Explain the terms internal environment and external environment / Assess the view that “government intervention in a market economy is necessary to improve the environments in which businesses operate”

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With the aid of examples:
1. Explain the terms internal environment and external environment
2. Assess the view that “government intervention in a market economy is necessary to improve the environments in which businesses operate”

The learning outcomes for this assignment are:

• Examine the nature of economic activity in the business market
• Understand the economic environment of business
• Evaluate the broad approaches to organisation and management

Reading Required:

For this unit you should read the following from Worthington, I., Britton, C. & Thompson (2018) The Business Environment (8th Ed). Harlow: Pearson Education.

Chapter 4 – The Political Environment
Chapter 5 – The Macroeconomic Environment
Chapter 13 – Government and Business
Chapter 17 – Governments and Markets

Chapter 4 Overview:
Politics is a universal activity, which affects the business world in a variety of ways. Understanding political systems, institutions and processes provides a greater insight into business decisions and into the complexities of the business environment. Given the increasing globalisation of markets, this environment has an international as well as a domestic element and the two are closely interrelated. Appreciating some of the key aspects of this environment and its impact on business organisations is vital for students of business and for managers alike.

Chapter 5 Overview:
Business organisations operate in an economic environment which shapes, and is shaped by, their activities. In market-based economies this environment comprises variables which are dynamic, interactive and mobile and which, in part, are affected by the government in pursuit of its various roles in the economy. As a vital component in the macroeconomy, government exercises a significant degree of influence over the flow of income and hence over the level and pattern of output by the public and private sectors. Other key influences include a country’s financial institutions and the international economic organisations and groupings to which it belongs or subscribes.

Chapter 13 Overview:
In any society multiple interactions exist between government and business and these occur at a variety of spatial levels and in a wide range of contexts. One such interaction stems from the government’s attempts to alleviate the problems of regional and/or local economic decay and decline and these tend to be the focus of governmental policies at local, regional, national and even supranational level. While such measures are formulated and administered by governmental agencies, business organisations in market economies often exercise considerable influence on government decisions. This influence can be enhanced if the views of the business community are expressed through powerful and persuasive representative organisations.

Chapter 17 Overview:
The central role played by government in the operation of the economy and its markets has been a recurrent theme of this book. Paradoxically, many of the government’s interventionist policies have been designed to remove existing barriers to the operations of free markets and to promote greater competition and choice. In some cases, the government’s strategy has been to disengage the state from some of its involvement in the economy – as in the case of privatisation. In other cases, policy changes and legislation have been deemed the appropriate course of action – as in the government’s approach to competition policy and to the operation of the labour market.For this unit you should read the following from Worthington, I., Britton, C. & Thompson (2018) The Business Environment (8th Ed). Harlow: Pearson Education.

You should also watch the short video clip on the benefits of the Market Economy. Power of the Market – The Pencil. LibertyPen. Youtube.

Assignment Instructions Notes attached to files.