Task 1 – P5
As part of this report I have been exploring and analysing the influence of two contrasting
economic environments on business activities.
As part of this report I will be talking about Tesco, which is a British multinational grocery and
general merchandise retailer, so contrasting economic environments such as economic growth
and recession and ripple effect would influence and affects Tesco in different ways.
The economic environment are the external factors that influence a business’ markets, it can
be split down into microeconomic and macroeconomic environment. The economy is made up
by different factors such as buyers, sellers, government, bankers that contributes with the
local or global economy, however Tesco needs a stable economic because in this way it would
not affect the products prices, unemployment, interests, customers purchase etc.
Economic growth is an increase of the capacity of an economy to produce goods and services
compared from one period to another, in simple words, growth means that there is an
increase in GDP from one year to the next. Economic growth will be good for Tesco as business
will booming, more goods are being produced and sold so profit is increasing. When this
happens, Tesco becomes a highly profitable so they could invest in new products or stores so
consumers will spend more money purchasing their products which leads to a higher demand,
Tesco would also create more job opportunities because of the growth.
Recession is when the economy declines significantly for at least a six months’ time. It means
there is a drop in the economic indicators, GDP, income, employment, manufacturing, and
retails sales. It occurs when customers stop purchasing the company products because of
manufactures and sellers reduce the product orders and laying off workers. Recession would
affect Tesco by declining the company revenues and profits, manufactures will also reduce on
hiring new employees, or freeze hiring entirely. With the purpose of cut costs and improve
their net income they are being forced to stop new products rollouts, stop the purchase of
new equipment and curtail research and development. The only positive aspect about the
recession is that it will cure inflation.
Ripple effect is what happens when there is a trend within the business environment and this
has an effect across many areas in the business environment, for example when there is
growth more people will be employed, income levels will rise and people will have more to
spend, so, it is like a chain of events that happened because of another event, in simple words
it is a single action that has an effect over several different entities.
Data GDP INTEREST INFLATION JOBLESS POPULATION
RATES RATE RATE
United 2989 0.25 0.7 5.10 65m
Kingdom
Poland 525 1.7 -0.2 8 39m
Basing on this table we can tell that Tesco is being affected in different ways because of the
different environment that the company is exposed to.
United Kingdom of Great Britain and Northern Ireland, is a severing country in Western
Europe, it is a developed country ad has the world’s fifth largest economy by nominal GDP and
As part of this report I have been exploring and analysing the influence of two contrasting
economic environments on business activities.
As part of this report I will be talking about Tesco, which is a British multinational grocery and
general merchandise retailer, so contrasting economic environments such as economic growth
and recession and ripple effect would influence and affects Tesco in different ways.
The economic environment are the external factors that influence a business’ markets, it can
be split down into microeconomic and macroeconomic environment. The economy is made up
by different factors such as buyers, sellers, government, bankers that contributes with the
local or global economy, however Tesco needs a stable economic because in this way it would
not affect the products prices, unemployment, interests, customers purchase etc.
Economic growth is an increase of the capacity of an economy to produce goods and services
compared from one period to another, in simple words, growth means that there is an
increase in GDP from one year to the next. Economic growth will be good for Tesco as business
will booming, more goods are being produced and sold so profit is increasing. When this
happens, Tesco becomes a highly profitable so they could invest in new products or stores so
consumers will spend more money purchasing their products which leads to a higher demand,
Tesco would also create more job opportunities because of the growth.
Recession is when the economy declines significantly for at least a six months’ time. It means
there is a drop in the economic indicators, GDP, income, employment, manufacturing, and
retails sales. It occurs when customers stop purchasing the company products because of
manufactures and sellers reduce the product orders and laying off workers. Recession would
affect Tesco by declining the company revenues and profits, manufactures will also reduce on
hiring new employees, or freeze hiring entirely. With the purpose of cut costs and improve
their net income they are being forced to stop new products rollouts, stop the purchase of
new equipment and curtail research and development. The only positive aspect about the
recession is that it will cure inflation.
Ripple effect is what happens when there is a trend within the business environment and this
has an effect across many areas in the business environment, for example when there is
growth more people will be employed, income levels will rise and people will have more to
spend, so, it is like a chain of events that happened because of another event, in simple words
it is a single action that has an effect over several different entities.
Data GDP INTEREST INFLATION JOBLESS POPULATION
RATES RATE RATE
United 2989 0.25 0.7 5.10 65m
Kingdom
Poland 525 1.7 -0.2 8 39m
Basing on this table we can tell that Tesco is being affected in different ways because of the
different environment that the company is exposed to.
United Kingdom of Great Britain and Northern Ireland, is a severing country in Western
Europe, it is a developed country ad has the world’s fifth largest economy by nominal GDP and
