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Changes That Affect the Economic Environment in Business

Decent Essays
Introduction

For this task I shall explain the changes in the economic environment on the business. This may include changes within the following,

Business cycle
Inflation
Unemployment
International trade

The business that that I will be looking at is Whitbread who own Premier Inn and Costa coffee. I will be explaining within this task how the above may affect Whitbread and its two companies Costa and Premier inn whether it is for the better or worse.

Business cycle

When looking at a graph of a business cycle we can expect to see increases and falls in production, income and expenditure of a company over time. The economy of the U.K, moves from boom to recession over time and these changes within the economy have major
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This will also affect trade as If the UK has higher inflation than competitor countries (which it isn’t now, but it has been for a lot of the last few decades) then UK prices gradually rise above imported prices. More imports are bought, so demand leaks out of the country and leaves UK businesses in a weak position such as Premier inn and Costa Coffee so overall inflation is not a good thing if it does occur and will have a negative effect on Whitbread’s businesses.

Unemployment

High unemployment rates especially within the countries that Whitbread operate their businesses, Costs and Premier inn can have a great effect on business operations as high unemployment will mean that more people will be relying on benefits for survival and as a result will be spending less, this would in turn affect businesses such as Premier inn and costa coffee as no one will be using their products and services which will then effect profits which would mean that they would have to halt growth and cut staff which are all negative factors as a result. This means when Whitbread are planning on expanding within different countries they will carefully have to look at these factors. Since consumers have lower confidence in the strength of the economy and less to spend, demand for products and services drops, and
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