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Name: Pirshotam Parmar

CMS-ID: 315-2019

Enrollment No: MS-UG-19-011

Subject: Business Economics

Submitted to: Dr: Aamir Hussain Siddiqui


Assignment
Business Economics
1. Please conduct STEEPLE analysis for a garment firm in Pakistan.
ANSWER:

A Garment Firm in Pakistan


Garment industry in one of Pakistan's largest industries. It plays vital role in contributing to the country's
economy through its industrial production, high employment opportunities and bringing in foreign
exchange. The industry is going through tremendous changes with respect to globalization and many
economics challenges. The proportion of textile industry in the country's economy along with its
contribution to exports in terms of employment foreign exchange earnings investment and value added,
and revenue generation altogether placed the industry as a single largest manufacturing sector of the
country. The main factor to contribute to such hope developments in the garments industry.
Social Factors:
In the developing countries like Pakistan, health and education are two major issues,
which need deep and special attention of the government. The government should make the legislation
for the provision of quality education at the highly subsidized rate of fee and they should declare
education class and compulsory for every child of country. It is also the prime responsibility of the
government to provide health care facilities to each individual of the country. They should declare
health free of every citizen of Pakistan and provide costly medicine for the treatment of deadly. The
network of roads is necessary for quick travelling and also enhances the economic activities but it is not
as important as health and education or removing of power shortage.
Technological Factors:
Technological factors micro environmental factors affecting the clothing industry
include availability of resources, demand and production. For example, the scarcity of certain materials,
such as leather products, may force retail and wholesale clothing companies to sell more faux or
substitute leather products. Retailers may increase the prices of cotton clothing if they encounter
shortages of this raw material as they must pay their manufacturers more. The introduction of new
clothing styles by a competitor can shift demand away from older fashions. Hence a small clothing
manufacturer may need to discontinue certain clothing lines and produce new ones that meet the needs
of consumers. Moreover clothing companies may add more advanced equipment in their plants like
robots, which may force companies to fire some workers.
Economic Factors:
Due to poor economic policy of the government the net loss of the country is still
increasing and the government is taking interest in getting more loans. There are stories of corruption in
the government and private sector and the people on not pay taxes, which has increased the diverse
condition of the government economic policies. The prices of the garments are increasing and prices of
the things are also increasing drastically and become out of reach of the common people. Even a
vegetable and fruit vender is challenging the writ of the government. The terrorist activities have also
shaken the economic situation and government has to pay more attention over the restoration of the
people.
Environmental Factors:
There are serious issues of environment and they are becoming more
dangerous especially in the garments industrial areas. The Garment industries are not complied with the
environmental policies of the governments is not effective. The removal of solid waste is not strictly
adhered and government has shown less attention over such issues and they do not have focus over
powerful corporation system for the removal of dust and garbage from the center of the cities and they
cause smell and spread of various diseases.
Political Factors:
The political system of Pakistan is not strong enough due to corruption as government
does not effective legislation to nip the evil of corruption. The government is involved in serious cases of
money laundering and corruption, commission and other serious allegations. The law and order
situation in the country is not exemplary and there is consistent danger of terrorist attacks. The public is
not pleased with their polices, as they think differently from the masses and their priority list is not up to
the expectations of the people. The government is imposing taxes of all commodities even the eatable
products, which has grown concerns among the people.
Legal Factors:
The legal position of the country is also week at there is no focus on the legal position
and making new laws and regulations to keep the country on the right track. The growing concern over
the corruption and law and order situation is not good and no effective laws are made to grip these evils
with strong hand. It is the basic task of the parliament to make new laws and the regulations to remove
the evils from the society but parliament does not show any interest in making new laws or overcome
the crimes. The law and order situations of the big cities like Karachi is not exemplary as different nature
of crime are the daily routine matter and government does not pay attention over these issues, which
has devastated the economy of the city. The law and order situation in Punjab is also not good and it
needs immediate attention to curb the criminals from the rural areas of the south Punjab.
Ethical Factors:
This E in steeple refers to the range of social involve duties, morality, integrity, behaviour, what is good
and bad for company, employees and society as a whole. More examples of Ethical factors are affecting
business. Above mentioned external environment factors, can have both positive influence then they
are called opportunities or negative influence and then they are called threats.

2. What will happen to the equilibrium price (based on shifting of Demand/Supply) and quantity of
butter in each of the following cases:

a. A rise in the price of margarine


b. A rise in the demand for yoghurt
c. A rise in the price of bread
d. A rise in the demand for bread.
e. A tax on butter production.
ANSWER:
A. Price rises, quantity rises (demand shifts to the right : butter and margarine are substitute.
B. Price falls, quantity rises (supply shifts to the right: butter and yoghurt are in joint supply).
C. Price falls, quantity falls (demand shifts to left: bread and butter are complementary goods).
D. Price rises, quantity rises (demand shift to the right : bread and butter are complimentary
goods).
E. Price rises, quantity falls (supply shift to the left).

3. Based on Growth Vector Components (Market penetration, Product development, Market


development and Diversification), suggest suitable growth component for OLPER milk brand.
ANSWER:
Market Development is suitable growth component for Olper milk brand.
4. The following are some costs incurred by a shoe manufacturer. Decide whether each one is a
fixed cost or a variable cost or has some element of both.

a) The cost of leather.


b) The fee paid to an advertising agency.
c) Wear and tear on machinery.
d) Business rates on the factory.
e) Electricity for heating and lighting.
f) Electricity for running the machines.
g) Basic minimum wages agreed with the union.
h) Overtime pay.
i) Depreciation of machines as a result purely of their age (irrespective of their
condition).
ANSWER:
A. Variable cost.
B. Fixed cost.
C. Variable cost.
D. Fixed cost.
E. Both, { Fixed cost: if the factory will be heated and lit to the same extent irrespective of output, but
variable cost: if the amount of heating and lighting it depends on amount of the factory in
operation department, which in turn depends on output}.
F. Variable cost.
G. Variable cost (cost will be variable because the total cost will increase with number of workers ).
H. Variable cost.
I. Fixed cost.

5. Which of the following are monopolies, explain with reason:


a) Pakistan Railway;
b) Daily Jang newspaper;
c) Hairdresser of your area (Muhalla);
d) The Pakistan Postal Service;
e) Ice cream seller in the cinema;
ANSWER:
A. Pakistan Railway is monopoly, because it is the sole seller of its service, there are no close
substitutes and have a power to influence price of service, Pakistan Railways, lifeline of the country,
is a national state-run transport service. It is under the administration of federal government and its head
quarter is in Lahore. It is an important source of transportation throughout Pakistan.
B. No because there are many close substitutes and this firm has no power to influence price of product and
also there are many newspaper in the market.
C. No Hairdresser of area is not a monopoly because may be in that area there will be many competitors,
and he can’t increase the price of service.
D. Yes it is a monopoly because it is a government institute and provides service with cheap price
and any private competitor can’t compete with it.
E. Yes of course because there is only one seller in that cinema hall.
F.

6. In terms of the circular flow of income, are the following net injections, net withdrawals or
neither? If there is uncertainty, explain your assumptions.
a. Firms are forced to take a cut in profits in order to give a pay rise.
b. Firms spend money on research.
c. The government increases personal tax allowances.
d. The general public invests more money in building societies.
e. Investors earn higher dividends on overseas investments.
f. The government purchases military aircraft.
g. People draw on their savings to finance holidays abroad.
h. The government runs a budget deficit (spends more than it receives in tax
revenues).
Answer:
A. Neither, there is merely a redistribution of factor payments on the left-hand side of the inner
flow. (The only exception to this would be if a smaller proportion of wages were saved than of
profits. In this case there would be a net reduction in withdrawals.)
B. Increase in injections (investment).
C. Decrease in withdrawals (net taxes).
D. Increase in withdrawals (investment).
E. Fall in withdrawals.
F. Neither. The inner flow is unaffected. If, however, this were financed from higher taxes, it would
result in an increase in withdrawals.
G. Neither. The inner flow is unaffected. The consumption of domestically produced goods and
services remains the same.
H. Neither. An increase in government expenditure (or decrease in taxes, or both).