Trends And Fluctuations In The Uk Economy Economics Essay

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Medium-scale businesses classically result from the slow and steady improvement in the small scale companies. When the businesses earns good profit then the earning of the revenue making the capital needed for the improvement in the building of the company along with the equipment and the employers. In the context of the United Kingdom the small scale companies employs the staffs less than 100, as the business achieve target then the employers increases less than 250 at this time the business class is called Medium sized industries.

The Unilever is the one of the largest Multinational Company that runs its business throughout the UK from every medium sized company. The products made by this company are includes foods, beverage, cleaning agents and the personal care products. This coursework below discuss on one of the medium sized company that manufacture the personal care product of Unilever Company.


The Unilever company mainly target in the manufacturing the food items, beverage items cleaning products and the personal care products. The company is run in both the small sized business and the medium sized business according to the population density. Some of the popular products of these companies are Dove soap, Vaseline, Sunsilk, Lynx spray, Surf are all household products , Alsa , Annapurna, Ben and Jerry's are food products.

Moving on the definition of economics "A social science teaching how individuals, governments, firms and nations make choices on assigning rare resources to satisfy their unlimited wants".

Economics are divided into two types depending on the nature of business performed one is Macroeconomic which is related with the aggregate economy and the other is Microeconomics which is related with individual customers.

Economic related with other science and business activity

The social science that mainly deals with the production, distribution and the consumption of good and services is known as Economics. The economics was earlier known as the political economy which was then change to 'economics' by the economists. The economic on the short term is called 'economic science' which avoids the narrow political interest meaning as similar as mathematics, ethics and so forth.

Economics links to businesses because it shows how to make options that a business can get the higher amount or revenue with the least amount of expenses. Economic teaches business how to calculate formulas and much other useful information so it can help in succeeding a business. An example of formula can be like; it can affect the demand of a product and a product you buy along with it, if the price of that product is decreased even by a little fraction.

Economics is a field of knowledge that studies the production, distribution and consumption of goods and services. It is closely combined with mathematics and social sciences, which can be defined as studies of the society. While mathematics primarily provides the tools for economics, such as regression analysis, social sciences give it the data with which to operate. For example, history provides economics with plenty of historic production data to analyze. There are many subjects that are related to economics, such as history, geography, sciences and philosophy.

Differences between Macro and Micro economics

Economics is classified into two different areas of study: microeconomics and macroeconomics. Microeconomics views the smaller frame and focuses more on basic theories of demand and supply and how an individual business decide to produce something and how much it got to be paid for it. Microeconomics would be of interest to People who want to start their own business or who want to mark the price of that particular product or services.


The branch of economics that analyzes the behavior of market of every customer and organization in an attempt of decision making process of those organization and household. It is involved with the interaction between the particular purchasers and sellers and the factor that has an influence option made between the purchasers and the selling person. Micro economics particularly focuses in the modes of supply and demand and the way of determining the price and outputs in that particular individual markets. E.g. any beverages industry.


Macroeconomics branch of economics that deals with the performance, structure, behavior and decision making of the whole economy. It examines the changes in unemployment, national income, rate of growth and gross domestic product. It is basically focused on the movement and trends in the economy as a whole.

Types of economy

There are mainly three economic systems:

Market economy: market economy also called as capitalistic economy is defined as the economy in which the consumers decides which goods and services they need and which business provides those. Most business in marked economy is sole ownership or privately owned. The government has a least control over this economic system. The only role of government is to figure out that the market is stable enough to handle its economic activities in a proper way. Due to the less government involvement the consumers are free where and how to spend their money. So in real world there is a least existence of pure form of market economies.

Command economy: command economy also called as planned economy is defined as the economy where the government owns most of the businesses. The government allocated the quantity to be produced and where and how those products should be produced. Here all the power is in the governments hand in making major decisions regarding the production and distribution of goods and services. Overall this economy consists of state-owned enterprise which has all the empowerment on the government hand. In this economy system there is a lack of flexibility that exists in the market economy and the reason of which there is a slower change in consumer needs ad fluctuating patters of supply and demand.

Mixed economy: it is the economic system in which both the government and private sector directs the company, reflecting both the characteristics of the market economy and command economy. Here both the sectors play an important role in effective decision making of the country. He in case of mixed economy there is flexibility in some areas and the government also has control on the others so it includes both capitalist and socialist economic policies and frequent arises in society which needs to balance a wide range of political and economic views.

Market economy impact on business

Market economy has been highlighted lately. Many people feel that it's an unclear picture and becoming worse consequently, while others point to figure that shows the economy performing better than it had ever done. Viewing the problem is reality and with the extreme amount of negativity enclosing the economy, it is concerned with time before it becomes a self-fulfilling prediction. For the owners of business, it works in this way; as the amount of foreclosures increases and banks begin to face greater losses, they have to reduce the amount of capital they can provide loans to small firms. These results in operating less capital for small businesses, which on the other hand must reduce overhead and often, put on hold on any kinds of expansion.

There are some things that Unilever Company can do to reduce the impact on an organization:

Offer more value for the similar, or a less price than other competitors

Maintaining or increasing advertising budget

Utilizing technology in reducing costs meanwhile increasing production.

Developing products/services that can utilize recurring billing, such as those on a basis of membership.

Innovating companies (commonly easier said than done)

Can be a source of resource for the organization by providing information and tools that prospects needs of them.

Relationship between Cost demand and production

For the price determination in the market the supply and the demand is very important. In an competitive market the unit price of the certain products may vary until it settles at the point where the quantity demanded by consumers will match the quality provided by manufacturer finally making an economic equilibrium of price and quality.

There are few laws that govern the supply and demand issue, they are

If demand goes higher and supply remains constant, then the equilibrium price and quantity as well goes higher.

If demand goes lower and supply remains constant, then the equilibrium price and quantity as well goes lower.

If supply increases and demand remains constant, then the equilibrium price goes lower whereas quantity goes higher.

If supply decreases and demand remains constant, then the equilibrium price goes higher whereas quantity lowers down.


Costs are those expenses faced by a business during supplying goods and services to consumers. In the short run (where there are fixed and variable factors of production) we make a distinction between fixed and variable costs. Examples of each are given below.


An economic principle that states a consumer's interest and willingness to purchase a specific good or service over a certain price. The price of a good or service increases as its demand increases and vice versa assuming that all other factors remain constant. Therefore demand is basically defines as the price of certain products value where customers is happy to pay for the price targeted by the company. As the buying cycle increases when the price decreases that means more quantity of products can be sold out when there is price decreases. Unlike price there are other factors as well were demand is related like price of substitute goods and Complementary goods.

Concept of Demand is mainly use to measure the effect of changes in process on quality demanded. As said earlier quantity of selling the products increases while there is price reduction


The production in terms of economics mainly means the inputs and finished goods means outputs. Input mainly determines the quantity of output produced. The starting point of the product is called input and its ending point is called output. The factor affecting the production quality like land, labor, capital and the entrepreneur are necessary in combination at a time in order to achieve goods.

In short term, production means creation or addition of utility. Land is the naturally obtained goods like flora and fauna, soil, air, water, minerals etc which are used in the production of the goods. The rent paid by the owner of the company to use this basic need. Similarly, human effort is very much important to make the product where they can use their technical and marketing ideas to make the products familiar in the market. Labour costs which are also called wages are paid by the company according to the rules made by the company. Finally Capital Enterprise is very important and is also called final stage for production of goods. These are human made goods like machinery, tools and building which are used for the production of products.

Finally, from Cost, Demand and Production what we can relate is that the as the cost of products decreases the customers wanting the products increases and the production of good in the company increases. For an instance, The Unilever Company manufacture LUX soap, the price is now decrease to £1 initially being £1.50 what we can see is that as price decreases customer starts buying more products that means demanding increases and the company need to produce more soap as a result production also increases.

Costs increases, Production and Demand Decreases

Costs decreases Production and Demand increases

The nature and determinants of national income

The production of total sum of goods and services within a nation over a particular period of time, which represents the total of the wages, rents, profits, interests and pension payments to the peoples living in the nation, is called National Income. National income determines the country's prosperous. National Income is obtained from the total revenues earned from the domestic corporations, wages paid to foreign and domestic staffs and the amount spend on the sales and income tax by the company or by individuals.

The Circular flow chart diagram is basic model to show the flow of products and service. It also shows the factors of production between the firms and households. In case if the government and international trade are not there then models shows that the household provide the factors of production for firms who is responsible for producing goods and services. On doing so, the factors of production in other hand receive the payment like wages and in turn use on the output of the firms. The circular diagram is shown below.

In context of UK, The Unilever Company achieving the total net value of all the products and services provided within the certain period of time, including wages, profits, rents bills, interest and pensions of staffs is the national income of the company. The company pays the revenue tax to the government.

Trends and fluctuations in the UK economy

All countries experience business cycles, where the growth rate of production, incomes and expenses fluctuates over a certain time span. The length and instability of each of these cycles tends to change over time partly because the structure of an economy develops. So we are trying to focus on on recent years what has been happening on the UK economy. Mainly there are five factors that effects the business cycle

Growth: Increase in capacity of economy to produce goods and services compared in different time period.

Peak: Maximum point at the end of economic development until start of narrowing.

Recession: Recession occur when the economic reached to the peak

Trough: Trough is the condition when the business has low level of production. The period in between the expansion and contraction in the business cycle is called tough.

Recovery: The unemployment increases but will fall rapidly as well as real gross and domestic products increases.

The business must also follow the government economic policies which are on

Full employment

Price Stability

High Economic Growth

Also depending on customers price inflation and the GDP growth the Graph obtained is shown below

economic growth and inflation

Fig. Customers price inflation and the GDP (Gross Domestic Product)

Potential impact of the international economic environment

Since, UK lies inside the European Union and hence the countries within the union will have significant influence upon international business. The law and regulation has easily passed in between the countries of EU hence the trading between these teams has less restrictive. Trade barriers between member states have been virtually eliminated and strict regulations have been applied to ensure fair competition for all.

EU also protects its member nation from the unfair competition that will effect on other. The economic power of the Union is such that it can act in this way to greater effect than an individual member would have. The priority is given to the EU nations rather than the countries outside the Europe. This will in faster economic growth for such countries. This is possible as the treat all the nation within EU as the single country.

Union will also separate the country with highest economic growth to compete with Americans Continent and the Asian Continent. Like Germany can compete with USA and France can compete with China in trading as these are two powerful countries in Economic situation.

Balance of Payment (BOP) is necessary to know the actual investment in outside and inside the nation. It is an important measure of the relative performance of the UK in the global economy.

International economic environment

Environmental regulations: The regulator estimates the economic impact under this plan. Cost benefit analysis is usually used to estimate this. These growing regulations are basically used and are not different from economic instruments. Regulations are commonly enforced by fines and they are operated as a form of tax and revenues if pollution rises above the level that is prescribed.

Quotas on pollution: The way to reduce pollution emissions should be reduced by the way of tradable emissions permits which is commonly used. This is treaded to ensure that the reductions in pollution are achieved at a least cost. If those pollution processes are implicated then there may be reduction of their own pollution load which may lead to less than paying the cost to someone else.

Taxes and tariffs on pollution/Removal of "dirty subsidies: The way of encouraging the cost of pollution can be discouraged and that can provide a "dynamic incentive" that is, the disincentive continues to operate even as pollution level falls. By reducing the pollution to a socially optimal level would set that pollution can occur only if the cost exceeds to the benefits to the society.


The Coursework has been completed with all the resources obtained from the books and the internet. The economics relation with other science and impact on business is also explained. The various types of economics and their differences is clearly mentioned and made to easy to understand for the reader. The relationship between the cost, demand and the production is also highlighted with appropriate example.

The description of national income along with its use in business is shown with diagram. The Coursework also describe the trends and fluctuations in UK economy growth with relevant graph as necessary. Proper Referencing and Citation is done to make Coursework Complete.