applied economics in grade11: its effects on the phil
1.
2. Socioeconomic Factors Affecting Business and
Industry
Socioeconomic factors are characteristics that
define the quality of life in a society. They influence the
behaviours, attitudes, trends, tastes and lifestyles of
individuals. In fact, the different class segments of the
society – that is, upper class, middle class, lower class,
- are attributable to the socioeconomic factors.
Education, income and occupation are the main
parameters of socioeconomic status, according to
the American Psychological Association.
3. Income
Income is the amount of money individuals
earn from their daily economic activities, be
it employment, business or investments.
The availability of disposable income (net
income after tax) influences spending
habits. Your customers are likely to
purchase expensive or luxurious items
whenever there is an increase in their
disposable incomes.
4. Education
Education equips members of the society
with the skills and knowledge they require
to be employed in different jobs and
professions. The standards of education in
your society depend on the availability and
accessibility of educational amenities. A
society that has a well– educated
population flourishes because individuals
are employable in well–paying jobs.
5. Occupation
Occupation refers to the type of
jobs people perform by virtue of
their skills, experiences or choices.
You may be self–employed or work
as an employee of an individual or
organizational entity.
6. The different types of occupation dictate the
income earned by people in the society. High
salaried individuals are normally associated with
skilled occupations such as, doctors, engineers,
lawyers and accountants. Self – employed
individuals owning successful businesses also
generate huge amounts of income. Unskilled
occupations such as menial labor do not pay
much. Therefore, the ability of customers to afford
the different products you offer in your business
depends on types of their occupation.
7. Other Factors Affecting
Business and Industry
Aside from the different factors
mentioned above here under are
other factors affecting
businesses and industry.
8. 1.Economic Conditions- Before creating
business plans or when evaluating
existing ones it is important to ‘scan’ the
external environment. Is the environment
conductive to business you are going to
establish or there are some problems to be
encountered in the future?
9. 2. Social Environment- Social factors relate to
pattern of behavior, tastes, and lifestyles. A
major component of this is a change in
consumer behavior resulting from changes in
fashions and styles. The age structure of the
population also alters over time (currently we
have an ageing population). An understanding
of social change gives business a better feel for
the future market situation.
10. 3. Government- This is continually
updating laws in a wide range of areas,
such as consumer protection legislation,
environmental legislation, health and safety
and employment law, etc. businesses need
to take a proactive approach and be ahead
of these changes, rather than hurriedly
making alterations to products and
processes in a reactive way.
11. 4. Economic Changes- These are closely related to
social ones. The economy goes through a series of
fluctuations associated with general booms and
slumps in economic activity. In a boom nearly
changes that affect business include changes in the
interest rate, wage rates, and the rate of inflation (i.e
general level of increase in prices). Businesses will be
more encouraged to expand and take risks when
economic conditions are right, e.g. low interest rates
and rising demand.
12. 5. Political Changes- These relate to
changes in government influence. In recent
years these changes have been particularly
significant because as members of the
European Union we have to adopt
directives and regulations created by the
EU which then become part of the UK law.
Political changes are closely tied up with
legal changes.
13. 6. Changes in technology- These have also
become particularly significant in the post –
millennium world. This is particularly true in
terms of modern communication technologies.
The creation of databases and electronic
communications have enabled vast quantities of
information to be shared and quickly
distributed in a modern company enabling vast
cost reductions, and often improvements in
service
14. 7. Environmental Factors- The locations of
countries influences on the trades that
businesses do. Adding to that, many climatic
changes alter the trade of industries and the
way consumers react towards a certain offering
that is launched in the market. The
environmental factors include geographical
location, the climate, weather and other such
factors that are not just limited to climatic
16. Viability is defined as the
ability to survive. In a
business sense, that ability
to survive is ultimately
linked to financial
performance and position.
17. A viable business has great effects to
the community. Some of this are:
1.It provides community jobs in the
business sector;
2.It produces taxable income for the
community from both the business
establishment and the workers,
18. 3. Government continuously makes improvement in
the community infrastructures such as bridges,
roads, sewers, water or electric to entice other
business to invest in the community;
4. It helps in the establishment of better schools,
more business and even more jobs for its citizens.
5. It leads to improved business services to the
community;
6. It improves community life.
19. The economic contributions to the societies
in which business operate are significant.
These include payments to host governments
in the form of taxes and royalties, which in
turn directly support long – term regional and
national development, including public
services and infrastructure. Business
provides broader economic contributions to
society through salaries, procurement and
community investment.
20. Across the globe, businesses expect
resource companies to maintain
strong ethical standards. This
includes strong anti–corruption
measures, as well as transparent
disclosure around interactions with
governments, including lobbying and
the payment of taxes and royalties.
21. The HHI is a commonly accepted measure of
market concentration. It is calculated by
squaring the market share of each firm
competing in a market, and then summing
the resulting numbers. Market share is equal
to the Revenue of the Firm/Revenue of the
Industry and is actually a percentage.
However, the whole numbers of the market
share are used to compute the HHI.
22. The HHI number can range from close to zero to 10,000.
The HHI is expressed as
HHI = MS² of Firm 1 + MS² of Firm 2 + MS² of Firm 3…..
+ MS² of Firm n.
The closer a market is to being a monopoly, the higher
the market’s concentration (and the lower its competition).
If, for example, there was only one firm in an industry, that
firm would have 100% market share, and the HHI would
equal 10,000 (100²), nearly 0% market share, and the HHI
would be close to zero, indicating nearly perfect
competition. This means the market is highly competitive
and is characterized by the existence of numerous
34. 1.Changes in interest rates, wage rate and
inflation rates are example of ________ change
2. Smart phone is an example of _____________.
3. Business is _________________ when it is
economically viable, environmentally sound
and socially responsible.
4. Business contributes to government by
paying ___.
5. Business ______________ are innovators.
35. 6. These influence the behaviours, attitudes, trends,
tastes and lifestyles of individuals.
7. It equips members of society with knowledge, skills to
be employed in different jobs.
8.It is defined as the ability to survive which linked to
financial position.
9. The amount of money individuals earn from their
work, business or investments
10. Commonly accepted measure of market
concentration
