01. the busines environment and busines economics
TRANSCRIPT
![Page 1: 01. the busines environment and busines economics](https://reader034.vdocuments.mx/reader034/viewer/2022042512/55a57acf1a28ab57048b46a0/html5/thumbnails/1.jpg)
The Business Environment
and Business Economics
![Page 2: 01. the busines environment and busines economics](https://reader034.vdocuments.mx/reader034/viewer/2022042512/55a57acf1a28ab57048b46a0/html5/thumbnails/2.jpg)
The Business Environment
• What is business economics?– decision making in business• external influences on the firm
– the business environment
• internal decisions of the firm
• the external effects of business decision making
• What do business economists do?– description
– analysis
– recommendations
![Page 3: 01. the busines environment and busines economics](https://reader034.vdocuments.mx/reader034/viewer/2022042512/55a57acf1a28ab57048b46a0/html5/thumbnails/3.jpg)
The Business Environment
• Political / legal factors
• Economic factors– the microeconomic environment
– the macroeconomic environment
• Social / cultural factors
• Technological factors
• PEST analysis– relationship between the four sets of factors
– importance of the economic factors
![Page 4: 01. the busines environment and busines economics](https://reader034.vdocuments.mx/reader034/viewer/2022042512/55a57acf1a28ab57048b46a0/html5/thumbnails/4.jpg)
The Structure of Industry
• Importance of industrial structure to the performance of firms
• Classifying production– primary production
– secondary production
– tertiary production
• Shares in GDP and employment of the three sectors– trends over time
– current position
![Page 5: 01. the busines environment and busines economics](https://reader034.vdocuments.mx/reader034/viewer/2022042512/55a57acf1a28ab57048b46a0/html5/thumbnails/5.jpg)
Output of industrial sectors(as % of GDP)
1974
54.9%
2.8%
42.3%
Secondary
Primary
Tertiary
![Page 6: 01. the busines environment and busines economics](https://reader034.vdocuments.mx/reader034/viewer/2022042512/55a57acf1a28ab57048b46a0/html5/thumbnails/6.jpg)
Output of industrial sectors(as % of GDP)
1974
54.9%
2.8%
42.3%
70.9%
5.8%
23.3%
2002
Secondary Secondary
Primary Primary
Tertiary Tertiary
![Page 7: 01. the busines environment and busines economics](https://reader034.vdocuments.mx/reader034/viewer/2022042512/55a57acf1a28ab57048b46a0/html5/thumbnails/7.jpg)
1974
54.7%
3.4%
41.9%
Secondary
Primary
Tertiary
Employment by industrial sector(% of total employees)
![Page 8: 01. the busines environment and busines economics](https://reader034.vdocuments.mx/reader034/viewer/2022042512/55a57acf1a28ab57048b46a0/html5/thumbnails/8.jpg)
1974
54.7%
3.4%
41.9%
79.8%
1.8%
18.4%
2002
Secondary Secondary
Primary Primary
Tertiary Tertiary
Employment by industrial sector(% of total employees)
![Page 9: 01. the busines environment and busines economics](https://reader034.vdocuments.mx/reader034/viewer/2022042512/55a57acf1a28ab57048b46a0/html5/thumbnails/9.jpg)
The Structure of Industry
• Classifying firms into industries– nature of an industry
– industrial sectors
– why classify firms into industrial sectors?• helps in analysing trends
• identifying specific needs
• helps to understand relationships between firms
• Standard industrial classification– nature of the system of classification
– sections, subsections• divisions, groups and classes
![Page 10: 01. the busines environment and busines economics](https://reader034.vdocuments.mx/reader034/viewer/2022042512/55a57acf1a28ab57048b46a0/html5/thumbnails/10.jpg)
Standard industrial classification: 1992
![Page 11: 01. the busines environment and busines economics](https://reader034.vdocuments.mx/reader034/viewer/2022042512/55a57acf1a28ab57048b46a0/html5/thumbnails/11.jpg)
The Structure of Industry
• Changes in the structure of UK economy
– expanding and contracting sections
• by output
• by employment
![Page 12: 01. the busines environment and busines economics](https://reader034.vdocuments.mx/reader034/viewer/2022042512/55a57acf1a28ab57048b46a0/html5/thumbnails/12.jpg)
80
90
100
110
120
130
140
150
160
170
180
190
200
210
220
230
240
1980 1985 1990 1995 2000
GDP by industry (1980 = 100)G
DP
by
indu
stry
(19
80 =
100
)
C
A/B
![Page 13: 01. the busines environment and busines economics](https://reader034.vdocuments.mx/reader034/viewer/2022042512/55a57acf1a28ab57048b46a0/html5/thumbnails/13.jpg)
80
90
100
110
120
130
140
150
160
170
180
190
200
210
220
230
240
1980 1985 1990 1995 2000
GD
P b
y in
dust
ry (
1980
= 1
00)
C
A/BD
GDP by industry (1980 = 100)
![Page 14: 01. the busines environment and busines economics](https://reader034.vdocuments.mx/reader034/viewer/2022042512/55a57acf1a28ab57048b46a0/html5/thumbnails/14.jpg)
80
90
100
110
120
130
140
150
160
170
180
190
200
210
220
230
240
1980 1985 1990 1995 2000
GD
P b
y in
dust
ry (
1980
= 1
00)
E
C
A/BD
GDP by industry (1980 = 100)
![Page 15: 01. the busines environment and busines economics](https://reader034.vdocuments.mx/reader034/viewer/2022042512/55a57acf1a28ab57048b46a0/html5/thumbnails/15.jpg)
80
90
100
110
120
130
140
150
160
170
180
190
200
210
220
230
240
1980 1985 1990 1995 2000
GD
P b
y in
dust
ry (
1980
= 1
00)
EF
C
A/BD
GDP by industry (1980 = 100)
![Page 16: 01. the busines environment and busines economics](https://reader034.vdocuments.mx/reader034/viewer/2022042512/55a57acf1a28ab57048b46a0/html5/thumbnails/16.jpg)
80
90
100
110
120
130
140
150
160
170
180
190
200
210
220
230
240
1980 1985 1990 1995 2000
GD
P b
y in
dust
ry (
1980
= 1
00)
I
G/H
EJ-Q
F
C
A/BD
GDP by industry (1980 = 100)
![Page 17: 01. the busines environment and busines economics](https://reader034.vdocuments.mx/reader034/viewer/2022042512/55a57acf1a28ab57048b46a0/html5/thumbnails/17.jpg)
20
30
40
50
60
70
80
90
100
110
120
130
140
150
1980 1985 1990 1995 2000
Employment by industry (1980 = 100)E
mp
loym
ent
by
indu
stry
(19
80 =
100
)
C
A/B
![Page 18: 01. the busines environment and busines economics](https://reader034.vdocuments.mx/reader034/viewer/2022042512/55a57acf1a28ab57048b46a0/html5/thumbnails/18.jpg)
20
30
40
50
60
70
80
90
100
110
120
130
140
150
1980 1985 1990 1995 2000
Employment by industry (1980 = 100)E
mp
loym
ent
by
indu
stry
(19
80 =
100
)
C
A/B
D
![Page 19: 01. the busines environment and busines economics](https://reader034.vdocuments.mx/reader034/viewer/2022042512/55a57acf1a28ab57048b46a0/html5/thumbnails/19.jpg)
20
30
40
50
60
70
80
90
100
110
120
130
140
150
1980 1985 1990 1995 2000
Employment by industry (1980 = 100)E
mp
loym
ent
by
indu
stry
(19
80 =
100
)
E
C
A/B
D
![Page 20: 01. the busines environment and busines economics](https://reader034.vdocuments.mx/reader034/viewer/2022042512/55a57acf1a28ab57048b46a0/html5/thumbnails/20.jpg)
20
30
40
50
60
70
80
90
100
110
120
130
140
150
1980 1985 1990 1995 2000
Employment by industry (1980 = 100)E
mp
loym
ent
by
indu
stry
(19
80 =
100
)
E
F
C
A/B
D
![Page 21: 01. the busines environment and busines economics](https://reader034.vdocuments.mx/reader034/viewer/2022042512/55a57acf1a28ab57048b46a0/html5/thumbnails/21.jpg)
20
30
40
50
60
70
80
90
100
110
120
130
140
150
1980 1985 1990 1995 2000
Employment by industry (1980 = 100)E
mp
loym
ent
by
indu
stry
(19
80 =
100
)
I
G/H
E
J-Q
F
C
A/B
D
![Page 22: 01. the busines environment and busines economics](https://reader034.vdocuments.mx/reader034/viewer/2022042512/55a57acf1a28ab57048b46a0/html5/thumbnails/22.jpg)
The Structure of Industry
• Changes in the structure of UK economy
– expanding and contracting sections
• by output
• by employment
• Analysing industrial structure
![Page 23: 01. the busines environment and busines economics](https://reader034.vdocuments.mx/reader034/viewer/2022042512/55a57acf1a28ab57048b46a0/html5/thumbnails/23.jpg)
The Structure of Industry
• Changes in the structure of UK economy
– expanding and contracting sections
• by output
• by employment
• Analysing industrial structure
– changes in industrial concentration
![Page 24: 01. the busines environment and busines economics](https://reader034.vdocuments.mx/reader034/viewer/2022042512/55a57acf1a28ab57048b46a0/html5/thumbnails/24.jpg)
The Structure of Industry
• Changes in the structure of UK economy
– expanding and contracting sections
• by output
• by employment
• Analysing industrial structure
– changes in industrial concentration
– the distribution of SMEs in the economy
![Page 25: 01. the busines environment and busines economics](https://reader034.vdocuments.mx/reader034/viewer/2022042512/55a57acf1a28ab57048b46a0/html5/thumbnails/25.jpg)
Number of businesses, employment and turnover by industrial sector (2001)
![Page 26: 01. the busines environment and busines economics](https://reader034.vdocuments.mx/reader034/viewer/2022042512/55a57acf1a28ab57048b46a0/html5/thumbnails/26.jpg)
• Structure → conduct → performance
– relationship between business structure and business conduct (behaviour)
• competitive markets and competitive behaviour
• limited competition and collusion
– relationship between business conduct and business performance
• different indicators for measuring performance
• profitability, market share, growth, etc.
The Determinants of Business Performance
![Page 27: 01. the busines environment and busines economics](https://reader034.vdocuments.mx/reader034/viewer/2022042512/55a57acf1a28ab57048b46a0/html5/thumbnails/27.jpg)
The Determinants of Business Performance
• Internal aims and organisation– profit maximisation as the prime goal
– other goals
– distinction between owners and managers
– importance of managers’ own objectives
– “satisficing”
![Page 28: 01. the busines environment and busines economics](https://reader034.vdocuments.mx/reader034/viewer/2022042512/55a57acf1a28ab57048b46a0/html5/thumbnails/28.jpg)
The Determinants of Business Performance
• Other factors affecting performance– internal structure
– information
– competence of management
– quality of the workforce
– systems• information systems
• motivation
• technical systems
• distribution systems
• financial systems