Changes That Affect the Economic Environment in Business

1. Explain why change happens in a business environment. You should include at least three reasons in your answer.

7. From the documents, what inferences can you make about the “disastrous effects of the business cycle” for each group below:

Nissan UK is able to use inflation in the prices of their goods, this is because they are then able to make sure that they are taking advantage of this type of opportunity their organisation, this is going to allow their company to make a profit at the time of a recession.

Because of the financial crisis business is put to test. All of the organisations who want to

P5 - Describe how John Lewis would be influenced by economic factors in a time of economic recession and economic growth in the UK economy

The UK economy is constantly changing for various reasons such as improvement in medicine and increased globalisation leading to people living longer and the UK economy becoming more diverse culturally. Whether or not it provides an opportunity or a threat to a business will largely depend upon how the management of the business decides to attempt to change because of the change of the demographics.

* The recent devaluation of Pound Sterling (£1) against the US Dollar ($1.5) means, Pret spend more money trading globally, compared to when the Pound Sterling (£1) much stronger than the US Dollar ($2). This will affect their annual profits or is likely to lead to unethical trading as they look for the cheapest sources to get their raw materials.

P1 – Explain the effects of changes in the economic environment on a selected business.

Regardless to that when UK is in a recession the sterling is weak which means that overseas visitor can get more pounds for their money and would find UK much more cheaper which encourage inbound visitor to visit the UK. A recession

The Business Cycle is “…the "ups and downs" in economic activity, defined in terms of periods of expansion or recession” (Dr. Econ). Expansion is the period in which employment, production, sales and income increase. Likewise, the contrasting contraction is when the actions above decrease. In order to keep track of the fluctuations of the US’s business cycles troughs and peaks, the National Bureau of Economic Research was created. The NBER is comprised of a group of economic researchers currently led by president James Poterba. The members are usually specialized in the field of business-cycle research, and are chosen by the president. The NBER was founded in 1920 as a private non-profit “…non-partisan organization dedicated to conducting economic research and to disseminating research findings among academics, public policy makers, and business professionals.” (http://www.nber.org/info.html). The NBER dating committee was formed in 1978, and plays an important role in the US as an examiner of broad measures of economic activity, and the most reliable source of the beginning and end of recessions in the U.S. This is accomplished by gathering as much data on a given period of economic activity.

Given the state of the recession and how it might have affected an organisation’s finances, this has a large impact on the employment relationship i.e. due to cuts there be maybe redundancies, therefore leading to loss of jobs.

During these times of change business may have to change its orgainsation, operation and its nature to deal with the challenges of each stage in the business life cycle. For business to be successful they must constantly develop and change strategies to deal with the growth of the business or the life of the business may be cut short.

1. The most significant challenge to business success you see in this rapidly changing global economy;

Timing of the business cycle is not predictable, but its phases seem to be. Many economists site four phases—prosperity, liquidation, depression, and recovery. During a period of prosperity, a rise in production leads to increases in employment, wages, and profits. Obstacles then begin to obstruct further expansion. Production costs can increase, helping create a rise in prices, and

There are many factors that need to be taken in account when opening a business. One very impactful factor is the economy. In a strong economy, disposable income is high and unemployment is low. As a result, consumers confidence during this time prompts them to purchase both essential and nonessential goods and services. Though during an economic slowdown, consumers become a lot more concerned about their expenditures and their job stability, this in turn leads to decreased revenue for businesses. Population also influences the total income for a business. In a place where the population grows very slowly, an individual has to deal with the possibility of not attracting a lot of new customers and sticking with their current market share. During this time it is very important to focus all efforts on customer service so the business does not lose current customers. Slow economy and population are not the only factors that reduce total revenue, a high unemployment rate can also drastically impact your business. Unemployment cuts down on a person 's wants, leading to decreased revenue for businesses.