Business help

Hey is anyone any good at business who can help me. Fiscal policy and how it would effect setting up a business?

thanks

Reply 1

Dr.Ugs

I did business studies at A level and got A* so hopefully I can help you :smile:

So the fiscal policy is how the government control taxation and expenditure.

It could affect setting up a business because a business needs to pay income tax and if taxes rise then it will have a negative impact on the business' profits and vise versa. This means that the business will need to devise a strategy that will mean they pay less tax (for example, their may be tax on certain foods so the business may decide not to introduce such products in it's business plan.

In terms of government spending a lot could be said but we would be going into economics! But for business, the basics could include the post code lottery and how more is spent on certain areas than others. This, in turn, will effect the socio-economic factors in a certain area. This needs to be taken into account when setting up a business as you would wanna set up in an area where there is more of your target market (i.e. a specific socio-economic group)

hope that helps!

Reply 2

Holly_____

Thanks that really helps! you dont know about how exchange rates would effect it as well do you?

Reply 3

Dr.Ugs

Original post by Holly_____

Thanks that really helps! you dont know about how exchange rates would effect it as well do you?

Well exchange rates effect imports and exports:

so if exchange rates are high, the pound is worth more than, say, the euro so less people will be likely to buy from the UK and hence exports will fall. This will perhaps determine the nature of the business (i.e. if it is in the secondary sector and focuses on production it will find it difficult to sell abroad). However, importing goods will be cheaper so you can buy your raw materials from abroad which will cost less than sourcing them from the UK. So a business setting up will need to take into account exchange rates in order to determine where to get the raw materials. (Low exchange rates would be the opposite and exporters would benefit)

:smile:

Reply 4

Holly_____

so what has the current government done to either help or not help new businesses?

Reply 5

Dr.Ugs

Original post by Holly_____

so what has the current government done to either help or not help new businesses?

Increasing tax has caused a decrease in the disposable income of the customers so less are likely to buy from new businesses as they wont be relied upon.

There is also the grant scheme that operates in universities to provide students with financial help. This will motivate more to go into further education and hence produce more skilled potential employees which in turn will provide the new business with professionals with the knowledge and the skills required to run a business which reduced the risk of failure :smile:

As you may have noticed, to do well in A level Business Studies you need to understand the dominoes rule; if one domino falls, the rest fall with it but each one by one. In turn, you talk about how one event triggers another event to happen :smile: