Bus Environ

7/29/2019 Bus Environ

1/28

The Business Environmentand Business Economics


2/28

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


3/28

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


4/28

The Structure of Industry

Importance of industrial structure to theperformance of firms

Classifying production

primary production

secondary production

tertiary production

Shares in GDP and employment of thethree sectors

trends over time

current position


5/28

Output of industrial sectors(as % of GDP)

1974

54.9%

2.8%

42.3%

Secondary

Primary

Tertiary


6/28

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


7/28

1974

54.7%

3.4%

41.9%

Secondary

Primary

Tertiary

Employment by industrial sector(% of total employees)


8/28

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)


9/28


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


10/28

Section Subsection

A Agricult ure, hunting and forestry

B Fishing

C Mining and quarrying

D Manufacturing

E Electricity, gas and water supply

F ConstructionG Wholesale and retail trade, repair of motor

vehicles and personal and household goods

H Hotels and restaurants

I Transport, storage and communication

J Financial intermediation

K Real estate, renting and business activ ities

L Public administration and defence;compulsory social security

M Education

N Health and social work

O Other community, social and personalservice activ ities

P Private households with employed persons

Q Extra-territorial organisations and bodies

CA Mining and quarrying of energy producing materials

CB Mining and quarrying except energy producing materials

DA Manufacture of food products, beverages and tobacco

DB Manufacture of t extiles and textile products

DC Manufacture of leather and leather products

DD Manufacture of w ood and wood products

DE Manufacture of pulp, paper and paper products; publishing and

printing

DF Manufacture of coke, refined petroleum products and nuclear fuel

DG Manufacture of chemicals, chemical products and man-madefibres

DH Manufacture of rubber and plastic products

DI Manufacture of other non-metallic mineral products

DJ Manufacture of basic metals and fabricated metal products

DK Manufacture of machinery and equipment (other)

DL Manufacture of electrical and optical equipment

DM Manufacture of t ransport equipment

DN Manufacturing not elsewhere classified

Standard industrial classification: 1992


11/28


Changes in the structure of UK economy

expanding and contracting sections

by output

by employment


12/28

80

90

100

110120

130

140

150

160

170

180

190

200

210

220

230

240

1980 1985 1990 1995 2000

GDP by industry (1980 = 100)

GDPbyindustry

(1980=100)

C

A/B


13/28

80

90

100

110120

130

140

150

160

170

180

190

200

210

220

230

240

1980 1985 1990 1995 2000

GDPbyindustry

(1980=100)

C

A/BD



14/28

80

90

100

110120

130

140

150

160

170

180

190

200

210

220

230

240

1980 1985 1990 1995 2000

GDPbyindustry

(1980=100)

E

C

A/BD



15/28

80

90

100

110120

130

140

150

160

170

180

190

200

210

220

230

240

1980 1985 1990 1995 2000

GDPbyindustry

(1980=100)

EF

C

A/BD



16/28

80

90

100

110120

130

140

150

160

170

180

190

200

210

220

230

240

1980 1985 1990 1995 2000

GDPbyindustry

(1980=100)

I

G/H

E

J-Q

F

C

A/BD



17/28

20

30

40

50

60

70

80

90

100

110

120

130

140

150

1980 1985 1990 1995 2000

Employment by industry (1980 = 100)

Employmentbyindustry(1980=

100)

C

A/B


18/28

20

30

40

50

60

70

80

90

100

110

120

130

140

150

1980 1985 1990 1995 2000



100)

C

A/B

D


19/28

20

30

40

50

60

70

80

90

100

110

120

130

140

150

1980 1985 1990 1995 2000



100)

E

C

A/B

D


20/28

20

30

40

50

60

70

80

90

100

110

120

130

140

150

1980 1985 1990 1995 2000



100)

E

F

C

A/B

D


21/28

20

30

40

50

60

70

80

90

100

110

120

130

140

150

1980 1985 1990 1995 2000



100)

I

G/H

E

J-Q

F

C

A/B

D


22/28


Changes in the structure of UK economy expanding and contracting sections

by output

by employment

Analysing industrial structure


23/28



by output

by employment


changes in industrial concentration


24/28



by output

by employment


changes in industrial concentration

the distribution of SMEs in the economy

Number of businesses employment and turnover by industrial sector (2001)


25/28

Number of businesses, employment and turnover by industrial sector (2001)

SectorSize of

enterprise

Number of

enterprises

(and % of sector )

Employment

(% of secto r)

Turnover

(% of secto r)

All SMEs

Large firms

3 739 565 (99.8)

6 775 (0.2)

55.4

44.6

51.4

48.6

A, B SMEs

Large firms

181 115 (99.9)

25 (0.1)

97.5

2.5

97.5

2.5

C, E SMEs

Large firms

5 705 (98.4)

95 (1.6)

14.6

85.4

19.8

80.2

D SMEs

Large firms

290 425 (99.2)

2 325 (0.8)

50.8

49.2

36.4

63.6

F SMEs

Large firms

691 595 (99.9)

205 (0.1)

84.5

15.5

74.7

25.3G SMEs

Large firms

540 655 (99.8)

1 000 (0.2)

50.1

49.9

52.8

47.2

H SMEs

Large firms

123 220 (99.8)

205 (0.2)

53.8

46.2

58.5

41.5

I SMEs

Large firms

235 110 (99.8)

455 (0.2)

39.1

60.9

38.1

61.9

J SMEs

Large firms

63 650 (99.5)

350 (0.5)

21.4

78.6

n/a

n/a

K SMEs

Large firms

866 470 (99.9)

1 015 (0.1)

70.2

29.8

71.9

28.1

M SMEs

Large firms

117 355 (99.9)

75 (0.1)

84.4

15.6

86.0

14.0

N SMEs

Large firms

232 470 (99.8)

565 (0.2)

42.0

58.0

36.8

63.2

O SMEs

Large firms

391 695 (99.9)

260 (0.1)

73.1

26.9

63.5

36.5


26/28

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


27/28


Internal aims and organisation

profit maximisation as the prime goal

other goals

distinction between owners and managers

importance of managers own objectives

satisficing


28/28


Other factors affecting performance

internal structure

information

competence of management

quality of the workforce

systems

information systems

motivation technical systems

distribution systems

financial systems

Documents

Bus Environ