In this assignment, I will explain the effects of changes in the economic
environment on my selected business, which is Tesco. Tesco can be
affected by macro-economic factors
Business Cycle:
The business cycle involves fluctuations of irregular up and down
movements in economic activity over a period of time. During peaks, the
economy experiences growth and indicators such as employment, sales,
personal incomes and industrial production increases. On the other hand,
during recessions, the economy contracts and there is a decrease in such
indicators.
Generally, the business cycle has four main components such as:
contraction, recession, expansion and peak.
Growth or Expansion:
During expansion, consumers’ confidence rises and as a result, companies
normally take the opportunity to expand and thus their income increases.
In such periods, consumers tend to be more willing to make major
purchases. For example, customers might see this as an opportunity to
update and replace their old appliances such as fridges and cookers and
businesses selling such products might experience a sales increase.
Peak:
This is the point where the economy is maximizing its growth and
business is booming. During such times, consumer confidence rises as
normally their wages and spending increase. Therefore, due to a rise in
salary, consumers tend to spend more on treats and holidays and hotels
and holiday companies might take advantage and benefit from this.
Slump or Contraction:
This situation is an economic downturn and as such businesses tend to
stop growing. It is a phase where the economy as a whole is in decline.
Contractions normally occur after a cycle peaks and as a result, this can
be a source of economic hardships, given that people will start losing their
jobs.
Recession:
A recession can also be referred to as a trough and occurs when a
business or economy witnesses high unemployment levels and declines in
production and profit levels. As a result, businesses might try to cut down
on their number of employees and therefore there might be an increase in
the rate of redundancy. Thus, consumers tend to spend less in order to
make ends meet and due to this, some business owners might opt to
minimize expenses.
Recovery:
This is where everything starts getting better due to the increase in
consumers’ confidence of the market, average un employment, the bank
environment on my selected business, which is Tesco. Tesco can be
affected by macro-economic factors
Business Cycle:
The business cycle involves fluctuations of irregular up and down
movements in economic activity over a period of time. During peaks, the
economy experiences growth and indicators such as employment, sales,
personal incomes and industrial production increases. On the other hand,
during recessions, the economy contracts and there is a decrease in such
indicators.
Generally, the business cycle has four main components such as:
contraction, recession, expansion and peak.
Growth or Expansion:
During expansion, consumers’ confidence rises and as a result, companies
normally take the opportunity to expand and thus their income increases.
In such periods, consumers tend to be more willing to make major
purchases. For example, customers might see this as an opportunity to
update and replace their old appliances such as fridges and cookers and
businesses selling such products might experience a sales increase.
Peak:
This is the point where the economy is maximizing its growth and
business is booming. During such times, consumer confidence rises as
normally their wages and spending increase. Therefore, due to a rise in
salary, consumers tend to spend more on treats and holidays and hotels
and holiday companies might take advantage and benefit from this.
Slump or Contraction:
This situation is an economic downturn and as such businesses tend to
stop growing. It is a phase where the economy as a whole is in decline.
Contractions normally occur after a cycle peaks and as a result, this can
be a source of economic hardships, given that people will start losing their
jobs.
Recession:
A recession can also be referred to as a trough and occurs when a
business or economy witnesses high unemployment levels and declines in
production and profit levels. As a result, businesses might try to cut down
on their number of employees and therefore there might be an increase in
the rate of redundancy. Thus, consumers tend to spend less in order to
make ends meet and due to this, some business owners might opt to
minimize expenses.
Recovery:
This is where everything starts getting better due to the increase in
consumers’ confidence of the market, average un employment, the bank
