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Business and the Economic Environment Task 1

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Business and the Economic Environment Task 1
UNIT 38
TASK 1 (P1, P2, M1, D1)
Introduction
In this assignment I will be talking about Marks and Spencer and how the economic environment could have an effect on them.
The economic environment is basically all the economic factors brought together. By saying economic factors, I mean aspects such as; employment, inflation, interest rates, productivity and wealth. All of these elements mentioned above have an influence on the buying behaviour of consumers and organisations.
P1
In terms of economic variations for marks and spencer, the best way to explain the effect it would have on them is by using the business cycle. The business cycle is basically the periodic but irregular up and down movement in economic activity, measures by fluctuations in real GDP and other macro- economic variables such as inflation, interest rates and unemployment to mention a few. In simple terms it is the ups and downs of a nation’s economy. The business cycle mainly has four cycles; recession, recovery, growth and slump which repeat themselves over time.

Recession is a period of reduced economic activity (economic growth slowing down) in which levels of buying, selling, production and employment go down. This means that during recession, Marks and Spencer would be affected because there will be a change on the buying behaviour of consumers. This will then lead to a sales revenue and profit decline for them. Due to low profits, they will cut their spending essentially cut back on hiring new employees and cut jobs for other by making them redundant in an effort to keep their business on track. They will also cut back on productions costs because consumers will cut back on spending as well which means they will not be buying as much.
Recovery is the turning point from depression to expansion. During the period of recovery, there are expansions and rise in economic activities. For Marks and spencer there will be a steady rise in output, income, employment, prices and profits.

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