Unit 38 Bethanie Brown
D1 – Evaluate the impact of changes in the economic environment on
a selected business
The type of economic changes that occur within a country can overall defined to be
within a business cycle, which refers to how economists make a judgment about the
economy through the considerations of different indicators. The use of data from past
points in time will be compared to visually observe the differences in the economy over
time, and if the country’s financial background has improved or reduced. Overall the
economic environment changes regularly, and the stages at which these changes can be
categorized in, includes: Economic Boom, Economic Slow Down, Recession and
Recovery.
Economic Boom
When the economic environment is described to be in a “boom” state, it overall refers to
a high level of economic growth. During this time, demand for products are at an all-
time high, making the potential profit of an organisation like The Body Shop, of great
increase. To meet this demand, production of products will also be increased. Due to
this, Employment levels and wages will rise, to cover the increases demand of products
desired by the consumer base, which overall means that those in work will tend to
invest more money back into the economy, overall allowing for businesses to grow and
sales/profits to be of a great increase. Because the opportunity for the sale of products
has increases, companies will source their materials at a reduced price to increase the
amount of profit available. To compensate this, importation will be used allowing for
growth between the combining of countries resources. Finally, because of the vast
amount of money being put back into the economy, it will result in the increase of
investment, which overall will make a company like The Body Shop use the extra
funding to produce new projects, that will potentially gain them a greater overall profit.
These projects can include: expanding, new marketing material, re-packaging products
and introducing them to a global market.
The size of the impact on a business, caused by an Economic boom, is considered
extremely high and of a large extent due to the fact there is a large turnover of business,
this will reflect positively on a company like The Body Shop due to the fact it has a large
impact over the sales, staff turnover and launching of new products surrounding the
business.
Economic Slow Down
Within this stage of the economy, economic growth is beginning to slow down however
the output of production remains high. This will have an impact over The Body Shop due
to the fact a decrease in profits will begin to occur, overall effecting their current
investments. Unemployment begins to slowly rise during this stage, share and building
worth begin to decrease and the decline of investment begins.
The Size of the impact on The Body Shop during this economic environment is
considered moderately small and ineffective due to the fact that this company is of a
large enough scale to be able to deal with a small decrease in stock turnover, which
tends to occur within this period of time.
Recession
D1 – Evaluate the impact of changes in the economic environment on
a selected business
The type of economic changes that occur within a country can overall defined to be
within a business cycle, which refers to how economists make a judgment about the
economy through the considerations of different indicators. The use of data from past
points in time will be compared to visually observe the differences in the economy over
time, and if the country’s financial background has improved or reduced. Overall the
economic environment changes regularly, and the stages at which these changes can be
categorized in, includes: Economic Boom, Economic Slow Down, Recession and
Recovery.
Economic Boom
When the economic environment is described to be in a “boom” state, it overall refers to
a high level of economic growth. During this time, demand for products are at an all-
time high, making the potential profit of an organisation like The Body Shop, of great
increase. To meet this demand, production of products will also be increased. Due to
this, Employment levels and wages will rise, to cover the increases demand of products
desired by the consumer base, which overall means that those in work will tend to
invest more money back into the economy, overall allowing for businesses to grow and
sales/profits to be of a great increase. Because the opportunity for the sale of products
has increases, companies will source their materials at a reduced price to increase the
amount of profit available. To compensate this, importation will be used allowing for
growth between the combining of countries resources. Finally, because of the vast
amount of money being put back into the economy, it will result in the increase of
investment, which overall will make a company like The Body Shop use the extra
funding to produce new projects, that will potentially gain them a greater overall profit.
These projects can include: expanding, new marketing material, re-packaging products
and introducing them to a global market.
The size of the impact on a business, caused by an Economic boom, is considered
extremely high and of a large extent due to the fact there is a large turnover of business,
this will reflect positively on a company like The Body Shop due to the fact it has a large
impact over the sales, staff turnover and launching of new products surrounding the
business.
Economic Slow Down
Within this stage of the economy, economic growth is beginning to slow down however
the output of production remains high. This will have an impact over The Body Shop due
to the fact a decrease in profits will begin to occur, overall effecting their current
investments. Unemployment begins to slowly rise during this stage, share and building
worth begin to decrease and the decline of investment begins.
The Size of the impact on The Body Shop during this economic environment is
considered moderately small and ineffective due to the fact that this company is of a
large enough scale to be able to deal with a small decrease in stock turnover, which
tends to occur within this period of time.
Recession
