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Business Notes – Business Assignment
on BTech Business
Subject (Business)
These notes are a summary of various business aspects but
through a narrow focus on the B-Tech Business. The summary
outlines the impacts of GDP growth rate, inflation, interest
rates, employment, and government policies on businesses by
using B-Tech company as their point of focus.
A lot of things affect the market and growth of businesses.
These notes will greatly benefit students by helping them to
understand various aspects that should be keenly considered to
influence business growth as well as their decision-making
processes.
B-Tech Business The business output differs from one year to another with the variation of the economic factors in the country. For instance, the GDP growth rate of a country significantly determines the productivity of a business or an organization. B-Tech is an example of a business that is profoundly affected by economic factors such as GDP, inflation, and interest rates (Macrotrends, 2020). The report will contrast Hong Kong’s government policies, GDP, inflation, interest, and employment rates between 2018 and 2020 and how they affect the B- Tech business (B-Tech, 2020). GDP Growth Rate Gross Domestic Product (GDP) is an economic growth indicator that describes the value of economic activities in a country. The factor provides data about the country’s economy size and its performance (Macrotrends, 2020). The growth rate of the GDP indicates
the economy’s general health within a particular period. In2018, Hong Kong’s GDP was at $362.7 billion, which was an increase compared to the previous years (Macrotrends, 2020). In 2020, the GDP is likely to be lower following the effects of the Corona Virus, which may result in a recession (Macrotrends, 2020). Hong Kong GDP in 2018 Hong Kong GDP in 2020 High Low GDP growth rate affects businesses’ income in different ways. When a country is experiencing a high growth rate, companies and organizations hire more workers, thus increasing productivity, which increases income (Sodeyfi & Katircioglu, 2016). On the other hand, when the growth rate is low, firms are unable to pay higher salaries to the employees. Therefore, there is a reduced liquidity flow, which results in a low ability to purchase the products. Consequently, businesses make low profits or losses, which leads to reduced income. Ideally, the GDP growth rate determines the income of businesses in the country. Inflation Inflation is another factor that significantly affects the economic growth in a country. The rate of inflation describes the percentage at which the country’s currency devalues, thus causing an increase in the general prices of goods in the businesses. In Hong Kong, the inflation rate in 2018 was 2.41%, which is likely to increase in 2020 due to the influence of the Coronavirus (Macrotrends, 2020). Hong Kong’s Inflation rate in 2018 Hong Kong’s inflation rate in 2020 Low High
In 2020, the interest rates in Hong Kong are likely to increase since there will be a rise in the demand for money to revive businesses that will have succumbed to the Coronavirus pandemic (Harswari & Hamza, 2017). The interest rates affect businesses’ cost of borrowing, consumption, and investment (Harswari & Hamza, 2017). For instance, in 2018, the cost of borrowing was lower; thus, the company would increase the level of consumption and investment (Harswari & Hamza, 2017). In 2020, on the other hand, the cost of borrowing will be high due to the increased interest rates (Roche, 2015). Therefore, consumption in the company will reduce since there will be fewer production operations. As a result, the firm will reduce its investment levels due to the high cost of borrowing and interest rates. In 2020, the B-Tech Company will have more challenges compared to 2018 (Roche, 2015). The high rate of interest will result in an increased cost of borrowing. Therefore, the company will be unable to borrow money from banks for further investments or advancements. Additionally, the company will face challenges to pay the borrowed money since the interest will be higher than the profits. Therefore, the firm will need to improve the level of productivity to increase the ability to pay the loans. Employment 2018 Unemployment rate in Hong Kong 2020 unemployment rate in Hong Kong Low High In 2018 the unemployment rate in Hong Kong was lower than the current (Roche, 2015). In 2020, companies have reduced the operations while others have closed down as a result of the Coronavirus. Therefore, a large percentage of the workers have been laid off hence increasing the numbers of unemployed people in the country. A higher unemployment rate increases the availability of labour for the businesses and vice versa (Nunley et al., 2016).
Additionally, the high unemployment rate leads to low wages and salaries, which reduce the cost of production for the business. In 2018, the B-Tech Company needed more labour since the economic growth rate in the country was favourable for the development of the business (Roche, 2015). However, in 2020, the company will reduce the need for labour since the production will be lower than in 2018 (Roche, 2015). Government Policy Profit and income taxes are set by the government to collect revenue for businesses. High income and profit taxes result in a rise in product prices, which results in a decline in the amount of consumption (Roche, 2015). As a result, in 2020, the government will impose higher income taxes, which will reduce the spending behaviour of the residents (Harswari & Hamza, 2017). Additionally, the businesses will be forced to pay higher taxes, thus increasing the prices of the products. As a result, people will reduce their consumption rates. Higher profit taxes will reduce the ability of the B-Tech company to venture into other businesses and to expand. Therefore, in 2020, there are slim chances of business expansion in Hong Kong. Conclusion The effects of the Coronavirus pandemic have affected the operations of businesses in
- Therefore, 2020 will be a challenging period for businesses to operate. This year, the country’s GDP growth rate is likely to be lower, thus affecting the production operations in businesses. Additionally, there is a likelihood that the inflation, interest and unemployment rates will increase. Therefore, the business will be unstable, thus exposing them to a risk of high losses. Moreover, the government is likely to impose higher profit and income taxes, which will result in a stretch of business finances. Primarily, in comparison to 2018, 2020 will be a more challenging year for business owners and operators.
