The Role of Business in the Economy


Role of Business in the Economy

Businesses have played a crucial role in the global economy. One of the roles is provision of employment opportunities in the society. This is harnessed through equal distribution of resources in various regions. Businesses have also utilized factors of production available in the economy. For instance, it uses land to develop manufacturing firms that process raw materials; uses the available labor to maximize productions and revenue outlay; and also maximizes on the raw materials endowed in a region to increase its profitability level.

According to Henderson (2004), businesses provide an access point for commodities and services through giving the surrounding population an opportunity to purchase the commodities that they need. Businesses also provide vital services like construction and plumbing.

Businesses activities create wealth. This is achieved through using the available resources and converting them into finished commodities and services. In so doing, it does not leave resources idle but ensures that it benefits the society. For instance, in production sector, plastics and metal ores are not beneficial or valuable in the economy unless when they are transformed to valuable commodities like computers ad automotives (Henderson, 2004).

Nonprofit and For-Profit Making Organizations

Business activities, whether profit or not-for-profit making organizations, maximizes the available resources— land, labor, raw materials and entrepreneurs—in realizing economic growth and development in the area of operation. Both profit and nonprofit organizations (NPO) aim at creating wealth and employment in the economy. Transformation of raw materials to finished products, as in the case with manufacturing plants, aim at creating wealth and harness economic growth and development. With effective use of available resources, business organizations create value in the society. People benefit from the services and commodities provided by the organizations.

However, there is distinct difference between profit making and not-for-profit making organization. For-profit making organizations, the focus is on increasing revenue outlay in order to maximize its profit in the economy. They use the available resources to create commodities and services, which they can sell the finished product or provide services at a much higher price in order to create high revenue outlay. This is not the case with not-for-profit making organizations. The focus is not on maximizing revenue outlay as its focus is not on profit making. NPO goals include assisting the community with necessary basic requirements like food, clothing and shelter.  The surplus revenues, realized from the operations of NPO, are used in meeting the basic demands of the community. Most of the organizations that consider themselves ‘businesses’ are focused on profit making while most organizations that consider themselves ‘non-governmental organizations’ are not focused on profit making.

Monetary and Fiscal Policy

Powell and Steinberg (2006), posit that fiscal and monetary policies are vital tools that ensure that macroeconomic objectives are realized in the economy. As the fiscal’s policy objective is to increase aggregate output and production capacity in the economy, its focus shifts on manufacturing firms and the government issues financial support in this sector. Monetary policy, on the other hand, aims at controlling inflation rates and interest rates in the economy. In a balanced and ‘healthy’ economy, the interaction between interest rates and aggregate demand realizes economic growth and reduces unemployment rate in the economy. The interaction between monetary and fiscal policies is demonstrated by IS/LM model (Powell and Steinberg, 2006). The impact of monetary policies, either favorable or unfavorable, is felt on the asset markets while fiscal policies have an effect on the goods market.  As the economy depends on the interaction between the two policies—fiscal and monetary—the interaction between the interest rates and output influences the level of production and the rate of interest in the economy.

Toyota Brand’s Marketing Strategy

The current society is characterized by stiff competition from rival industries. In the case of Toyota Company, its leading product, Toyota automotive has been performing well in the economy. This has been attributed to the product’s brand marketing strategy in the economy. Toyota automotive strategy aims at increasing the revenue outlay through advertising and developing new markets in the economy (Ferrell and Hartline, 2010). With the diverse operations and qualified personnel in the Toyota industry, the management has diversified operations and increases the marketing operations across the globe. New markets have been realized through adequate market research and advertisements on the durability and effectiveness of the brand.

Social Responsibility

Social responsibility has been a key feature in most of the successful business organizations, and Toyota Company is no exception. Supporting the activities of the community, and providing them with basic amenities have proved crucial in developing a successful business entity. Toyota has been involved in providing food products to sub-Saharan countries, and organizing sports activities in most of the regions (Ferrell and Hartline, 2010). This has ensured that the revenue outlay is increased and that the operations of the company would have been felt globally. Increasing the awareness of the Company’s operations would increase the market share of Toyota, which would have resulted to increased profitability for the organization. Increase in social responsibility has enhanced wide customer base, which has facilitated purchase of the company’s product. Currently, Toyota Company’s success is attributed to the effectiveness of social responsibility in the society.




Ferrell, O. & Hartline, M. (2010). Marketing Strategy, New York: Cengage Learning.

Henderson, D. (2004). The role of business in the modern world: progress, pressures and prospects for the market economy, London: Institute of Economic Affairs.

Powell, W. & Steinberg, R. (2006). The Nonprofit Sector: A Research Handbook, New Haven: Yale University Press.




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