Impacts on Thorpe Park

1784 Words Oct 23rd, 2012 8 Pages
Economic
Unemployment:
In an economic depression unemployment rates and decrease in the flow of money into the economy. Thorpe Park will find it exceedingly difficult to earn profits. As a result they reduce their staffs that lead to unemployment. But they only hire seasonal staff who only work 9 months of the year so employees will become unemployed at the end of the 9 months every year.
Unemployment is a major influence on Thorpe Park as it will affect its products for example if they are short on staff one person cannot check all the seatbelts are locked on the rides than activate it as it will take double the time to get the ride going and make the customers waiting time longer which will make them fail their objects of giving
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Since saving capital at current interest rates is a possible source of revenue, higher interest rates tend to make new ventures less attractive. For instance, if a cost benefit analysis shows that a new program within a company is likely to yield a profit of 4% per year for all money put into the program, but the prevailing interest rates are 6%, the company is better off putting their money in the bank. In this way, interest rates dictate what a business will consider a strong return on investment. Thorpe Park will not have any time to save money as every 4 years they make a new ride which may be more profitable than putting money into savings account.
Interest Rates and Investment
A third impact of interest rates on Thorpe Park is its ability to raise capital through stock the value of stock prices. When a company goes public, it sells shares of the company in the form of stock to raise capital. Subsequently, the implied value of the business is tied to the share price of the stock, and share price is tied to demand for the company's stock. When interest rates are higher, the demand for investment tends to be lower, so higher interest rates are generally detrimental for Thorpe Park stocks, and their ability to raise money through a stock offering. The reason higher interest rates are bad for stocks is that