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Jayme Lowndes

on 20 April 2010

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The business environment is a set of political, economic, social and technological (PEST) forces that are largely outside the control of a business, these factors can have both a positive and negative impact on the business. P.E.S.T (political, economic, social, technological) these are the four main factors that effect the ability of your orgainisation to survive and prosper. All businesses are part of the economy, but rarely do they have control over it. The way the economy changes has a very influencial effect on the way businesses act today.. Every act of buying and selling no matter how large or small contributes to what we call 'the economy'.
Decisions by individuals, businesses and the government on what they are going to buy or sell are influenced by the economic cycle, consumer tastes, multiculturalsim and product diversity, just to name a few. Economic factors that effect business
interest rates
exchange rates Social factors that effect business
costs structure
cultural heritage
morals toward wealth/income The economic cycle is the predictable changes in national income.
- Business cycles undergo four stages in the economic cycle:
Recession or 'bust'
After a recession or 'bust' phase the 'boom' phase can start again.
- These phases of the business cycle are determined by changing employment, industrial productivity, and interest rates.
UK business confidence 'hits four-year high'

Businesses have seen their output rise
Business confidence has reached its highest level in four years, according to a survey of UK companies.
The Business Trends survey from accountants BDO shows both confidence and output back at pre-recession levels.
However, the report warns that a "significant increase" in investment in the private sector is needed to sustain the recovery.
It said that business optimism could be "short-lived" without the investment.
The rise in output was put down to companies deciding to re-stock after letting their stock levels run down during the recession.
This provides only short-term support for economic growth, BDO warned.
It added that the investment needed to ensure longer-term growth was being hampered by uncertainty over plans for the public finances following next month's general election.
"The economy is showing signs of improvement, but the main political parties risk frittering this opportunity away if they don't provide clarity for businesses now," said Alex White, a partner at BDO.
"Political parties are keeping businesses in the dark on the substantive impact of their policies... uncertainty created here is an enemy to investment."
BDO's survey covered 11,000 companies from a range of industries.
Risk appetite
Meanwhile a survey of chief financial officers (CFOs) at UK companies has also indicated a rebound in confidence.
The survey, by business services company Deloitte, shows that business appetite for financial risk is at its highest level since early 2008.
"CFOs have significantly reduced the level of balance sheet financial risk over the past year, but this process seems to be drawing to a close," explained Ian Stewart, Deloitte's chief economist.
"This recovery in corporate risk appetite mirrors the behaviour of financial markets where risky assets, such as equities, have outperformed safe assets such as gilts and cash."

Monday, 12 April 2010 09:30 UK


BOOM: A period of fast economic growth. Output is high due to increased demand, unemployment is low. Business confidence may be high leading to increased investment. Consumer confidence may lead to extra spending.

SLUMP: A period when output slows down due to a reduction in demand. Confidence may begin to suffer.

RECESSION: A period where economic growth slows down and the level of output may actually decrease. Unemployment is likely to increase. Firms may lose confidence and reduce investment. Individuals may save rather than spend.

RECOVERY: A period when the economy moves between recession and a boom.


- Businesses produce more goods
- Businesses invest in more machinery
- Consumers spend more money.


- Businesses cut back on production
- Some businesses may go bankrupt
- Consumers spend less money.
Consumer tastes are shaped by the way products are advertised to them. Influences on consumer tastes
income levels
food trends
peer pressure
celebrity endorsements
avaliablity a business that specifically targets its products and services at a constantly changing demand in an area of consumers taste must take time and money to continually investigate, change, invest and produce in many different ascpects of the specific demand. eg a retail business that sells 'trendy' clothing aimed at the teenage market, such as sportsgirl, must be in tune with the changing tastes of the age groups that it targets, and monitor fashion trends to enable it to be able to anticpate customer needs. Trump and Bondholders Gain Control of Casinos
By Nelson D. Schwartz - the new york times

Published: April 12, 2010

The three properties — Trump Taj Mahal Casino Resort, Trump Plaza Hotel and Trump Marina Hotel Casino — face a cloudy future. Atlantic City, as well as the gambling industry, has suffered in recent years, hit hard by the recession and changing consumer tastes. More than one-third of the city’s 11 casinos have been in bankruptcy, and more gamblers have been going to rival gambling centers in Pennsylvania, New York and Connecticut.

a snippet taken from the new york times - its shows how much the change in consumer tastes can affect sales, investments and profits.

http://www.nytimes.com/2010/04/13/business/13trump.html?dbk Lately with the influence to be environmentally friendly, customers increased the demand and applied pressure to do just that! to be environmentally friendly! which means an increase in the research and development of the popular areas, which if successful can lead to huge profits, customer satisfaction and products that easily meet the demand, instantly gaining trust and improving the businesses reputation.
an example here would be the new envirobags, a trend that has taken Australia by storm, with many businesses deligating the time and money to meet this demand by starting their own versions of the envirobag so it is not only promoting being environmentally friendly but also advertising the business. To ensure its future success and profitability a business needs to recognise and access changes to consumer tastes so that it is able to constantly satisfy the consumers needs and wants. Australian consumers are influenced by many different cultural backgrounds. Due to our many cultural diversities that are avaliable to us. It provides many opportunities for business owners to buy and sell overseas products due to our vast mulitcultural knowledge. eg like food, fashion, cars, housing, travel. Multiculturalism is the accepttance or promotion of multiple ethnic cultures.
Australian consumers are influenced by countless cultural backgrounds throughout our cities and towns. Our supermarkets stock many cultural ingredients, our streets are filled with mexican, italian, greek, indonesian, american and chinese takeaways and resturants, our car dealerships are filled with the latest overseas trends, and most important of all our streets are filled with an endless diversity of cultures. Product diversity is the range of products produced within a business, successful and sustainable businesses constantly focus on satisfying customers, this requires effective managment of the product range and product mix, the business must constantly improve on their products and services to keep customers interested, to solve constantly arising problems, influxces in new technology, to keep competitive, to keep a good name and to make a consistent income. bibliography
and the text book -- business studies in action , preliminary course 2nd edition

By Britenie Power & Jayme Lowndes
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