Business environment affected by economic uncertainty

• Microeconomy


  A part of the economy that consists only of the individual consumers and firms that make up a specific market
• Macroeconomy

  The economy as a whole (including all businesses and consumers)
• The business environment includes all of the factors that can affect a business and its day-to-day running
• The business environment can be affected by microeconomic and macroeconomic uncertainty
• Microeconomic uncertainty

  • A new competitor entering a market that a business is in can lead to uncertainty over the number of customers that the original business will have in the future
  • A shortage in a raw material can lead to uncertainty for a business that needs it, as their suppliers might change their prices, which will affect the business's costs
• Macroeconomic uncertainty

  • A change in government may lead to uncertainty over the availability of government spending in the future
  • The decision of a country to leave a trade agreement with another country could lead to uncertainty over future exchange rates
  • Changes to business or employment legislation by the government can lead to uncertainty over exactly how the legislation will affect things like customers, sales and profits when the legislation comes into effect
• A business could use economic forecasting or scenario planning to try to predict the effects of uncertainty or to create plans to help deal with it