What are imports/ exports?

What do we import/ export here in the UK?

BUSS 4:Assessing Changes in the

Business Environment

This section examines the relationships between organisations and their external environment. Candidates should understand the opportunities and threats created by changes in the contemporary business environment. The importance of acquiring and managing information and of communicating effectively should be considered throughout.

Specification section The Relationship between Businesses and the Economic

EnvironmentContents • assessing the effects of the following factors on business organisations:

–impact of economic factors–trends in key economic variables–globalisation of markets–developments in emerging markets• evaluating the strategies businesses might deploy in response to these changes.

Amplification Knowledge of the determinants of macroeconomic factors is not required.Candidates should be familiar with the following economic factors: the business cycle, interest rates, exchange rates, inflation, unemployment andeconomic growth.

Exchange Rates• To understand what exchange rates are

• To identify how changing exchange rates might affect businesses

• To evaluate how businesses might respond to changing exchange rates

•The exchange rate is the price of one currency expressed in terms of another

http://study.com/academy/lesson/how-currency-changes-affect-imports-and-exports.html

Summary

• A strong pound can have negative effects on exports which account for around thirty per cent of demand. • A weaker pound can provide a boost to aggregate demand, a useful

tool in lifting the economy out of a recession

Business strategies in response to £ exchange rate depreciation (the pound is weak)

• What does this mean for businesses?

• What does this depend on?

Whether they are:Businesses that export goods to other

countriesBusinesses that sell their goods in the UK,

competing against foreign importsBusiness that import fuel, raw materials and

components to use in production

• If the exchange rate of a currency rises by 10%. Consider how an exporter of goods with an elastic demand might be affected differently from an exporter of goods with an inelastic demand.

• What strategies may the first business employ?

Application

• http://www.telegraph.co.uk/finance/personalfinance/11880234/Shoppers-face-10pc-price-rises-as-weak-pound-hit-retailers-profits.html

• Where are these goods made?• What has happened to the currency?• What has been the action taken by the businesses?• Why are they doing this?• What is impacting their strategy?