LO3 - Know the impact of the economic environment on businesses

Unit 01 Y/502/5408

THE BUSINESSENVIRONMENT

Scenario Criteria Tasks Assessment1 2 3 4 5

Learning Outcome (LO) The learner will:

Pass - The assessment criteria are the pass requirements for this unit. The learner can:

Merit - For merit the evidence must show that, in addition to the pass criteria, the learner is able to:

Distinction - For distinction the evidence must show that, in addition to the pass and merit criteria, the learner is able to:

1 Know the range of different businesses and their ownership

P1 Describe the type of business, purpose and ownership of two contrasting businesses

M1 Analyse the type of business, purpose and ownership of two contrasting businesses

D1 Evaluate the effect of a selected business changing its ownership status

P2 Describe the different stakeholders who influence the purpose of two contrasting businesses

2 Understand how businesses are organised to achieve their purpose

P3 Describe how two businesses are organised

P4 Explain how their style of organisation helps them to fulfil their purposes

3 Know the impact of the economic environment on businesses

P5 Describe the influence of two contrasting economic environments on business activities within a selected organisation

M2 Analyse the impact of changes in demand and supply on a selected business

D2 Evaluate to what extent a selected business is likely to be affected by changes in the economic environment

4 Know how political, legal and social factors impact on business

P6 Describe how political, legal and social factors are impacting upon the business activities of the selected organisations and their stakeholders

LO2 - Assessment Criteria

Scenario Criteria Tasks Assessment1 2 3 4 5

P5 - Learners could write a report for the management team of an organisation. They should describe the influence of two contrasting economic environments upon business activities within the selected organisation.

M2 - Learners will need to go on to consider changes in demand and supply on the business, and analyse the impact of those changes.

D2 - Learners will need to evaluate the extent to which a business is likely to be affected by changes in the economic environment.

In earlier learning outcomes, learners were required to focus on two businesses. In learning outcome 3 they just need to be concerned with one. Learners need to understand that any business does not exist in isolation but is affected by a range of possible economic factors.

They could undertake a group task where the key economic variables that can affect a business are identified and researched. Learners should then use the data that they have obtained and look for changes in the behaviour of businesses using examples from newspapers or news websites. Each group could then be asked to present their findings

Assessment Criteria P5, M2, D2

Scenario Criteria Tasks Assessment1 2 3 4 5

Focusing on ONE of the businesses selected during LO2, you need to provide evidence for the following 5 tasks within this case study:

1. Economic Environments2. Business Demands3. Supply for the Business4. Comparing Economic Environments5. Evaluate Economic Environments

Focusing on one of the businesses selected from the two selected during ao2

Task 1 (P5.1) – Focusing on a business, describe the influence of two contrasting economic environments that impact a business, based on:

Ownership of Business Business Operations - Functionality of Businesses Activities Movement of Capital

LO3 - The impact of the economic environment

Importance of StabilityImpact on business of changes in

the economic environmentGrowth, Recession, Ripple Effect

Levels of Inflation

Availability and Cost of Credit Labour Changes in Government Policy

Scenario Criteria Tasks Assessment1 2 3 4 5

The demands placed on a business influence (dictate) the performance of the business by acting on the needs of the customers: - Click on the links below for additional information◦ Influenced by affordability◦ Competitive Pressures – such as emerging markets from abroad or

new entrants to markets (e.g. Supermarkets selling electronics or clothing)

◦ Availability of Substitutes◦ Level of Gross Domestic Product (GDP)◦ Needs and Aspirations of Consumers

Task 2 - P5.2 – Based on the two contrasting economic environments selected describe the influence of customer demand for the product/service – focusing on:

Affordability Competitive Pressures Substitutes GDP Needs / Aspirations of

the Customer

LO3 - The impact of the economic environment – Business Demands

Scenario Criteria Tasks Assessment1 2 3 4 5

Supplying a service/products to the consumers from the business plays a big part in business supply chain - Click on the links below for additional information

◦ Influenced by availability of Raw Materials and Labour◦ Logistics◦ Competition for Raw Materials – such as the cost of electricity,

sometimes related to oil/gas etc◦ Ability to Produce a Profit◦ Government Support – such as limitations on taxation,

importing and exporting of products/services◦ But these wax and wane with the economy. Elasticity of

supply is how companies react to the change in conditions.Task 3 (P5.3) – Based on the two contrasting economic environments selected describe the influence of supplying the product/service to the business and customers – focusing on: -

Logistics Availability of Raw Materials and

Labour

Competition of Raw Materials and

LabourProfitability Government

Support

LO3 - The impact of the economic environment – Elasticity of Supply

Scenario Criteria Tasks Assessment1 2 3 4 5

Task 4 - M2.1 – Based on the TWO contrasting economic environments selected analyse and compare the impact of changes in demand and supply on a selected business.

◦ Consider the market they are in, what they exist for and the size of the business Consider the structure - Tall, wide, small, big

departments ... Strategic plans for the future to achieve the aims of the

business◦ Inter Dependencies of the departments

Consider the departments your organisation has, why they exist and what they perform – how are they affected by the departments that exist ()

Changes in the Supply Chains of Operations

Development of Internal Structures Functional Areas

LO3 - The Economic Environment - Comparison

Scenario Criteria Tasks Assessment1 2 3 4 5

Business Activities – How the business operates (dealing with suppliers / customers)◦ has it forced your company to downsize, change its ethos, change its

plans or way of dealing (like going purely online) Business Strategy – business changed and impact it has on the

business operations Internal Structures – organisation structure

◦ Would they hire more or less? / retrain or lay people off?◦ Would they find a different way of doing things like training staff to

do multiple jobs or cut our one section of their company altogether? Functional Activities – department function / link together (how

would the change) Stakeholders – change in the focus and/or management of the

business Task 5 - D2.1 – Evaluate to what extent a selected business is

likely to be affected by changes in the economic environmentBusiness Activities

Business Strategy

Internal Structures

Functional Activities Stakeholders

LO3 - The Economic Environment - Evaluation

Scenario Criteria Tasks Assessment1 2 3 4 5

Assessment Outcome – P5Task 1 - P5.1 – Focusing on a business, describe the influence of two contrasting economic environments that impact a business, based on:

Task 2 - P5.2 – Based on the two contrasting economic environments selected describe the influence of customer demand for the product/service – focusing on:

Task 3 - P5.3 – Based on the two contrasting economic environments selected describe the influence of supplying the product/service to the business and customers – focusing on:

Assessment Tasks

Ownership of Business Business Operations (Functionality of the Business Activities) Movement of Capital

Affordability Competitive Pressures Substitutes GDP Needs / Aspirations of the

Customer

Availability of Raw Materials

Competition of Raw Materials Logistics Availability

of LabourCompetition

of Labour Profitably Government Support

Scenario Criteria Tasks Assessment1 2 3 4 5

Assessment Outcome – M2Task 4 - M2.1 – Based on the TWO contrasting economic environments selected analyse and compare the impact of changes in demand and supply on a selected business

Assessment Outcome – D2 Task 5 - D2.1 – Evaluate to what extent a selected business

is likely to be affected by changes in the economic environment

Assessment Tasks

Development of Internal Structures Functional Areas

Business Activities

Business Strategy

Internal Structures

Functional Activities Stakeholders