Unit 38 Bethanie Brown
M2 - Analyse the effects of fiscal and monetary policies for a selected business in
terms of the market it operates in
There are many effects that both fiscal and monetary policies have over a given
organisation, such as The Body Shop. It is of great importance to analyze these
effects to overall ensure that the company is able to perform successfully
through any given economic standing throughout such periods as booms and
busts.
Effects of Fiscal Policy
Fiscal Policy is mostly in association with the increase/decrease of taxes, chosen
by the government, to control the public spending within the economic
environment. These decisions that the government makes will have a vast effect
over The Body Shop for many reasons. Firstly, if the government feels as though
spending within the economy has been reduced and not meeting the
expectations needed for a balanced economic growth, the reduction in taxes will
result in the public investing into more products sold by such luxury brands as
The Body Shop. This will have an effect over the companies’ profits due to the
fact there will be an increase in sales. The increase in finical gain through this
will enable The Body Shop to invest in more product research and development
which will allow for the company to present new and profitable products into
the market industry for the public. Another positive for The Body Shop that is
associated with the result of decrease in tax is that the employment rate within
the company will increase due to the fact there can be more investment
opportunities within the HR department of the business. This is overall
beneficial for the cosmetic industry due to the fact that this will enable the
company to grow and expand, which allows for the increase in success with
regards to becoming a bigger market leader over its competitors. However, the
decrease in tax can have a detrimental effect over The Body Shop rather than a
positive one. If the company finds a large increase in demand for their products,
and they are unable to meet these needs it will result in the loss of consumers to
competitors within the industry alongside potential bad reputation surrounding
the company.
The increase in tax, set by the government, will also have an effect over The body
shop and its market. Spending by consumers during this period is found to
decrease due to the fact people tend to save rather than spend during this time.
This means there will be a decrease in demand with regards to the company’s
products. The positive outcome of this is that the company is able to see physical
evidence as to what products supplied within their company are the best sellers
and most desired amongst their consumer base. This effects the cosmetic market
that the company is in due to the fact that the company can take advantage of
this information and use it to stand out within the industry. However, during this
time it mostly has a negative effect over the company. Price battles within the
market tends to begin as a form of prosecution over potential consumers. This is
damaging to the profits and reputation of the company due to the fact they are
M2 - Analyse the effects of fiscal and monetary policies for a selected business in
terms of the market it operates in
There are many effects that both fiscal and monetary policies have over a given
organisation, such as The Body Shop. It is of great importance to analyze these
effects to overall ensure that the company is able to perform successfully
through any given economic standing throughout such periods as booms and
busts.
Effects of Fiscal Policy
Fiscal Policy is mostly in association with the increase/decrease of taxes, chosen
by the government, to control the public spending within the economic
environment. These decisions that the government makes will have a vast effect
over The Body Shop for many reasons. Firstly, if the government feels as though
spending within the economy has been reduced and not meeting the
expectations needed for a balanced economic growth, the reduction in taxes will
result in the public investing into more products sold by such luxury brands as
The Body Shop. This will have an effect over the companies’ profits due to the
fact there will be an increase in sales. The increase in finical gain through this
will enable The Body Shop to invest in more product research and development
which will allow for the company to present new and profitable products into
the market industry for the public. Another positive for The Body Shop that is
associated with the result of decrease in tax is that the employment rate within
the company will increase due to the fact there can be more investment
opportunities within the HR department of the business. This is overall
beneficial for the cosmetic industry due to the fact that this will enable the
company to grow and expand, which allows for the increase in success with
regards to becoming a bigger market leader over its competitors. However, the
decrease in tax can have a detrimental effect over The Body Shop rather than a
positive one. If the company finds a large increase in demand for their products,
and they are unable to meet these needs it will result in the loss of consumers to
competitors within the industry alongside potential bad reputation surrounding
the company.
The increase in tax, set by the government, will also have an effect over The body
shop and its market. Spending by consumers during this period is found to
decrease due to the fact people tend to save rather than spend during this time.
This means there will be a decrease in demand with regards to the company’s
products. The positive outcome of this is that the company is able to see physical
evidence as to what products supplied within their company are the best sellers
and most desired amongst their consumer base. This effects the cosmetic market
that the company is in due to the fact that the company can take advantage of
this information and use it to stand out within the industry. However, during this
time it mostly has a negative effect over the company. Price battles within the
market tends to begin as a form of prosecution over potential consumers. This is
damaging to the profits and reputation of the company due to the fact they are
