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Transcript of PESTLE
Fiscal policy is the use of government expenditure and revenue collection (taxation) to influence the economy
is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of
for the purpose of promoting economic growth and stability
Monetary Policy Committee
MPC: Meets the last Thursday of every month to set the base rate of interest
inflation is a rise in the general level of prices of goods and services in an economy over a period of time
The annual rate of inflation shows how much higher or lower prices are compared with the same month a year earlier. It indicates changes to our cost of living
Economists favour low steady inflation of around 2%per annum
Disposable Income and the cost of living
In 1997, when Labour came to power, people were left with 34.5 per cent of their gross income once they had paid taxes, national insurance, mortgage or rent. Now they are left with 32.6 per cent, says a report by uSwitch, a price comparison website.
The Business Organisation
and its External Environment
All businesses are involved in the transformation of inputs (resources) into outputs (goods and services)
The business as a transformation system
Business organisations do not operate in a vacumn
they interact with the outside world
External Environmental Influences
Political, Economic, Social,
Technological, Legal etc.
Sources: Worthingon I & Britton C, The Business
Why is it important to monitor the external environment?
What is threatening the businesses?
what is changing?
why is it changing?
where is the change coming from?
who will it affect?
how will the change occur?
when will it happen?
Tools for analysing the external environment
What is missing?
Government Fiscal Policy
Government has to 'referee' tax and spending
Source: The Guardian
Gross Domestic Product
Satisfaction of customer
Capon C, Understanding the Business Environment 2009
The big wide world in which
organisations and sectors operate
The external environment provides the context in which an organization/sector operates
The Systems Model of Business
What opportunities are out there?
"Change is the law of life and those who look only
to the past or present are certain to miss the future."
—John F. Kennedy
The business can then ask itself....
What is the external environment?
Governments, regardless of their colour (political philosophy), aim to:
Promote business growth
Improve fairness in society
Invest in public services
Improve the quality of life of their
To carry out their policies the Government has to raise money and spend money
TAX and SPENDING
Summary key points in a business PESTLE
Political and economic objectives of any government
Key areas of economic policy
Interest rate setting
Economic growth (GDP)
Strength of the pound and exchange rates
The Nation's Bank Account
Lower annual net migration
Raise the tax free personal allowance 12,500 by 2020
Increase NHS spending
No increase in VAT
A pledge to eradicate the deficit by the middle of the next decade.
The Tories will legislate to make executive pay packages subject to strict annual votes by shareholder.
Listed companies will have to publish the ratio of executive pay to to the broader UK workforce.
Companies employing more than 250 people will be required to publish more data on the pay gap between men and women.
Geopolitical factors, 'war on terror'
P = Political
The European Question.
500 million people - 27 countries
An interconnected world makes change more rapid and harder to analyse potential impacts
The Importance of Industry Pressure Groups
Institute of Hospitality
Institute for Travel and Tourism
British Hospitality Association
The UK's economy grew by 2.6% in 2014, the fastest pace since 2007 and up from 1.7% in 2013, official figures have shown.
China's GDP is 8%
BBC News economy tracker
Why is the rate of interest such an important factor for businesses and individuals?
Business Loan: £25,000 over 10years @ 5% pa
Mortgage: 4-year fixed rate at 2.14% until 31/10/2019
Cost of Living
The current rate of inflation is
the lowest level since records began.
Growth is a positive for business.
Negative growth = recession + negative
Key Point: The overall aim of the bank is to achieve low inflation
Teresa May's Conservative Policy
Key points to look out for:
Changes in VAT, APD, corporation tax, business rates, excise duty
Infrastructure, Training/education, housing etc.