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Essay of 2 pages for the course BTEC Business Level 2 Unit 1 at undefined (P1)
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By: paulmcconaghie • 7 year ago
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Unit 1: P1 Business EnvironmentIn the following task I would be exploring the impact of business environment on a
start-up business.
Business environment is both national and local facts which would influence a business.
National factors are split into two political and economic issues, which a business start-up will need to
consider when setting up.
Political issues:
Recently the government brought in a new policy has stopped smoking in public areas like pubs and
restaurants. So a start-up business should take this into consideration when setting up because they all
need to provide for customers who smoke so if providing an area like a hut where they can, which some
pubs do now. This could become costly for a business to provide a hut outside a pub where customers
can smoke. Policies are put into place because it helps businesses to run fairly for customers. Small
businesses also need licenses to sell tobacco and alcohol products this would be issued by the local
council by asking permission
Governmental initiatives where the current conservative-led coalition government are cutting jobs in the
public sector so they hope employment would rise in the private sector also hoping the private sector
would grow due to this. This is positive influence on a start-up business because the availability of
employees have grown so businesses have the availability of staff and over the years can grow the
business highring more and more staff.
Government support:
A scheme with the Bank of England to enable banks to borrow from them at cheaper rates, so they can
then lend to small businesses at lower interest rates. The government would introduce these types of
schemes to boosts the UK economy and boost employment. This is good for a start-up business
because the cost of loan is cheaper so they are more liking to take out a loan which would help them to
buy good new equipment which is needed to start-up a business. Overall businesses then take out loans
due to it being cheaper, which is a positive impact.
Economic issues:
Recessions happens due to a drop in consumer spending. This leads to businesses finding different ways
to reduce their own spending. Businesses can survive recessions if they have enough extra cash so that
reduced consumer spending doesn’t result in going bust. Recessions is a negative for a business as we
all know in 2008 we felt the effects of unnecessary spending and we saw big businesses close like
Woolworth. So business should consider the environment of the world when setting up like if the
economy is stable and there’s a low risk of a recession.
The exchange rates has a big impact on a business on the ground whether the pound is worth more or
less against the dollar for example. Start-up businesses relatively want more for their pound and if this is
the case then this encourages businesses to buy goods from abroad.
Interest rates affect a businesses because if they are low this encourages new businesses to start-up by
taking out a loan.
If the unemployment rate is low then this shows the country is doing well and at the moment the UK’s
unemployment rate is in the mid-teens. Businesses need employees to grow the business and increase
revenue and a start-up business would need skilled employees available to them.
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