The business Environment
P5 Know the impact of the economic environment on business.
Tutor: M. Popescu
Student: Luca Polak
Class: IBS 1B
Date: 18 January 2013
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Importance of stability;
Impact on business of changes in the
economic environment; -
Levels of inflation;
Availability and cost of credit;
Changes in government policy.
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Influenced by affordability;
Competition availability of substitutes;
Level of Gross Domestic Products;
Needs and aspirations of consumers.
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Influenced by availability of raw
materials and labour; -
Ability to produce profitably;
Competition for raw materials;
* Changes in supply and demand:
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Supply and demand curves;
Elasticity of demand;
Influence of branding of price
* Global interaction:
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levels and type of interdependence.
For this report I have chosen two companies (one from P1 and one new) named Heineken and Sony. Heineken is a Dutch multinational and Sony is a Japanese multinational. I am going to take a look at how different economic environment affect the two selected organizations. This report is focused on the economics, demands, supplies, changes in demands en supplies and the global interaction.
* Importance of stability:
Stability exist when business people can make forecast for the short and medium term about likely demand for their products in the near future. Stability involves being able to make deals secure in the knowledge that people you supply to on credit will pay you back at the price agreed. When you borrow money, you expect the repayments to be for the agreed amounts.
Heineken is a PLC (NV), which means that it is active on the stock market. In the Netherlands the stocks had a positive performance. The Netherlands Stock Market (AEX), produced 2 points or 0.58 percent during the last 30 days. This has a really good effect for Heineken’s business, because Heineken’s stocks will perform very good on the stock Dutch market.
The economy of Holland is known for its traditional emphasis on the rule of law and an efficient legal framework. Strong protection for property rights are provided by the judicial system, independent and free of corruption.
Sony is a Plc too, which makes them active on the stock market. In Japan the stocks had a positive performance during the last month. The Japan Stock Market (NIKKEI 225), produced 559 points or 6.32 percent during the last 30 days. This has a really good effect for Sony’s business, because Sony’s stocks will perform very good on the stock Japanese market.
The economy in Japan benefits from relatively good levels of economic freedom in all areas. The economic freedom are solidly in place a very low level of inflation, supported by an effective judicial framework and the almost complete absence of corruption.
* Impact on the business of changes in the economic environment:
Growth occurs when more goods are being produced and consumed, and incomes are rising.
Recession occurs when people involved in the business become more cautious and customers cut back on spending, and start to save more. Manufactures and sellers cut back on their orders, produce fewer goods and start to cut back costs in general, including by laying off workers.
The ripple effects is that customers are going to spend less, producers and sellers cut back in their stocks, production, costs including employment and as more people lose work incomes fall it leads to further cutbacks in customer spending.
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