2 Business Environment |
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The political and economic environment in which business operates is a key determinant of overall performance.� A healthy business environment is one, which is characterised by stability, flexibility and a high quality of life.� Five areas of the business environment are considered:
Macroeconomic
stability
� macroeconomic instability affects business confidence and can have a
negative effect on investment and long term planning decisions.
Competition
� an open economy with strong domestic and foreign competition in UK
markets helps spread best practice and improves efficiency.�
It also encourages the development of new products and processes.
The labour market � modern, fast changing economies need flexible efficient labour markets in order to respond to changing circumstances and to make the best of new opportunities.� They also need to offer appropriate worker protection.
Institutional
and political environment
� business confidence and the willingness to invest is affected by the
institutional and legal framework, and the efficiency of the regulatory
system.� The latter is also
particularly important for consumer confidence.
Quality of life � a goal in itself but also a key determinant of economic performance in a globalised economy where attracting key knowledge workers is an important factor in competitiveness
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Last updated on 12 March 2002