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Unit 4: Business
and the
(Economic)…read more

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Marketing environment is made up of:
INTERNAL ­ staff, technology, finance
MICRO ­ customers, agents, suppliers, distributors
- Political e.g. laws, regulations, consumer
spending power
- Economic e.g. long and short term
conditions of the market
- Sociocultural e.g. ethics and social
- Technological ­ vital for competitive
advantage and a cause of globalisation…read more

Slide 3

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Concerned with:
- Total level of spending/demand in the economy
- Levels of employment and unemployment
- Investment made by business and government
- General level of prices
- Rate of interest and exchange rates…read more

Slide 4

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Level of activity in an economy is measured by the
value of gross domestic product
Income method ­ total of all income earned in the economy
Output method ­ total value of all the goods and services produced
in the economy
Expenditure method ­ total value spent by consumers, business and
- Economic growth is about an increase in productivity within
the economy
- Our living standards are influenced by our access to goods
and services
- Without growth, individuals will only experience a groth in
living standards at the expense of otehrs
- With economic growth we can all potentially be better off…read more

Slide 5

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The Business Cycle
Some businesses are known as 'cyclical' because demand for their
products fluctuate and this makes them more vulnerable to
changes in the business cycle and GDP
Features of the business cycles stages:
Inflation increases Demand low High unemployment
Increased consumer
Some firms are Investments fall due Increasing number of Investing increases
unable to satisfy to lack of confidence bankruptcies due to confidence in
demand in market the market
Interest rates rise Profits fall Low levels of
Production rising to
spending meet demand
The extent to which a business is affected by the business
cycle depends on the income elasticity of demand for its
products e.g. fashion retailers, electrical goods, construction
firms, advertising, restaurants.…read more

Slide 6

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Large businesses need often need to borrow credit.
The amount they borrow depends on:
· If they are profitable and likely to remain so
· Ability of the business to generate positive cash flow
· Strength of the relationship between business and its
· Industry/market business operates in…read more

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