Relationship between business and environment ppt

The Relationship Between Businesses and the Economic Environment - ppt video online download

relationship between business and environment ppt

PPT. Environmental Forces. Business Environment; Task Environment Stability of society is based on unequal relationships; Family is the prototype of all. The important points that explains the interface between business and various types of environment are as follows: Both the environment and business are. Internal environment: the conditions and forces within an organization. regulation of business and the general relationship between business and government.

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The Relationship Between Businesses and the Economic Environment

Persistent tendency for prices to rise, resulting in a fall in the real value of money. Retail price index RPI: Monthly record of inflation. It includes housing costs such as mortgage interest and council tax.

Measure based on RPI. CPI excludes housing costs. Used by the government and B of E as inflation target. Higher inflation rate, the higher the interest rate. Interest rate used as a mechanism to control inflation. Why do we currently have high inflation, but a low interest base rate?

Brainstorm in twos why prices might rise in an economy. Cost-push inflation An increase in the cost of production forces firms to increase their prices to protect profit margins. This leads to an increase in prices. Brainstorm strategies which a business could use to combat high inflation.

Strategy Evaluation Cut internal costs to keep price rises down. This strategy may be painful in term of job losses or restructuring. If improvements in productivity are made, this may come at the cost of investing in capital. Source from cheaper suppliers. Will the source of supplies be as reliable as existing suppliers?

relationship between business and environment ppt

Will the quality be lower- and could this be indentified by consumers? Potential risk of lost reputation 23 What can businesses do to combat high inflation? Cut profit margins by not raising prices as much as costs. The impact of this strategy may depend of price elasticity of demand for the products Lower profits may hinder future investment and growth plans of the business.

The impact of this strategy may depend on price elasticity of demand for the firms products. Elastic products would be affected a great deal. Will consumers resent firms taking advantage of economic conditions?

Strategies used by firms depend on a variety of factors such as: Size of the firm Economies of scale of the firm Other economic influences.

relationship between business and environment ppt

Competitiveness of the market. Is it an oligopoly? Fall in inflation rate Reduced prices Slowing down in the rate of increase Fall in inflation rate 26 Effects of High Inflation Interest rates may rise monetary policy Businesses increase prices.

High Inflation If UK inflation rate higher then the rest of the world then less competitive internationally. Consumer price sensitivity increases.

The Interface between Business and Various Types of Business Environment

Suppliers may increase their prices. Interest rates tend to be low.

relationship between business and environment ppt

The business firm has to adjust with the changing demographic pattern of the country. Business and Economic Environment: The economic environment of a country comprises of the structure of the economy, economic resources, level of income, economic policies etc. Any change in the economic policy can have a positive or negative impact on the working of the business. Business organisation has to consider the various economies prevailing in the country like import policy, industrial policy, taxation policy etc.

Economic policies like liberalisation, privatisation, and globalisation had a considerable impact on the business. Changes in the economic policy ultimately affect the business.

The Interface between Business and Various Types of Business Environment

Increase in the income well result into growth of organisational sale and vice versa. Favourable economic environment helps in rise in the national income and increase in the standard of living. Favourable economic environment also facilitates increase in foreign direct investment and growth of industrial sector resulting into growth of economy as a whole.

Business and Technological Environment: Technology refers to the set of process in an organisation to transform raw material of resources into finished goods and services. Technology includes tools- both machine hard technology and way of thinking soft technology. It includes not only the knowledge and method but also the entrepreneurial expertise that enhances the competitiveness of a nation.

Technology can greatly influence business decisions. It helps in minimizing cost, reducing wastage and brings higher efficiency in the production process. Information technology has brought about revolutionary changes in the world of business environment. On the other hand business is responsible for technological up gradation as a huge amount is spent on Research and Development to introduce new products and concepts in the business.

This technological revolution became a compelling reason for inter-nationalization and Globalisation.

relationship between business and environment ppt

Quick adoption of latest technology will help the business to gain competitive advantage and facilitates overall industrial efficiency. Business and Natural Environment: Both natural environment and business are closely related and have influence over each other. Natural environment is also termed as physical environment Business depends on the nature for supply of resources like raw material, water etc. The business has to adjust with the environment to ensure its survival. Ecological factors have recently assumed great importance.

The excessive use of these resources, environmental pollution and the disturbance of ecological balance has caused great concern. One cannot take the environment granted. The business should give due consideration for the conservation of natural resources. Similarly geographical factors affect the location of industries.