which involves demand and supply and market
structure.
MAIN BODY
Discussing main arguments related to article by use of micro economic concepts
In below following factors has been discussed-
 Impact of customers- For the organisation the customers are essential part in earning of
revenue and with increase in prices the customer face difficulty in brand selection whivh
they were currently purchasing. In given case, the transportation cost of product increases
that is affecting directly to final price of trampoline. The customer base is decline with
rise on price of products. The Brexit exit affected the UK customer as there was decline
in demand of trampoline.
 Availability of employees- The working of employee benefits the organisation in smooth
functioning with its full efficiency and effectiveness. To handle the work of company
there is requirement of skilled and expert staff (Cepel and et. al., 2019). There was
opportunity of creating employment due to exit of Brexit and with fast rate there was
increase in demand.
 Level of competition- The market & competition level directly affects the functioning
of company and market share. The large number of customer signifies the product
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demand which is on high scale. In long run company can have survival if industry is not
having competition without getting regular feedbacks from customers. In organisation
there will be no modification in product quality management without existence of
competitors.
 Availability of investors- In the aim of receiving dividend shareholders and investor
invest funds in company. The margins of business concern will decline with the increase
in price of final product in short time period and affects origination operating results. In
organisation the risk is shared by investor which is more associated with results that puts
direct affect on wealth. The investor were also affected w8ith the Brexit exit who made
investments of funds in UK companies.
 Media and general public- It helps in generating brand awareness and image as they
work as face of company product in terms of purchase and consumption. The local
communities increases brand value by paying taxes on regular basis, offering opportunity
of employment to multiple groups and according to environment business is operated.
Explaining the theory of demand & supply and market structure.
From the above given article it is been shown effect of price rise in trampoline which can
be interpret by having study of several microeconomic concepts.
Demand and Supply- In economics terms demand refers to quantity of good that
consumer is willing and wants to purchase at several prices during a given time period the
relationship is shown between the price and willingness of people for purchase or exchange. By
defining to consumer desire and force the economic growth and expansion is derived. The law
of demand states, the increase in prices of goods lower down the quantity demanded and vice-
versa that being others factors constant and equal. Between price and quantity demanded in large
market there exists inverse relationship(Fabus, 2018). There are various factors which influences
demand for given goods-
 Price of commodity- There exists inverse relationship in product price and amount of
product which consumer wants to buy. The consumer demand more in less price
according to their purchasing power and less product at higher prices. The product price
increases daily in context to trampoline. The price for 40-foot container is increasing
according to report of Drewey . There is decrement in demand of trampoline with
increase in price.
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 Consumer Income- The positive relationship between consumer income and demand of
product exists for several factors. The increases in demand for the product and services
with the rise in consumer income and decrease in income of consumer will down the
demand of product and service. In UK good income is earn by the people and in
accordance to their level they can purchase trampoline from market.
Supply, refers to amount of resources which producer, provider of financial assets are
willing and able to offer in market place or to an individual. Supply is total amount of specific
good which is made available to resources. In law of supply positive relationship exists which
refers to to quantity sold at specific price that means higher the price, higher the quantity
supplied which can maintain high opportunity cost for each additional unit sold (Gaganis,
Pasiouras and Voulgari, 2019). In framework to trampoline the high price will lead to high in
product supply. The various factors affecting supply for particular products -
 Cost of production- In framework to trampoline, sufficient raw material is with
manufacture which leads to rise in supply for the given goods. There is inverse
relationship between manufacturing cost and supply of commodity. The increase of
production cost, reduces supply of organisation in order to save money.
 Government subsidies- This is an advantage provided by government for minimising
entire cost of production. With Subsidies and supply of goods this is positively related.
For manufacturing the government provides more subsidies in context to trampoline and
in market there is increase in supply.
Market structure- It refers to nature and characteristics of the market which can be
organizational or having competition in it. It describes the pricing policies which are m9oving in
market and competition quality.
Types of market structure
 Perfect Competition- It is a type of market in which buyers and sellers are
independent ,having multiplicity in buyers and sellers. In this market, the buyers and
sellers sell identical products which does not require any type of advertisement. The
competitor are free to move in to the market as this market is movable or free to leave the
market. The market is extremely competitive. The market having equal price and
marginal cost (Price= Marginal cost).
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 Monopoly- Monopoly market is a type of market in which only one seller is present of a
specific goods or services. There are different types of monopolies which are given as
natural monopoly, geographical monopoly, technological monopoly, government
monopoly. There are many barriers to enter in this type of market to prevent competitions
. The firm which operate here are the large firms, having a unique product . As compared
to other markets the profit generation through this market is higher (Gogokhia and
Berulava, 2021). Here Marginal cost of the product is equal to the Marginal revenue
(MC=MR).the firms imposes high price that the customer are glad to pay.
 Monopolistic competition- It is a market in which many firms of small and medium
sizes compete with each other, having different products from one another. To enter in
this market there are some barriers without any government interference. To each firm
this market provide interdependency where every firm is independent. The organizations
are free to move in and leave the market .
 Oligopoly- The firms are price makers in this market. Oligopoly is a market in which few
very large firms dominate the industry and compete with each other, having different
product introduction ,without any government interventions. (Möller, Nenonen and
Storbacka, 2020) .
CONCLUSION
From the above it can be concluded that, about economic behaviour economic model
permits in observing, knowing and articulation are made. The economic trends and various
factors are acknowledged through study of microeconomic and macroeconomics concepts. There
was major impact in fluctuation of demand and supply due to change in price. The study of
different market structure assists in knowing numerous segments of service and production. The
economy was dropped due to increase in inflation rate, availability of labour at high rates and
production activities.
References:
Books and Journals
Bejtkovský, J., Rózsa, Z. and Mulyaningsih, H.D., 2018. A phenomenon of digitalization and E-
recruitment in business environment. Polish Journal of Management Studies, 18.
Cepel and et. al., 2019. Selected economic factors of the quality of business
environment. Journal of International Studies.
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Fabus, M., 2018. BUSINESS ENVIRONMENT ANALYSIS BASED ON THE GLOBAL
COMPETITIVENESS INDEX (GCI) AND DOING BUSINESS (DB): CASE STUDY
SLOVAKIA. Journal of Security & Sustainability Issues, 7(4).
Gaganis, C., Pasiouras, F. and Voulgari, F., 2019. Culture, business environment and SMEs'
profitability: Evidence from European Countries. Economic Modelling, 78, pp.275-292.
Gogokhia, T. and Berulava, G., 2021. Business environment reforms, innovation and firm
productivity in transition economies. Eurasian Business Review, 11(2), pp.221-245.
Möller, K., Nenonen, S. and Storbacka, K., 2020. Networks, ecosystems, fields, market
systems? Making sense of the business environment. Industrial Marketing
Management, 90, pp.380-399.
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