P5 FINISHED 
Notes
The business environment consists of a range of major influences that are outside a business.
These include political, social, legal changes that affect business. However, most business people will tell you that it is changes in economic factors that they fear most because they can have such a dramatic effect, as witnessed by the global economic crisis of 2008-09.
Economic environment
The economy is made up of millions of individual decision makers who buy and sell goods, borrow and lend money and raise taxes and change interest rates.
The most important of these decision makers are consumers and suppliers (from the business point of view)
Consumers: Buy goods and usually look for value for money.
Suppliers: Supply goods to other businesses and to customers.
Although the economy is made up of millions of individual separate decision makers, there are still clear patterns to the types of decisions they make. (E.g. when consumer confidence levels raise, this means their levels of spending increases and the businesses will increase their supply of goods)
The importance of Stability
Stability - A situation in which something such as an economy, company, or system can continue in a regular and successful way without unexpected changes
Business people want stable economic conditions. Stability exists when the business people can make forecasts for the short and medium term about likely demand for their products in the near future.
Stability involves being able to make deals secure, knowing 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 the exact amounts agreed.
Growth - An increase in the capacity of an economy to produce goods and services, compared from one period of time to another
This is the opposite of a recession – the period of economic growth. Growth occurs when more goods are being produced and consumed, and incomes are rising.
Growth is associated with a ripple
The business environment consists of a range of major influences that are outside a business.
These include political, social, legal changes that affect business. However, most business people will tell you that it is changes in economic factors that they fear most because they can have such a dramatic effect, as witnessed by the global economic crisis of 2008-09.
Economic environment
The economy is made up of millions of individual decision makers who buy and sell goods, borrow and lend money and raise taxes and change interest rates.
The most important of these decision makers are consumers and suppliers (from the business point of view)
Consumers: Buy goods and usually look for value for money.
Suppliers: Supply goods to other businesses and to customers.
Although the economy is made up of millions of individual separate decision makers, there are still clear patterns to the types of decisions they make. (E.g. when consumer confidence levels raise, this means their levels of spending increases and the businesses will increase their supply of goods)
The importance of Stability
Stability - A situation in which something such as an economy, company, or system can continue in a regular and successful way without unexpected changes
Business people want stable economic conditions. Stability exists when the business people can make forecasts for the short and medium term about likely demand for their products in the near future.
Stability involves being able to make deals secure, knowing 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 the exact amounts agreed.
Growth - An increase in the capacity of an economy to produce goods and services, compared from one period of time to another
This is the opposite of a recession – the period of economic growth. Growth occurs when more goods are being produced and consumed, and incomes are rising.
Growth is associated with a ripple