4.3 Economic factors which impact on business operations in the global market

Question 1

Economic factors which impact on business operations in the global market, including:

Answer 1

1.economic activity

2.discretionary spending

3.interest rates

4.currency fluctuation

Question 2

How Economic Activity Impacts Business operation in the global market?

Answer 2

• Demand Fluctuations : High economic activity boosts demand for products and services, while low activity reduces it.
  * Production Levels:Businesses adjust production based on economic cycles to align with demand.

It typically follows the business economic cycle

Question 3

Define Economic activity.

Answer 3

The production,distribution, buying and selling of products and services in an economy

Economic activity has a direct impact (GDP)

Question 4

when planning and operating a business you must assess what?

Answer 4

the macro-economic environment for threats** and **opportunities.

Question 5

Discussing Economic Activity :(on a globall scale)

Answer 5

• You can refer to either economic expansion or economic contraction

1. expansion:an increase in the level of economic activity within an economy, and of the goods and services available. It is a period of economic growth as measured by macro economic indicators such as** increases in GDP, increases in inflation and high consumer confidence.**
2. Contraction 

An economic contraction is a decrease in the level of economic activity, goods and services available. It is a period of economic downturn as measured by macro economic indicators such as decreases in real GDP, decreases in inflation and low consumer confidence. 

Question 6

Measuring Economic Activity (Economic Factors)

Answer 6

1.Gross Domestic Product:The strength of GDP growth in an economy can affect business growth and profits,inflation and interest rates:R GDP that takes into account the rates of inflation.
2.Inflation:The level of inflation can affect business spending and growth as well as consumer spending and demand
3.Consumer Confidence:The higher the consumer confidence,the greater the aggregate demand for goods and services within an economy and vice versa

Question 7

Economic factors ar influenced by the following :

Answer 7

**Global influences:  **
1.Global prosperity 
2.Weather conditions 
3.Technology

Domestic influences
1.Government policies 
2.Interest rates 
3.Availability of credit 
4.Laws and regulations 
5.Government incentives 

Question 8

For exam style question:in economic activity do the following

Answer 8

discuss two economic expansion and economic contraction) factors

Question 9

Define Discretionary Spending .

Answer 9

Spending on goods and services that are not essential related to essential items and services

(Luxury items)

Wants not Needs

Question 10

explaining the impact of Discretionary Spending Towards business function.

Answer 10

Revenue Variability: Increased discretionary spending leads to higher sales for non-essential goods, while decreased spending reduces revenue.

Marketing Strategies: Businesses may alter marketing efforts to attract consumers with more disposable income during periods of high discretionary spending.

treat the maker like an idiot ,tell them everything with relation to C.S

How well your product is going to be

Question 11

Use this in your Discussion of Discretionary spending.

Answer 11

1.More Economically Developed countries

2. Less Economically developed Countries)

Question 12

Discretionary Spending examples

Answer 12

luxury spending” e.g. Entertainment, Dining out, Travel and vacations, Luxury goods, Hobbies and leisure activities

Question 13

Discussion on Discretionary spending

Answer 13

The more** discretionary Income** someone has the more they can spend on goods and services which further stimukates economic growth.

Question 14

when discussing business operations ,student(i.e YOU) should refer to factors such as

Answer 14

• **Business growth and expansion plans
  **
• **Research and development (innovation) **
• **Revenue/Sales (Demand) **
• Cost of production and production volume
• Profit
• Marketing strategies
• Distribution strategies
• Funding Strategies and Financial Management

Question 15

Interest Rates(Control cash rates) impacts on Business operations in the globall market .

Answer 15

• Cost of Financing: Higher interest rates increase the cost of loans for business expansions and operations, potentially slowing growth.

* Consumer Spending: High interest rates can reduce consumer spending on credit, affecting sales of goods typically bought on credit.

Question 16

Currency Fluctuation impact on business operations in the global market

Answer 16

Import and Export Costs: A strong domestic currency makes imports cheaper and exports more expensive, affecting profit margins.

Pricing Strategies: Businesses may need to adjust pricing strategies to remain competitive in international markets due to exchange rate changes.

Supply Chain Management: Fluctuating currency rates can impact the cost of raw materials and components sourced internationally.