Unit 38: Business and Economic Environment P5 M3
P5 M3
Unit – 38 (Business and the
Economic Environment)
BTEC National Diploma In Business Level 3
The Date
Your Name
Your Teacher
1
,Unit 38: Business and Economic Environment P5 M3
Unit 38 – Business and Economic Environment
To:
From:
Date:
Ref:
On completion of this unit I should:
1) Understand the impact on business of changes in the economic environment.
2) Know how government spending impacts on businesses.
3) Understand fiscal and monetary policies and the effects on spending.
4) Know how the international economy affects UK business and competition.
Task 5:
a) Describe the impact of international factors on a selected business.
b) Assess the impact of changes in the global and European business environment on a
selected business.
2
, Unit 38: Business and Economic Environment P5 M3
International factors affecting UK businesses
Businesses are affected by an external environment as much as they are affected by their internal
actions and decisions. The business environment is greatly influenced by global forces and trends
that tend to define how organisations supposed to exists and participate in business world in
future. International events, both economic and political, can have significant effects on the activities
of businesses in the UK and worldwide. Understanding of the nature of these factors and events
taking place worldwide is important while developing a business strategy and is extremely curtail to
secured development of any business organisation.
European Factors
The European Union – can be described as a group of European countries that participates in the
world economy as one economic unit and operates under one official currency, the euro. EU is a
politico-economic union of 28 member states that are located primarily in Europe. The EU operates
through a system of supranational institutions and intergovernmental negotiated decisions by the
member states.
Through factors such as laws, regulations, directives, taxation, spending, etc… EU has a power to
influence any business operating within the territory of the EU. Similar to UK Parliament EU can
regulate its taxation and spending, which may affect on UK businesses just like fiscal policy by the
central government. Thus, Jaguar Land Rover feels a significant impact of EU’s actions. For
example if next year, EU decides to spend most of the funds raised from taxes for Italy’s agriculture,
construction of the UK may experience a significant squeeze. The 2020 Carbon Budget plan
implemented by the EU has a huge impact on Jaguar Land Rover’s operations as well: regulation of
carbon emission forces the company to shift towards producing more sustainable and ecologically-
friendly cars, which involves replacing production lines within most of the factories and looking for
new sources of supply for the eco-friendly materials to be used.
Due to the influence of the European Union on the UK, the directors of Jaguar Land Rover are
responsible for preparing the Annual Report and the financial statements in accordance with
applicable law and regulations. Company law enforced by the EU requires the directors to prepare
financial statements for each financial year. Under that law the directors have elected to prepare the
financial statements in accordance with International Financial Reporting Standards (IFRSs) as
adopted by the European Union. Under Company law the directors must not approve the financial
statements unless they are satisfied that they give a true and fair view of the state of affairs of the
company and of the profit or loss of the Jaguar Land Rover for that period. In preparing these
financial statements, International Accounting Standard 1 requires that the senior management of
Jaguar Land Rover:
Properly select and apply accounting policies; present information, including accounting
policies, in a manner that provides relevant, reliable, comparable and understandable
information.
Provide additional disclosures when compliance with the specific requirements in IFRS are
insufficient to enable users to understand the impact of particular transactions, other events
and conditions on the entity’s financial position and financial performance.
Make an assessment of the company’s ability to continue as a going concern.
3
P5 M3
Unit – 38 (Business and the
Economic Environment)
BTEC National Diploma In Business Level 3
The Date
Your Name
Your Teacher
1
,Unit 38: Business and Economic Environment P5 M3
Unit 38 – Business and Economic Environment
To:
From:
Date:
Ref:
On completion of this unit I should:
1) Understand the impact on business of changes in the economic environment.
2) Know how government spending impacts on businesses.
3) Understand fiscal and monetary policies and the effects on spending.
4) Know how the international economy affects UK business and competition.
Task 5:
a) Describe the impact of international factors on a selected business.
b) Assess the impact of changes in the global and European business environment on a
selected business.
2
, Unit 38: Business and Economic Environment P5 M3
International factors affecting UK businesses
Businesses are affected by an external environment as much as they are affected by their internal
actions and decisions. The business environment is greatly influenced by global forces and trends
that tend to define how organisations supposed to exists and participate in business world in
future. International events, both economic and political, can have significant effects on the activities
of businesses in the UK and worldwide. Understanding of the nature of these factors and events
taking place worldwide is important while developing a business strategy and is extremely curtail to
secured development of any business organisation.
European Factors
The European Union – can be described as a group of European countries that participates in the
world economy as one economic unit and operates under one official currency, the euro. EU is a
politico-economic union of 28 member states that are located primarily in Europe. The EU operates
through a system of supranational institutions and intergovernmental negotiated decisions by the
member states.
Through factors such as laws, regulations, directives, taxation, spending, etc… EU has a power to
influence any business operating within the territory of the EU. Similar to UK Parliament EU can
regulate its taxation and spending, which may affect on UK businesses just like fiscal policy by the
central government. Thus, Jaguar Land Rover feels a significant impact of EU’s actions. For
example if next year, EU decides to spend most of the funds raised from taxes for Italy’s agriculture,
construction of the UK may experience a significant squeeze. The 2020 Carbon Budget plan
implemented by the EU has a huge impact on Jaguar Land Rover’s operations as well: regulation of
carbon emission forces the company to shift towards producing more sustainable and ecologically-
friendly cars, which involves replacing production lines within most of the factories and looking for
new sources of supply for the eco-friendly materials to be used.
Due to the influence of the European Union on the UK, the directors of Jaguar Land Rover are
responsible for preparing the Annual Report and the financial statements in accordance with
applicable law and regulations. Company law enforced by the EU requires the directors to prepare
financial statements for each financial year. Under that law the directors have elected to prepare the
financial statements in accordance with International Financial Reporting Standards (IFRSs) as
adopted by the European Union. Under Company law the directors must not approve the financial
statements unless they are satisfied that they give a true and fair view of the state of affairs of the
company and of the profit or loss of the Jaguar Land Rover for that period. In preparing these
financial statements, International Accounting Standard 1 requires that the senior management of
Jaguar Land Rover:
Properly select and apply accounting policies; present information, including accounting
policies, in a manner that provides relevant, reliable, comparable and understandable
information.
Provide additional disclosures when compliance with the specific requirements in IFRS are
insufficient to enable users to understand the impact of particular transactions, other events
and conditions on the entity’s financial position and financial performance.
Make an assessment of the company’s ability to continue as a going concern.
3
