Unit 38 Business and Economic Environment
Unit 38:
Unit code: QCF Level 3: Credit value:
Business and the Economic Environment
T/502/5500 BTEC National 10
Guided learning hours: 60
Aim and purpose
The aim of this unit is to introduce learners to the interaction between the general economic environment and business activity and how the interactions generate national wellbeing. Learners will study how government activities regulate and influence business activities and how business activities influence government action and policy.
Unit introduction
Businesses operate in an environment shaped by the government. Government seeks to control the general level of prices (inflation), employment levels, economic growth and the balance of payments. A range of techniques is used to influence these variables but changes made by the government have a direct impact on individual businesses. Raising interest rates may reduce demand as it becomes more expensive for consumers to borrow. This means that businesses will have to reduce output and possibly make staff redundant. The cost of borrowing to pay for new investment goes up so implementing newer technologies might be delayed, reducing an organisation’s competitiveness. Changes in the business environment will impact on individual organisations. Government spending has a significant impact on business as it is such a high proportion of the gross domestic product. Spending on infrastructure projects such as upgrading the west coast main railway line or building new sports facilities for the Olympic Games have a multiplier effect at both the national and local level. Suppliers of related goods and services prosper. In recession, the government uses spending as a means of stimulating economic activity. Fiscal and monetary policies are two of the main tools available to government for regulating most economic activity. Fiscal policy uses taxation and spending to influence the economy. The annual spending review and budget identify spending plans and how they
Unit code: QCF Level 3: Credit value:
Business and the Economic Environment
T/502/5500 BTEC National 10
Guided learning hours: 60
Aim and purpose
The aim of this unit is to introduce learners to the interaction between the general economic environment and business activity and how the interactions generate national wellbeing. Learners will study how government activities regulate and influence business activities and how business activities influence government action and policy.
Unit introduction
Businesses operate in an environment shaped by the government. Government seeks to control the general level of prices (inflation), employment levels, economic growth and the balance of payments. A range of techniques is used to influence these variables but changes made by the government have a direct impact on individual businesses. Raising interest rates may reduce demand as it becomes more expensive for consumers to borrow. This means that businesses will have to reduce output and possibly make staff redundant. The cost of borrowing to pay for new investment goes up so implementing newer technologies might be delayed, reducing an organisation’s competitiveness. Changes in the business environment will impact on individual organisations. Government spending has a significant impact on business as it is such a high proportion of the gross domestic product. Spending on infrastructure projects such as upgrading the west coast main railway line or building new sports facilities for the Olympic Games have a multiplier effect at both the national and local level. Suppliers of related goods and services prosper. In recession, the government uses spending as a means of stimulating economic activity. Fiscal and monetary policies are two of the main tools available to government for regulating most economic activity. Fiscal policy uses taxation and spending to influence the economy. The annual spending review and budget identify spending plans and how they