Unit 38 P1
Unit 38- P1- Explain the effects of changes in the economic environment in a selected business.
Introduction
In this report I am going to explain the effects of changes in the environment for JLR.
What is the business cycle? Explain all five stages of the business cycle?
Growth
In 2008 Tata Motors acquired Jaguar and Land Rover from Ford. Tata Motors merged the two marques into a single company and officially joined together in 2013. Their sales and profits have risen every year. At the start of the merger some people might have considered this a very large gamble because a lot of experts tipped the idea to fail. At the start of the merger JLR would have been growing and gaining publicity.
Boom
After JLR would have grown to a decent level they would then experience a period where everything is going right for them. This is known as a ‘boom’. This is the period in the business cycle where JLR would be taking in the most income and it is also the period where they would be hiring employees and would be creating new business ideas or thinking about diversifying into new areas.
Downturn
When JLR have finished booming and doing well they would end up going down and earning a bit less money. This could be because people are not interested in the businesses cars at this present time in the year or because JLR have spent a lot of money recently and do not have anything to show for it. A downturn is a good example of things getting worse before they get better again. This is identified by a fall in GDP in one quarter.
Recession
The dictionary definition for a recession is “a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.” During a recession a business will be producing fewer products and will not be hiring new staff, in fact they would probably be making some of their employees redundant because they would not be needed as JLR would be producing fewer products. A recession could be down to an increase in taxes or it could be that one of JLR’s biggest clients has left them. http://www.google.co.uk/search?safe=vss&site=&source=hp&q=define%3A+recession&oq=define%3A+recession&gs_l=hp.3..0l10.19603.22764.0.22984.19.17.1.0.0.0.186.1807.12j5.17.0.msedr...0...1c.1.62.hp..1.18.1826.xb2eOv3D_5A
Recovery
The recovery is when the business is basically working their way back up from the recession. In this time JLR would be making business plans and trying to improve and change what they are already doing so that they attract more and more customers.
Economic Environment – Scenario’s
Explanation – Link to JLR.
An increase in GDP
GDP stands for ‘gross domestic product and it is the monetary value of all of a business’ finished products. An increase in GDP for JLR would mean that they are increasing the amount of production that is taking place in their business and would mean that their customers would be spending more as a result.
A decrease in GDP
A decrease in GDP for JLR would mean that they would be earning lower profits and their share prices would also have decreased meaning that a lot of them would have been sold. Also the JLR would be producing less products.
Trade Surplus
Balance of payments is the total value between payments into and out of your business of a certain period. Trade surplus is where a business’ export exceeds its imports. Trade surplus represents a net inflow from foreign markets. A decrease in trade surplus might result in policy actions specifically designed to reduce imports, including quotas or tariffs on imports or manipulation of currency exchange rates.
Trade Deficit
Trade defect is basically the opposite of Trade surplus in the fact that there imports exceed their exports.
Ripple Effect – Growth
The ripple effect Is where one action affects several different entities. The affects that growth would have on JLR would be good because it would mean that they would be able to hire more employees and produce more products and future plans.
Ripple Effect – Recession
A recession would have a bad affect on my business because it would mean that JLR would need to make some of their employees redundant and would have to hold back on their future plans.
Introduction
In this report I am going to explain the effects of changes in the environment for JLR.
What is the business cycle? Explain all five stages of the business cycle?
Growth
In 2008 Tata Motors acquired Jaguar and Land Rover from Ford. Tata Motors merged the two marques into a single company and officially joined together in 2013. Their sales and profits have risen every year. At the start of the merger some people might have considered this a very large gamble because a lot of experts tipped the idea to fail. At the start of the merger JLR would have been growing and gaining publicity.
Boom
After JLR would have grown to a decent level they would then experience a period where everything is going right for them. This is known as a ‘boom’. This is the period in the business cycle where JLR would be taking in the most income and it is also the period where they would be hiring employees and would be creating new business ideas or thinking about diversifying into new areas.
Downturn
When JLR have finished booming and doing well they would end up going down and earning a bit less money. This could be because people are not interested in the businesses cars at this present time in the year or because JLR have spent a lot of money recently and do not have anything to show for it. A downturn is a good example of things getting worse before they get better again. This is identified by a fall in GDP in one quarter.
Recession
The dictionary definition for a recession is “a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.” During a recession a business will be producing fewer products and will not be hiring new staff, in fact they would probably be making some of their employees redundant because they would not be needed as JLR would be producing fewer products. A recession could be down to an increase in taxes or it could be that one of JLR’s biggest clients has left them. http://www.google.co.uk/search?safe=vss&site=&source=hp&q=define%3A+recession&oq=define%3A+recession&gs_l=hp.3..0l10.19603.22764.0.22984.19.17.1.0.0.0.186.1807.12j5.17.0.msedr...0...1c.1.62.hp..1.18.1826.xb2eOv3D_5A
Recovery
The recovery is when the business is basically working their way back up from the recession. In this time JLR would be making business plans and trying to improve and change what they are already doing so that they attract more and more customers.
Economic Environment – Scenario’s
Explanation – Link to JLR.
An increase in GDP
GDP stands for ‘gross domestic product and it is the monetary value of all of a business’ finished products. An increase in GDP for JLR would mean that they are increasing the amount of production that is taking place in their business and would mean that their customers would be spending more as a result.
A decrease in GDP
A decrease in GDP for JLR would mean that they would be earning lower profits and their share prices would also have decreased meaning that a lot of them would have been sold. Also the JLR would be producing less products.
Trade Surplus
Balance of payments is the total value between payments into and out of your business of a certain period. Trade surplus is where a business’ export exceeds its imports. Trade surplus represents a net inflow from foreign markets. A decrease in trade surplus might result in policy actions specifically designed to reduce imports, including quotas or tariffs on imports or manipulation of currency exchange rates.
Trade Deficit
Trade defect is basically the opposite of Trade surplus in the fact that there imports exceed their exports.
Ripple Effect – Growth
The ripple effect Is where one action affects several different entities. The affects that growth would have on JLR would be good because it would mean that they would be able to hire more employees and produce more products and future plans.
Ripple Effect – Recession
A recession would have a bad affect on my business because it would mean that JLR would need to make some of their employees redundant and would have to hold back on their future plans.