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Unit 38 Business and the Economic Environment D1
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D1 evaluate the impact of changes in the economic environment on a selected business
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Unit 38: Business and the Economic EnvironmentD1: evaluate the impact of changes in the economic environment on a selected
business
Introduction
This assignment focuses on the different factors of the economic environment and
how these factors are likely to influence PJ Hegarty and Sons.
Economic Impact on Business Number 1-16
Environme
nt
Economic This is growth that is taking place in the economic 1
Growth environment. This means that the economy of UK is Because this is the best
performing well. This will impact the business by; time for the business to
1. Increasing disposable income capital and make sales
2. Increasing demand and gain as a business.
3. Increase the income of businesses There are many job
4. Increase employment levels opportunities that will
5. Better education/training available be available during this
time.
If more money is available in the economy, this will
cause the increase of the wages of
employees/customers. Instead of saving they will want
to spend and this will increase the demand of
products/service from the business, further increase
productivity. Once the business has more money, they
will now be able to cover more costs in the business
and they will take on more building projects because
they have the budget to do so. Also, the business will
be able to hire more employees to help with these
works because they will now be able to pay the
salaries as well. lastly, if employees do not have the
skills to take on the job, this is a good time to provide
training as it will be better and more affordable.
Recession This is the period in the economic environment where 2
the economy is in a bad place and everything begins This is because the
to decrease. This will impact the business by; business can lose a lot
1. Decrease in disposable income at this time. Therefore,
2. Decrease in demand change is important
3. Decrease in prices, further decrease business because it can cause
income the business to fail if
4. Low unemployment levels they do not have a plan.
During these times, the government will be spending
more money in order to cover public service, because
the amount of tax is not enough due to businesses not
making enough money. Individuals (customers) begin
to save, instead of spending. As demand decreases,
this will push the business to decrease prices so that
their customer are able to afford it. The employment
levels also decrease because the business is unable to
pay the wages for them.
Increased Inflation is the increase of prices within the economy. 3
Inflation This will impact the business by; This is because inflation
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