BTEC level 3 Diploma in Business Name: Daniil Chernat
Unit number: Unit 38 Unit title: Business and the Economic Environment
P1) Explain the effects of changes in the economic environment on a selected business.
The economic environment is a range of conditions which businesses are affected by. For
example, the economic environment could be affected by employment, rising income levels,
inflation and interest rates. In addition to that, all these factors could impact the buying
attitudes of consumers. The economic environment could be divided in to two parts, such as
the microeconomic environment and the macroeconomic environment. Microeconomics is
related to particular businesses; macroeconomics is related to the whole country.
Microeconomic factors could affect the decisions that the business will make. Microeconomic
factors include market size, supply, suppliers and the distribution chain. All businesses are
affected by the macroeconomic environment. These factors include: GDP, Inflation and
deflation, taxes, saving rates, interest rates, unemployment rates, etc.
The Combe Haven Holiday Park
is located on the south of
England, close to Hastings. The
Combe Haven Holiday Park is a
holiday park that is mostly used
by people with big families or by
people that want to spend their
leisure time not far away from
home. Some of these visitors are
from Northern Europe. The main
purpose of this park is to provide
families with holiday facilities
and entertainments. These
includes providing people with
high level service, providing
secure and safe environment for people.
The Combe Haven Holiday Park attracts
people that are holidaymakers and
people who own caravans in Combe
Haven Holiday Park. This means that
there are two main visitors. People that
visit for one to two weeks. Secondly,
they are visitors are people who own
caravans and they are using it for their
own private use.
, BTEC level 3 Diploma in Business Name: Daniil Chernat
Unit number: Unit 38 Unit title: Business and the Economic Environment
Business cycle (growth and recession)
The business cycle refers to how stable the economy of the country is and general levels of
economic activity in the country. In general, the business cycle can be divided into two main
parts upward and downward movement. From the diagram below, you can see that for an
individual business cycle, boom is when a business is doing well and recession is when business
is not doing so well. In terms of the whole economy, a recession is when economic activity falls
in the level of real national output.
The Combe Haven Holiday Park is currently experiencing a boom, which means that more jobs
are created and wages become higher. In addition to that, the consumption of The Combe
Haven Holidays Park products and services also increased, as more people invest money in the
park, e.g. buying caravans and buying holidays. If the Combe Haven Holiday Park is affected by
recession, then incomes and profits fall, the confidence of the business also decreases and,
there would be a need for less staff and there wouldn’t be any jobs offered to new people. The
main features of boom are that sales and profits are high and the main features of slump is that
economic growth is slowing down, but the output is still going up.
Rates of inflation and deflation
Inflation and deflation change depending on either demand a specific service/product or supply
side of the macro – economy. Inflation is when services/goods have high demand on them.
This is called demand pull inflation. Also, consumers are capable of paying a larger amount of
money for the item that they are demanding. This leads the businesses to produce more
products and charge more. Deflation is when too many goods are produced, but consumers are
not buying them as the price of the product/good is too high. For example, new IPhone has
been released and soon all other phone companies will copy some features of the phone and
Apple will have to decrease the price of their IPhone, as the demand on IPhone will decrease.
Unit number: Unit 38 Unit title: Business and the Economic Environment
P1) Explain the effects of changes in the economic environment on a selected business.
The economic environment is a range of conditions which businesses are affected by. For
example, the economic environment could be affected by employment, rising income levels,
inflation and interest rates. In addition to that, all these factors could impact the buying
attitudes of consumers. The economic environment could be divided in to two parts, such as
the microeconomic environment and the macroeconomic environment. Microeconomics is
related to particular businesses; macroeconomics is related to the whole country.
Microeconomic factors could affect the decisions that the business will make. Microeconomic
factors include market size, supply, suppliers and the distribution chain. All businesses are
affected by the macroeconomic environment. These factors include: GDP, Inflation and
deflation, taxes, saving rates, interest rates, unemployment rates, etc.
The Combe Haven Holiday Park
is located on the south of
England, close to Hastings. The
Combe Haven Holiday Park is a
holiday park that is mostly used
by people with big families or by
people that want to spend their
leisure time not far away from
home. Some of these visitors are
from Northern Europe. The main
purpose of this park is to provide
families with holiday facilities
and entertainments. These
includes providing people with
high level service, providing
secure and safe environment for people.
The Combe Haven Holiday Park attracts
people that are holidaymakers and
people who own caravans in Combe
Haven Holiday Park. This means that
there are two main visitors. People that
visit for one to two weeks. Secondly,
they are visitors are people who own
caravans and they are using it for their
own private use.
, BTEC level 3 Diploma in Business Name: Daniil Chernat
Unit number: Unit 38 Unit title: Business and the Economic Environment
Business cycle (growth and recession)
The business cycle refers to how stable the economy of the country is and general levels of
economic activity in the country. In general, the business cycle can be divided into two main
parts upward and downward movement. From the diagram below, you can see that for an
individual business cycle, boom is when a business is doing well and recession is when business
is not doing so well. In terms of the whole economy, a recession is when economic activity falls
in the level of real national output.
The Combe Haven Holiday Park is currently experiencing a boom, which means that more jobs
are created and wages become higher. In addition to that, the consumption of The Combe
Haven Holidays Park products and services also increased, as more people invest money in the
park, e.g. buying caravans and buying holidays. If the Combe Haven Holiday Park is affected by
recession, then incomes and profits fall, the confidence of the business also decreases and,
there would be a need for less staff and there wouldn’t be any jobs offered to new people. The
main features of boom are that sales and profits are high and the main features of slump is that
economic growth is slowing down, but the output is still going up.
Rates of inflation and deflation
Inflation and deflation change depending on either demand a specific service/product or supply
side of the macro – economy. Inflation is when services/goods have high demand on them.
This is called demand pull inflation. Also, consumers are capable of paying a larger amount of
money for the item that they are demanding. This leads the businesses to produce more
products and charge more. Deflation is when too many goods are produced, but consumers are
not buying them as the price of the product/good is too high. For example, new IPhone has
been released and soon all other phone companies will copy some features of the phone and
Apple will have to decrease the price of their IPhone, as the demand on IPhone will decrease.
