Análisis de la Empresa y su Entorno

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Unit 11: The Company and Its Environment 202532026 · LOMLOE " Economics · Secondary Education 01 The Company & Its Functions Value creation, risk, social, and productive functions 04 Economic Factors 02 Mission, Vision & Values Purpose, direction, and guiding beliefs 05 CSR & R&D&I 03 Environment & SWOT General/specific environment and strategic analysis Unemployment, inflation, and interest rates Social responsibility and innovation Material elaborado por Econosublime · Editado por Economarina y Economyriam · www.econosublime.com 1.

The Company and Its Functions A company is the economic unit of production that combines the factors of production — land, capital, and labour — to produce goods and services. This process is coordinated and managed by the entrepreneur under conditions of risk. Companies are essential to society because they fulfil four key functions: Value Creation Companies transform raw materials into more refined products, increasing their usefulness and creating added value — the difference between the value of the product and the value of the factors used. Wheat flour bread: each stage adds value and raises the price.

Social Function Companies generate employment, produce quality goods, offer consumer choice, and drive innovation that improves quality of life — such as IBM's first personal computer, which transformed what was previously impossible into everyday reality. Risk Function Companies pay for raw materials, machinery, and workers before knowing whether they will sell their products. They assume financial risk by investing upfront with no guarantee of revenue.

Productive Function Companies coordinate the entire production process: deciding what raw materials to acquire, which production processes to use, and what technology to implement — ensuring all tasks are completed and goods are produced efficiently. Why do we pay more for a bag of crisps at the beach than at the supermarket? Because companies provide added value — convenience, place, and time utility — that justifies the higher price. 2. Mission, Vision and Values Mission The mission is the purpose of the company — why it exists.

It should be clear, concise, and motivating, covering three aspects: Identity (who we are), Purpose (our main objective and impact), and Value (what we create for customers, employees, and shareholders). Vision The vision is a guide to where the company wants to be in an ideal future — "What do we want to be?" It must be clear, compelling, and challenging, motivating employees to work towards a common goal.

Google: "Organising the world's information and making it universally accessible and useful." Nike: "Bringing inspiration and innovation to every athlete in the world." Disney: "To be the world's leading entertainment company and provide experiences that inspire, inform, and entertain people of all ages." Amazon: "Being the most customer-focused company in the world, where customers can find and discover anything they want to buy online." Coca-Cola: "To refresh the world, inspire moments of optimism and happiness, create value and make a difference." Values A compan y's values are the fundam ental beliefs that guide its behavio ur and decision -making at every level — from day-to- day operati ons to strategi c choices.

Exampl es: Amazo n — "Custo mer obsessi on"; Google — "Innova tion"; Apple — "Simpli city" in design and user experie nce. 3. The Company's Environment & SWOT Analysis The environment includes all factors surrounding the company that affect it 4 both beneficially and detrimentally. Two environments are distinguished: General Environment (PEST) Factors that affect all companies in a region equally: Specific Environment Factors affecting companies in the same sector: Political-Legal Government policies, laws, taxes, social security. E.g., COVID lockdowns devastated gyms but boosted home fitness equipment sales. Sociocultural Education, lifestyles, consumption habits.

E.g., growing environmental awareness has driven a boom in organic product consumption. SWOT Analysis Economic Interest rates, unemployment, income levels. E.g., the 2022 war in Ukraine caused energy and raw material shortages, forcing companies to raise prices. Technological Technological change makes products obsolete faster. E.g., smartphones and 5G led consumers to demand larger screens. Customers Customer behaviour is decisive. Telepizza's 2014 "pizzalada" went viral 4 until people tried it. Know your customers. Competitors Competitors drive decisions.

When Burger King launched the "Impossible Whopper" in 2019, McDonald's responded with the "McPlant." Suppliers Supplier reliability affects operations. Late deliveries force companies to hold larger stocks, increasing warehouse costs. Intermediaries Intermediaries can hold considerable power in some sectors, directly influencing company revenues. SWOT analysis combines external and internal analysis to identify a company's Weaknesses, Threats, Strengths, and Opportunities. The external analysis (PEST + Porter's Five Forces) reveals opportunities and threats; the internal analysis (Porter's value chain) reveals strengths and weaknesses. 5.

The Economic Environment: Unemployment An unemployed person is someone over the age of 16 who is looking for work but cannot find it. Unemployment exists when the number of workers who want to work (labour supply) exceeds the number companies want to hire (labour demand). Students, retirees, and those who choose not to seek work are inactive — not unemployed. Spain's Unemployment History Unemployment Rate (%) 25 20 15 10 5 0 2002 2007 2010 2013 2019 2021 2025 Year Spain's unemployment peaked at a historic 26.94% in 2013 — over 6 million people out of work. From 2013 it fell steadily to 3.2 million (13.92%) in December 2019, before rising again with COVID-19 to over 3.5 million in 2021.

By 2025, the rate has fallen to 10.29%. Youth unemployment remains particularly severe at 24.54% in 2025, having exceeded 50% at the height of the crisis. Women's unemployment (11.50%) remains higher than men's, reflecting significant labour market discrimination. Effects of Unemployment Families in Precarity An estimated 25% of Spaniards live in relative poverty. During the crisis, millions struggled to pay rent, and grandparents' pensions supported three generations. Social Effects Unemployment discourages professional development and causes depression, stress, and emotional instability. Young people, women, and workers over 55 are the most disadvantaged groups.

Lower Quality of Life Unemployed workers represent unused labour — fewer goods produced means fewer needs satisfied. Unemployment benefit payments reached €40 billion at the crisis peak, crowding out spending on education, healthcare, and research. Impact on Businesses High unemployment reduces consumer demand, hurting sales. It raises bankruptcy risk as lenders become cautious. However, it lowers wage costs for companies, as competition for workers decreases. 6. Economic Environment: Inflation What is Inflation? Inflation is the generalised and sustained (continuous) growth of the prices of goods and services in an economy.

Two conditions must be met: the price increase must be generalised (affecting a large number of goods, not just one) and sustained (continuous over time, not a temporary spike). Spain experienced 3–4% annual inflation between 2000 and 2008. After the 2009 crisis, prices fell in several years. Since 2021, supply disruptions from COVID-19 lockdowns and the war in Ukraine pushed inflation to 8.40% in 2022, falling back to 2.44% in 2025. Inflation is called "the invisible thief" because it erodes purchasing power without anyone physically taking money from your pocket. Winners and Losers of Inflation " Losers Consequences of Inflation Loss of Purchasing Power Wages never rise as fast as prices.

Before 2000, five years' salary bought a house; now it takes eight. With the same money, we can buy fewer things. Higher Business Costs Raw materials, wages, and other factors become more expensive, squeezing profits or forcing price increases. d Winners Uncertainty Unpredictable price rises make it difficult for families and businesses to plan investments. Companies don't know future costs or revenues, so they avoid investing 4 leading to closures. Lower Demand As purchasing power falls, consumer demand drops, reducing company sales and revenues. Savers: savings lose real value as prices rise. Lenders: money repaid is worth less than when lent.

Pensioners & workers: wages and pensions rise far more slowly than prices 4 the poorest are always hardest hit. Causes of Inflation The State: tax revenues (VAT, income tax) rise with prices while fixed expenditures grow more slowly. Borrowers: repay debts in money that is worth less than when borrowed 4 the real value of their debt falls.

High Demand Low Cost Pressure Demand-pull: Excess money chasing goods Cost-push: Rising oil and energy costs Full employment fuels spending Wage-price spiral from higher costs High Cost Pressure Low Demand In 202232023, Spain experienced cost inflation driven by the war in Ukraine: rising energy and oil prices increased production costs across transport, food, and industry, triggering a wage-price spiral that proved very difficult to break. 7. Economic Environment: Interest Rates The interest rate is the percentage of interest that the borrower pays on the amount borrowed — and which the lender receives. It is, in essence, the price of money.

A 5% annual rate on a €10,000 loan means paying €500 per year. The same rate applied monthly would cost €6,000 per year — demonstrating how the frequency of application dramatically changes the total cost. Who Sets Interest Rates? In the eurozone, the European Central Bank (ECB) sets the benchmark interest rate at which it lends to commercial banks. Banks then lend to households, businesses, and governments at a higher rate — enough to make a profit, but competitive enough not to lose customers to rival banks.

Banks do not charge everyone the same rate: the interest rate increases with risk (the higher the risk of non-payment, the higher the rate — known as the risk premium) and with term (longer repayment periods command higher rates). ECB & Federal Reserve Rates Federal Reserve (%) ECB (%) 6 4 2 0 Effects of Interest Rate Changes When Rates Rise Banks charge more; households and businesses borrow less. Consumption falls, some businesses close, and unemployment rises. Prices fall as demand cools. Rates are raised to fight inflation — at the cost of higher unemployment. In 2022, with Spanish inflation near 10%, the ECB raised rates to 4.5%.

2000 2005 2010 2015 2020 2023 Year When Rates Fall Banks charge less; households and businesses borrow more. Consumption rises, companies hire more workers, and unemployment falls. But prices rise due to higher demand. Rates are cut during crises to stimulate the economy — at the cost of higher inflation. After 2008, the ECB cut rates to 0%, making mortgages cheaper and boosting construction and employment. Interest rates are a powerful tool that can affect whether your parents keep their jobs, whether you can afford a mortgage, and whether businesses invest or close. Pay attention to economic news. 8.

Corporate Social Responsibility (CSR) In 2015, Volkswagen was found to have equipped nearly 11 million cars with software to cheat emissions tests. One study concluded this would cause approximately 1,200 premature deaths in Europe, equivalent to 13,000 years of life lost and €1.9 billion in costs. This is the opposite of social responsibility. While companies create jobs and generate wealth, they can also cause pollution, deplete natural resources, and commit labour abuses. These are social costs (negative externalities) — costs caused by companies but borne by all of society without the company paying for them.

Corporate Social Responsibility (CSR) is the voluntary behaviour of companies to ensure their actions have positive repercussions on society — going far beyond simply complying with the law. Economic Responsibility Generating wealth, creating jobs, and paying taxes. Responsible companies contribute to the economic development of their local and national environment. Compliance Social Responsibility Providing decent working conditions, informing consumers, respecting supplier agreements, complying with laws, upholding gender equality and human rights. E.g., Telefónica's "Solidarity Holidays" programme sends employees to help underprivileged children abroad.

Environmental Responsibility Reducing pollution, consuming less energy, managing waste properly, and creating eco-friendly packaging. E.g., Mercadona's "eco-efficient store" uses heat recovery systems, occupancy sensor lighting, and product reuse programmes.

Ethical Leadership Follow laws and regulations Strategic CSR Use responsibility to boost brand Act responsibly because it's right Many companies — including Inditex (€35M+ in social programmes in 2015, benefiting 1M+ people in 44 countries), Agbar (citizen science and water conservation), and Procter & Gamble Spain (work-life balance and female talent promotion) — demonstrate that CSR can be both ethically sound and commercially advantageous. 9. What is R&D&I? R&D&I (Research, Development and Innovation) is the expenditure by companies or the State on research to acquire knowledge that can be applied to improve products or production processes.

It is considered key to technical progress and the continued advancement of society. The Three Activities 1 Research Basic research increases scientific knowledge without a specific practical application (e.g., how bacteria affect the human body). Applied research seeks a practical application of findings (e.g., searching for a cure for the common cold). 3 Innovation 2 Development Activities that leverage research knowledge to develop new products or production processes (e.g., ibuprofen). Why R&D&I Matters Generates Knowledge Research increases scientific understanding, enabling society to master its environment.

Solves Social & Environmental Problems R&D&I can address pandemics, water scarcity, and climate change. Improves Quality of Life New medicines, farming techniques, and energy sources solve real human problems. Increases Productivity & Competitiveness Innovation improves production processes, reduces costs, and opens new business opportunities Introducing new things to the market: product (tablets, touchscreens), process (Amazon robots for faster delivery), marketing (Coca-Cola personalised name packaging), and organisational (teleworking, four-day workweek). in global markets.

Case Study — Hyperloop: The world's first full-scale capsule, Quintero One, was built in El Puerto de Santa María, Cádiz, by the company Carbures. At 32 metres long and 5 tonnes, it carries 30–40 passengers. Travelling at over 1,200 km/h inside near-vacuum tubes with magnetic levitation, it could take passengers from Madrid to Barcelona in 30 minutes (vs. 8 hours by train). Virgin Hyperloop aims for safety certification by 2025 and commercial operation from 2030. Learning Activities: Situación de Aprendizaje This unit's learning activities are designed to apply theoretical knowledge to real-world contexts, developing analytical and critical thinking skills across all topics covered.

Activity 1 · Utility & Value Creation Analyse the type of utility (form, place, time) created by companies such as a pizzeria, Mercadona, Amazon, and a vending machine. Reflect on 1 why the same bottle of water costs 20c at a supermarket, €1 at the gym, €1.50 at a bar, and €4.50 on a plane. Identify the functions performed by "Bonitos Peluditos," Pepito's dog grooming salon. Activity 2 · Analysing the Environment 2 Apply PEST analysis to four COVID-19 news articles (economic impact on families, changing consumer behaviour, government restrictions, and digitalisation). Perform a full SWOT analysis for Lucia's sweet shop on a busy commercial street, and for a well-known company of your choice.

Activity 3 · Unemployment 3 Compare unemployment data across European countries by gender. Comment on Spain's unemployment rate graph (2002–2025). Analyse a Forges cartoon about unemployment's social effects and reflect on the personal and national consequences of high unemployment. Activity 4 · Inflation 4 Watch the "Uncle Scrooge and Inflation" video. Analyse winners and losers in inflation scenarios. Conduct a classroom market experiment with demand-pull and cost inflation cards to observe how printing money or rising costs affect transaction prices. Activity 5 · Interest Rates 5 Determine which borrowers pay higher interest rates and why.

Analyse an ECB rate hike news article and explain the chain of effects on households, businesses, and the broader economy. Activity 6 · CSR & R&D&I 6 Classify CSR initiatives of Mercadona, Inditex, Telefónica, Agbar, and P&G Spain by area (economic, social, environmental). Analyse the Hyperloop case study and discuss why R&D&I investment is essential for companies and society. Final Product: Choose any company and complete a full PEST + SWOT analysis using online research. Find two news items for each PEST factor, classify them as opportunities or threats, then complete the SWOT matrix. Template available at www.econosublime.com · Videos: youtube.com/c/econosublime