P5- Describe the Influence of Two Contrasting Economic Environments on Business Activities Within a Selected Organisation

3270 Words Jul 8th, 2014 14 Pages
P5- Describe the influence of two contrasting economic environments on business activities within a selected organisation

In this task I would be talking about the influence of two economic environments on business activities. So this could be how Sainsbury’s in the UK operated during the recession and the boom period. The UK is in the growth economic environment and this means the country was before in the recession economic environment and now it is growing. This does not mean they are a rich country compared to China.
Economic
• Importance of stability- stability is when business people can make predictions for the short and the medium term about likely demands for their products in the near future. For example, Sainsbury’s might
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Sainsbury’s would be affected if there are changes in the economic environment and these are growth, recession and ripple effect. Growth is when more products are being produced and consumed. This also means the incomes are rising. So in Sainsbury’s, if customers buy more goods and services, the production department would make more products than the usual so that they can sell more products. This also means that the company would employ workers and invest in equipment such as machinery where they would use this to make more products. When Sainsbury’s sell more products to customers this means the business is making a profit. Recession is when there is a decline in the GDP and this also means there is an increase in the unemployment rate. Recession will take place if customers tend to save more money than to spend it on goods and service. Also if producers tend produce fewer goods can also result to recession. If Sainsbury’s were in recession they would not be affected as other business however at this state customers would save more money than buy more goods and services and the production department might not make goods to sell, and this means they would lose some of their profit. The ripple effect is the beginning of the recession and if Sainsbury’s were in this state they would not suffer badly as other business because people still need to shop in one of the big companies. However some customers may tend to save money and buy less goods and producers will make less