Samples Business The Business Environment

The Business Environment

964 words 4 page(s)

Role of Business
It is not an understatement to claim that businesses are the backbone of the economy. First of all, they earn income which is a source of revenues for the government. Businesses also contribute to economic development by creating jobs (Edmiston) which in turn help economies grow through consumption activities. Businesses are also an engine of innovation in the economy. Businesses also contribute towards efficient allocation of scarce resources because they strive for maximum profitability. Similarly, businesses also contribute towards the economic and social development of communities in which they operate in through volunteer activities, scholarships, grants, and infrastructure development.

For-profit and non-profit
As far as the roles of for-profit and non-profit organizations are concerned, they have both similarities and differences. First of all, both are faced with the classic economic problem of scarcity of resources, thus, they have to manage their financial and human capital efficiently. In fact, non-profit organizations are increasingly becoming more business-like in management of resources due to an increase in demand for their services. For-profit organizations are usually established with the aim of making profit while in contrast, non-profit organizations are established with the purpose other than making profit such as supporting an activity in the community, working towards a social cause, or promoting the interests of the general public (Idealist). For-profit and non-profit organizations also have different relationship with the government when it comes to taxes. Unlike for-profit organizations, non-profit organizations may be exempted from tax and contributions to them may also be tax-deductible.

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Fiscal and monetary policy
The U.S. current fiscal policy as indicated by the budget outlook from the Congressional Budget Office is aimed at reducing government expenditures (Cassidy, 2013) and increasing tax revenues as indicated by President Obama’s focus on increasing tax rates on certain groups. It is feared that this fiscal policy, especially lower government spending, will hurt the economy and further slow down economic recovery. It may also lead to extremely low 1.4 percent economic growth rate this year. Other consequences may be high unemployment rate.

As far as U.S. monetary policy is concerned, the major goals are to maximize sustainable output and employment and promote stable prices (Federal Reserve Bank of San Francisco). The current Federal Funds Rate is 0.15 percent (Board of Governors of the Federal Reserve System) which is still at historically low level. This means the Fed is still keeping interest rate low to help recover the national economy. This low rate will help investment activities in the economy due to low borrowing costs which may also help improve employment rate. It also seems that the Fed doesn’t fear price levels to get out of control which may be why it has been maintaining low interest rate for quite some time now.

Accessing global markets
Population in many developed and even developing countries has been aging due to advancements in medical science and healthcare and China is no exception. Even though China is one of the major markets for cell phone, it has a sizable population of elderly people. Another demographic trend in China has been the collapse of traditional family system as more and more young Chinese have been moving away from home in search of better employment opportunities. This creates an opportunity for targeting elderly with landline phone products as whose monthly service costs are usually cheaper than cell phone. In addition, landline services are usually unlimited for fixed monthly fees as opposed to cell phone whose services usually charge by the minute. Elderly people who may prefer to stay connected to their children without worrying about costs may be an ideal market for landline phone in China. Another appeal of landline phone to elderly population in China may be that landline phones are less complicated technologically as compared to cell phone.

The company will find a local partner in China with strong nationwide distribution network since elderly may still be likely to shop for phone services old-fashioned way. The company will advertise in local print and electronic media such as TV to reach local elderly population. In addition, free home installation services as well as free equipment will be provided in exchange for a contract, usually for a minimum of one year. The company will also utilize word-of-mouth marketing by offering bonus to existing subscribers who bring in new customers.

Social responsibility
Starbucks could be credited with popularizing the quick-service coffee concept in the U.S. One of the company’s stakeholders is coffee bean growers. Starbucks is known to paying fair prices to coffee bean growers under Fair Trade agreement (Kaye, 2008). This demonstrates the company’s commitment to high standards of social responsibility and has several positive implications. First of all, it motivates coffee bean growers to continue to provide high quality product to Starbucks. Fair prices also help improve the economic circumstances of coffee bean growers and set positive example for other competitors in the industry. This practice also benefits the company because it leads to higher customer loyalty. Today, customers are increasingly concerned about the corporate social responsibility (CSR) standards of the companies they do business with.

  • Board of Governors of the Federal Reserve System. (n.d.). Selected Interest Rates (Weekly) – H.15. Retrieved April 24, 2013, from
  • Cassidy, J. (2013, February 6). U.S. Fisccal Policy is Upside Down. Retrieved April 24, 2013, from
  • Edmiston, K. (n.d.). The Role of Small and Large Businesses in Economic Development. Retrieved April 24, 2013, from
  • Federal Reserve Bank of San Francisco. (n.d.). About the Fed. Retrieved April 24, 2013, from
  • Idealist. (n.d.). “Nonprofit” vs. “Not-for-profit” — does it make a difference? Retrieved April 24, 2013, from
  • Kaye, L. (2008, May 8). Starbucks, the CSR Whipping Boy. Retrieved April 24, 2013, from