unit 1 business environment ppt

1. Unit 1 : The Business
Environment
Assignment P5
Name: Tarandeep Singh ID: 40095900
Group B

2. Assignment P5
Describe the influence of two contrasting
economic environments on a business activities
within my chosen organisation

3. Introduction
In this task we will be looking at Economic Environment and the influence that they have on a businesses
activities. The firm that is chosen is Tesco and Oxfam.
The areas that are covered in this task are:
● Introduction of Tesco and Oxfam
● Explanation of Economic environment
● Explanation of Interest rate and Brexit
● Effects of Interest rate on Tesco and Oxfam
● Effects of Brexit on Tesco and Oxfam
● Conclusion & sources

4. Tesco
Tesco is the British grocery and general retailer brand
Specialising in the selling high quality products
headquartered in London, England founded in 1919 by a
person named Jack Cohen. IT is a family owned business.
Currently, the company runs more than 2,000 stores
world wide.
It’s main purpose is to supply excellent services with
authentic worldwide food products.

5. Economic Environment
● The definition of economic environment is the
environment in which businesses operate that is
dependent on the sum total of economic factors.
● Economic factors include income,
employment, inflation, interest rates,
consumer behaviour and distribution
of wealth. All of the economic factors
have effects on the economic environment, which in
turn affects the business market.

6. Interest rates and Brexit
Interest rates
● Interest rate is an economic factor that
may affect a business.
● It is the amount charged, expressed as a
percentage of principal, by a lender to
borrower for the use of assets.
● Interest rates are typically noted on an
annual basis, known as the annual
percentage rate (APR).
Brexit
● Brexit is an economic factor that may affect a
business.
● It is a term for the potential or hypothetical
departure of the United Kingdom from the
European Union.
● It is a decision based on referendum that took
place in the UK on 23rd June 2016. The topic
of referendum was whether the UK should
remain in the EU or leave and majority of
them voted to leave

7. Effects of Interest rates on
Caffè Nero
● High interest rates lower consumer income : when interest rates rise, consumers with
debts are going to have to pay more interest to lenders. This will have a negative effect on
their spending habits because the more money they have to pay to keep their loans, the less
income they will have to spend on products and services which will then affect the business.
● High interest rates will make it difficult for Caffè Nero to obtain loans because when interest
rates rise loans become more expensive.
● Interest rate fluctuations that is putting pound sterling much lower than the previous US
Dollar exchange rates is more likely to affect Caffè Nero as most of the suppliers are willing to
accept the US dollar therefore, the cost of the coffee is significantly higher than before.

8. Effects of Brexit on Caffè Nero
● Coffee prices: the financial uncertainty caused by Brexit has had a knock on effect on the
strength of the pound, which has had a negative impact on the price of imported goods
including coffee beans.
● Immigration limitations: due to brexit only highly skilled workers are likely to be granted
rights to work in the UK for an extended period of time. This will make the UK a much less
attractive destination for migrants, and as such we will have a considerably reduced number
of new European workers each year. For Caffè Nero organisation, this will have a knock on
effect at an operational level, due to the relatively high percentage of baristas from overseas.
It’s likely that the organisation will struggle to fill barista positions without increasing
salaries. This would then eat into profit margins, ultimately causing an increase in coffee
prices for the end users, and the higher staff turnover may also have a negative effect on
quality.
● Banks have threatened to move out of the UK which will again affect the firm.

9. Conclusion
In conclusion, we learn that economic factors
also play an important role in the functioning of
a business. Interest rates and Brexit are two of
the factors that I spoke about that have an affect
on Caffè Nero.

10. Sources
https://en.wikipedia.org/wiki/Caff%C3%A8_Nero
https://smallbusiness.chron.com/interest-rates-affect-businesses-67152.html
http://blog.wmf-coffeemachines.uk.com/how-will-brexit-affect-the-coffee-industry
https://study.com/academy/lesson/what-is-the-economic-environment-in-business-definition-importance-
factors.html
Class presentation