EE - Impact of Business Activities Lesson

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Impact of Business Activities

View the infographic below.

Businesses and the Economy, GDP, Thriving Businesses, Inflation, Unemployment Rate, Failing Businesses, Spending, Business Problems, Profits 

In this graphic you can see there is a relationship between business and the economy. Businesses have a big impact on the economy and the economy has a big impact on business. This lesson will show how businesses impact the economy in many different ways, including the Gross Domestic Product (GDP), which is the main measure of the health of the economy. Businesses also impact inflation and the unemployment rate and many other major aspects of our economy. On the other hand, the economy also impacts business. If the economy is not doing well, it causes a lot of problems for businesses, sometimes causing them to fail. When the economy is not doing good, people do not buy as much. If people do not buy as much, businesses do not make as much money. Businesses then are not able to afford to employ as many people and people lose their jobs. 

PEST Analysis. Political includes political stability, regulation and de-regulation, statutes, laws, codes of conduct, government funding, subsidies, support for specific industries, fiscal or monetary policy, tax rates, trade agreements. Economic includes economic trends, economic stability including inflation, wages growth, GDP, and GNP, also exchange rates, trade agreements, seasonality and economic cycles, consumer confidence, consumer purchasing power; discretionary incomes. Social includes demographic changes like population growth, age distribution, population density, geographic distribution. Also includes consumers attitudes such as tastes and preferences as well as social influencers like role models and opinion leaders. Also includes shopping habits such as preferred channels, channel switching, online and offline shopping. Technological includes innovation, breakthrough or technological developments and new product materials or ingredients, new packaging solutions. Also includes improved production processes or business models, new ways of transacting business, and new machinery or software. 

In the PEST analysis graph, you see several impacts on business. As a business owner, you need to be aware of the political environment as politicians make laws that have a direct impact on the profitability of your business. You have to watch the economic environment, as discussed previously. You have to be aware of the social environment, which drives how customers interact with your business. Businesses also have to stay on top of technology, technological advances can help or hurt a business. 

Impact of Business Activities Key Terms Activity

 

ENTREPRENEURSHIP_LessonBottomBanner.png IMAGES CREATED BY GAVS and PEST Analysis Graph Wikimedia Links to an external site.