Regular Assignment 1
Module: The Business Environment
Tutor: Steve Tidball
Submission Date: 19th September 2013
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Regular assignment one
In this assignment, the explanation of the macroeconomic and ...view middle of the document...
The unemployment rate gets larger as the economy gets worse so it is a countercyclic economic indicator.’ Various economic indicators do have a severe effect on the trading of retailers as well as the economy more importantly.
Retailers can create strategies and structures in order to work with the economy once an analysis has been carried out. The analysis will enable the retailers to find out where there is demand, where growth can occur, the difference between actual growth and potential growth and of course the inflation rates. Inflation ‘redistributes incomes from the economically weak to the economically powerful.’ This means that no retailer can ever be sure what level of inflation to expect nor can they be certain. The inflation level can also deter potential investors in a company.
The Microeconomic environment
The Microeconomic environment is different to the Macroeconomic environment; however an understanding of both is definitely needed. This is because Macroeconomics considers the larger outside issues such as the Government and economy; whereas the microeconomics are decisions made at retailer’s level enabling full control of decisions and expectations. The Microeconomics are influenced by expenditure such as costs, for instance financial costs which include average fixed costs and total variable costs or opportunity costs which include alternatives foregone. The Microeconomics also involve finding out about competitors, what they are doing differently if anything, consumers’ spending habits, what will influence the customer to spend and what on, there will also be a consideration of purchases such as whether bulk buy should occur or a set amount of units.
The Porters Five Forces are often used in the Microeconomic environment. This example enables businesses to generally plan their strategy using a reliable template. Once the businesses have compared their strategy to that of the Porters Five Forces, they are likely to be more ready to take on competitors and be prepared for changes in the Macroeconomic than previously.
The Porters Five Forces
The aim of Porters Five Forces is to provide a framework for developing competitive forces understanding. This enables businesses to keep their competitive advantage and not be forced out of their market by competitor/s. The five forces of the Porters Five Forces are:
1. The Bargaining power of your customers
2. The threat of new entrants into yours industry
3. The bargaining power of suppliers
4. Threat of substitute products or services
5. Rivalry amongst existing firms.
Porters Five Forces enables businesses to be able to completely analyse their competition. This in turn then enables the business to be thoroughly informed on the five factors.
Hampshire Fire and Rescue Service
‘Everything we do has an effect on our environmental impact. Hampshire Fire and Rescue have committed to reduce this impact. The Environmental Working Group has been...