Global Business and Economics Assignment Sample

1. Introduction to Global Business and Economics Assignment Sample

The objective of this report is to explore the effects of macroeconomic and microeconomic factors on the operations and decision-making of businesses. In this report, relevant economic theories, models, and real-world examples will be provided to explain how business operations within UK and China are influenced by both microeconomic and macroeconomic environments. China has been selected as it both countries has play a crucial role in promoting global trade and investment. Further, there is huge difference in market size and population despite which UK is able to compete with China in context of economy. This has been Thereafter, the frameworks and theories of international economics, such as the Comparative Advantage Theory, restrictions and barriers to trade, rate of currency exchange, etc., will be evaluated. Real-world scenarios will be attached as examples in this discussion.

Micro- economic analysis aids in taking firm and individual decision for allocating resources under production, consumption and exchange. Macro economic analysis aids in developing economic policies which support in addressing global concern such as unemployment, inflation and GDP growth. Marketers use the PESTLE Framework to evaluate the external economic environment of a business. It has identified that UK;s is highly impacted by Brexit, increases in inflation and interest rate, regular shift in consumer’s preferences, technology adaptation and changes in legislation. Whereas China is having higher political conflicts, higher purchasing power and GDP growth, regular technology innovation and higher concern over environment are crucial factors influencing countries macro environment. On the basis of this evaluation, it has asserted that China should enter in UK market through joint venture which aids in gaining local network. (Çitilci and Akbalık, 2020). On the other hand, the internal environment of a business is explored through the SWOT analysis. After analysing the strengths and weaknesses of the business, the opportunities and threats are explored and evaluated within the external surroundings of a business (Teoli et al. 2019).

This Global Business and Economics Assignment Sample compares the UK and China’s economic environments, exploring microeconomic and macroeconomic factors, international trade, exchange rates, and market entry strategies. An Assignment writing helper can support students in understanding economic theories, PESTLE analysis, and SWOT frameworks for global business decisions.

2. Microeconomic Analysis

a. Adjustments in the Market Forces - Demand and Supply

The changes in demand and supply for a commodity help to determine the equilibrium, which tells about a specific price level at which the quantity demanded and the quantity supplied match each other. The demand has a negative gradient, implying that a rise in price lowers the quantity demanded and vice-versa. This concept plays a crucial role in formulating strategies and short term decision which could be understood through following example:

(Source: UK housing Market, 2025)

In the current times, there is a continuous increase in the housing demand within UK which is resulted in boosting prices. The above diagram depict that increase in house demand with no significant change in supply has resulted in rising overall cost of housing facility. This evaluation support government in taking accurate intervention by which such situations could be overcome (Mamdouh, Ezzat and Hefny, 2021). In this regard, UK government has offered a tax rebate of 150 pound which aids in reducing cost. Moreover, government has also focused over offering housing discount which support in stabilizing economic condition of the county.

(Source: Reduction in Housing demand, 2025)

In contract with China, it has identified that housing demand has reduced by over 20% in china which has resulted in negative shift in demand and supply curve. This situation has risen due to economic slowdown, changing customers preference to invest in real estate and youngsters are least interest in buying own houses. This define that housing demand in both countries are different that result in differential shift towards demand and supply curve.

Price Elasticity of Demand

The price elasticity of demand discusses the tendency of a change in the quantity demanded relative to the alteration in the item’s price levels. The price elasticity of demand can be inelastic, unitary elastic, perfectly inelastic, perfectly elastic, or elastic (Dela Cruz et al. 2023).

(Source:Price elasticity of Demand, 2025)

The above graph defines two different type of elasticity which includes elastic and inelastic demand. Demand of all luxury items and products are elastic as little change in the price would lead to drastic change in the demand for the product. All the Luxury organization such as Walpole, Burberry, Rolls-Royces and many more used this graph to take decision related to the pricing (Mohan et al, 2022). This helps them in establishing relationship between prices and demand based on which accurate decisions are taken.. However, producer could increase prices of necessity product which could create affordability issue within the country. To overcome the same, government uses price control techniques which aids in fulfilling the basic needs of people. For example: In UK, demined for energy sector product such as coal, nuclear power, electricity is inelastic which help producer in setting up accurate prices. Further, Chinese people are more prone towards cost conscious product due to which consumer demand changes with little increase in price.

c. Different Forms of Markets

Considering the perspectives of microeconomics, markets can be of various types depending upon the frequency of customers and firms, the type of commodity, etc. Perfect competition, monopoly, monopolistic competition, and oligopoly are the main four forms of markets observed in the real-world context (Sloman and Jones, 2020). There is a differential decision making framework which used in each type of organization. In the context of perfectly competitive market, organization is involved towards evaluating marginal revenue and cost for taking decision. In this type of market, firm usually charges a cost where MR is equal to MC. In oligopoly market, game theory of decision making is used which aids in predicting the ultimate impact of particular course of action on other firm based on which accurate decision could be taken (Al-Surmi, Bashiri and Koliousis, 2022). From the porter’s five force analysis, it has identified that both China and UK are developed countries which includes large number of competitions. This creates an issue for both countries to easily enter into new market and sustaining long term stability.

d. Social Costs of Production and Consumption

The costs to society of both production and consumption are referred to as externalities, which are the effects of business operations on other individuals who are not directly involved in the process which could be good and adverse externalities. Below graph includes total social costs include in the manufacturing of cigarette:

(Source: Social cost curve, 2025)

The area covered in red defines social cost which is the difference in marginal private cost and social cost. This evaluation support organization in considering both economic and social implication of particular project based on which most accurate decision is taken. It has been identified that social cost of cigarette manufacturing in UK is 43.7 billion pound which helps government in taking accurate decision (Social cost of cigarettes manufacturing, 2024). Due to this, UK’s government has increased tax rate on this product with the aim of reducing Cigarette manufacturing and consumptions. It has identified that Chins is biggest producer of coal based power which contributes to over 59.3%. This method aids in easily distributing power to wider target and reduces overall cost. However, this has increases pollution which negative hampers country natural environment.

Macroeconomic Analysis

a. The Circular Flow of Income

The circular flow of income framework presents a comprehensive understanding of the rotation of income or money within an entire economy. The circular flow of income framework demonstrates the process of how the money income goes from firms to households, as factor payments like wages, interests, rents, etc., and again that money income comes back from households to firms in the form of expenditure by households on those goods and services made by the firms (Sloman et al. 2019).

b. Fiscal and Monetary Policies

The implementation of fiscal and monetary policies is the response by the government to manage the macroeconomic issues, such as inflation, unemployment, etc. and facilitate economic growth. Both fiscal and monetary policies can either be expansionary or contractionary, based on the economic issue. This policy has huge impact on overall investment and purchasing decision of the Household and firm. For example: china and UK has integrated contractionary policy which aims at decreasing government spending, increasing bank reserves and interest rate. This policy guides consumer to increase saving as it help in earning higher interest and thereby reducing overall inflation issue. The following IS-LM framework is influenced by the fiscal and monetary policies, usually enforced by the government and the central bank of the country (Worthington et al. 2018).

Recently, in the UK, the cost-of-living index or consumer price inflation increased substantially and reached 11% in October 2022. In response to this situation, the UK government took various contractionary fiscal and monetary measures. The corporate tax rate was raised to 25% to reduce the spending by customers on commodities and services. The bank interest rate at which commercial banks receive loans from the Bank of England was increased to 5.25%. Also, government bonds were sold by the Bank of England (Harari, 2024). These policies worked as the inflation rate slowly decreased in the following years.

c. Multiplier Concept

The multiplier effect refers to the change in the level of national income or output through a change in the components of aggregate demand, such as expenditure on consumption, expenditure on investments, spending by the government, and net exports (Sloman and Jones, 2020). This will help in determining the potential impact of particular action on the entire sector which ultimately support in enhancing overall decision making process.

Key macroeconomic challenges:

There are several key macroeconomic challenges that impact on overall working and growth of the country which could be understood through following points:

Inflation: It refers to the situation in which prices of goods and services increases drastically that eventually impact on overall affordability and purchasing power of people (Reznikova et al, 2022). This challenge is having long lasting impact on UK’s social cost as poor people are unable to fulfill their basic need which negatively influence overall mental, physical and social well being of the people.

For example: UK’s inflation peaked at 11.1% in year 2022 which was resulted into misbalancing economic condition (UK’s inflation rate, 2025). To overcome the same, government has initiated changes in monetary policy which support in reducing cash in hand with people and thereby decreasing overall inflation. The government has raised interest rate by 5.23% which reduces overall demand in the country. However, this policy has increased social cost as business entities are demotivated to invest in growth and expansion which negatively impacted on employment.

Unemployment: It has been assessed that rise in the unemployment rate is another critical challenge impacting on overall growth of country. Higher unemployment leads to lower output, reduces disposable income, promote social instability and ultimately impact on economic growth (Goretti et al, 2021).

Currently, UK’s unemployment rate is 4.4% which controlled by developing infrastructure, establishing learning session and by promoting SMEs (UK labor market statistics. 2025). However, this policy is negatively impacting social cost as promoting SMEs without any significant support result in facing financial, human and resources constraint which influences overall growth.

Reduction in GDP: Another major macroeconomic challenge is associated with the reduction in GDP which develops economic crisis and reduces employment (Topić-Pavković, 2024). This challenge is creating long lasting impact on overall social cost as lower GDP leads to terminating jobs and enhancing poverty which impact on mental and physical well being of people.

4. International Economics

International trade refers to the transaction of goods and services between two countries in the world market. International trade is highly significant for the businesses of those two countries as it paves the way for increased revenue channels, wider access to the market, greater operating efficiency, etc. The dynamics of international trade are understandable through an exploration of the following theories.

a. The Law of Comparative Advantage

This theory defines the crucial reason behind increasing international trade which eventually boosts overall economic condition of the country. This theory stated that country generally produces particular good and services which is having lower production and opportunity cost than others. For example: China is exporting huge amount of consumer good and electronic items due to comparative advantage of producing goods at lower cost than other (Haini, 2021). This helps all the other countries in easily fulfilling their resources requirement at a reasonable cost. However, this situation has led to reducing growth potential in importing countries and increase unemployment. Further, Brexit in UK support country in taking its own decision and formulating policy which help in enhancing overall profitability.

b. Economies of Scale

The economies of scale are a microeconomic concept, which applies to the international trade as well. A firm enjoys the economies of scale when it produces a larger quantity of a commodity at a relatively lower average cost. Each organization aims at increasing demand for its product and services in international market which support in reducing per unit cost of production and thereby enhances profitability. For example: China is are capable in producing goods at lower cost and focuses on fostering innovation in its offering that boost demand and ultimately result in attaining economies of scale (Kim, 2021). UK is self sufficient in producing large number of resources which eventually reduces overall cost of production. This assists other countries in initiating trade with UK and thereby attaining economies of scale.

Absolute advantage:

It has been stated that international trade has generally boosted due to absolute advantage of some countries which eventually enhances their economic condition (Borchert et al, 2021). This theory stated that country should sustain competitive advantage over others which result into increasing demand. For example: Saudi Arabia and US sustain absolute advantage in producing oil and Corn respectively which aids in enhancing the country’s economic position.

d. Restrictions and Barriers to Trade

In international trade, various factors act as barriers, such as embargoes, quotas, tariffs, etc. Generally, a country imposes tariffs on items that are imported from other countries (Wall et al. 2015). For instance, Brexit put trade restrictions on the UK as Britain has introduced new customs checks, regulations, and non-tariff measures after leaving the European Union. This has affected the trade flows and caused supply chain disruptions for the UK and EU countries (De Lucio et al. 2024).

e. Exchange Rates

A significant factor influencing global trade is the Currency Exchange Rate. Fluctuations in the exchange rate affect the value of domestic currency, relative to other countries’ currencies. The domestic currency gets costlier when the exchange rate rises, adversely affecting the exports of goods and services by the domestic country. Again, if the currency exchange rate declines, the imports fall as well (Wall et al. 2015). The balance of payment (BoP) framework of a country depends a lot on the fluctuations of the exchange rates. The country experiences a trade deficit when the exchange rate is higher (Makin, 2002). IT has identified that UK sustain BOP deficient which could be managed by selling out foreign exchange. On the other hand, China experience BOP surplus in which country reserves all the currency which strengthen countries’ economic condition.

5. Recommendation

After critically evaluating all the micro and macroeconomic condition, it has determined that UK and china should integrated large number of strategies which are as follows:

• Both countries should emphasis over integrating latest technology and promote innovation which helps in gaining absolute advantage and thereby attaining economies of scale.
• Further, it has determined that both countries experienced huge amount of inflation which could be managed with the help of raising interest rate Countries should emphasis over reducing purchasing power through repo rate and thereby enhancing economic condition.
• Along with this, organization should emphasis over developing strong connection with local suppliers which help in overcoming trade barrier and managing growth.
• Beside this, business entities should emphasis over attracting foreign investment which helps in promoting economic growth and development.

Conclusion

In this assignment, an in-depth analysis of microeconomic and macroeconomic elements has been performed. The discussion related to demand and supply, market structures, externalities, etc., tells about the way prices of commodities are set in the market and the demand and supply changes influence the strategies of businesses. It has been determined that inflation, reduction in GDP and unemployment rate is major macroeconomic challenges which impact on overall working of the business entity. Also, macroeconomic factors such as multipliers, the circular flow of income, affect the GDP or national income of the economy, which have been demonstrated. It has been identified that Law of comparative advantages, absolute advantage, exchange rate, economies of scale and trade restriction are various factors that result in promoting overall international trade.

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