WEEK 3
Consumers and Business
The role of business in the economy (cont.)
You will learn about the:
You will learn to:
Examine economic issues
- Impact of investment, technological change and ethical decision-making on a firm through:
• production methods
• prices
• employment
• output
• profits
• types of products
• globalisation
• environmental sustainability.
You will learn to:
Examine economic issues
- compare and contrast the ways that different economies deal with specific problems or issues
- identify bias in media items on economic issues affecting the local, state and national economies
Key Factors affecting Business Decisions
There are a number of important influences on the decision-making process of businesses. Both global and domestic factors can impact on a firm's decision-making, proving that the interconnections of businesses around the globe drive domestic decisions in a more closely aligned way than ever before. Globalisation boomed from the 1990s and for some time, national boundaries mattered little as companies expanded and built anywhere. Fast forward to 2020 and global supply chains have started to contract from a number of political shocks as well as Covid-19, and we're entering a different phase where business decisions are becoming regionalised instead of globalised.
In the last two decades, Australia's manufacturing industry has given way to China as that emerging economic powerhouse became the world's workshop but the impact of declining investment and technological change has given Australian manufacturers a resurgence, and we now face a new possibility of regional hubs supplying us with what we need. The impact of investment, technological change and ethical decision-making on firms is driving a new era of self-sufficiency.
In the last two decades, Australia's manufacturing industry has given way to China as that emerging economic powerhouse became the world's workshop but the impact of declining investment and technological change has given Australian manufacturers a resurgence, and we now face a new possibility of regional hubs supplying us with what we need. The impact of investment, technological change and ethical decision-making on firms is driving a new era of self-sufficiency.
Impact of Investment
Investment refers to any activity by an individual, business, organisation or government whose purpose is to increase wealth or opportunity at a later time. People can invest ingenuity, time, capital or savings. This investment can change production methods, prices, employment, outputs, profits, types of products, how globalised we become, and the environment.
Impact of Technological Change
Technology is a similar influence on changes in the economy, impacting the business environment in the same areas as investment. Technological developments are driving a fast-paced and motivated business environment to maximise opportunities.
Impact of Ethical Decision-making
Ethical decision-making is beginning to influence the bottom line and businesses are beginning to recognise the important of corporate social responsibility in their operations. Ethical decision-making also has an important role on the business environment, generating new approaches and in some areas new industries built around innovations addressing a growing demand for ethical products.
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Dani Rodrik explains in our ‘Economist in action’ video that economics is a science of trade-offs, and that we can have too much globalization. His ‘Globalization Trilemma’ shows that when economies are increasingly globalized, they must ‘give up some sovereignty or some democracy’.
How do Businesses Create?
Click on the image "The Top Forty Tax Dodgers". From the list there, choose a firm that drives Australia's economy and GDP. Research the various impacts on that firms’ decision making activities in terms of their:
- Production methods
- Prices
- Employment
- Output
- Profits
- Types of products
- Globalisation
- Environmental sustainability
