Reezi Unit 1 D2
D2 - Evaluate how future changes in economic political, legal and social factors, may impact
on the strategy of a specified organisation.
In this task I will be evaluating how the any changes in the future on economic, political, legal
and social factors could impact my chosen organisation, which is Mercedes. For a business
to be successful they will always have to be one step ahead and should be preparing for any
changes in the future, especially if they are changes in economic, political, legal and social.
Businesses will have to come up with and create a plan or a strategy so they are ready for
the future.
Economic
Interest rates
The base interest rates in the UK is currently 0.5% that is currently held by the Bank of
England. From the Bank’s Monetary Policy Committee (MPC), all nine members voted to
keep the interest rates low, where it has been like this for about seven years now.
An increase in the interest rates can impact Mercedes. The customers who are in debts
would now have less income for them to spend, as they are actually having to pay more
interest to lenders. As a result this could decrease the amount of sales, this could impact
Mercedes as their profit would slowly but surely start to fall, this is when the business is
having a breakdown and will soon start to struggle. Another way Mercedes is affected is that
the interest rates can change from business to business, this means that companies that
produce luxury goods being Mercedes at impacted the most especially when the interest
rates are high. This is due because as most of the customers cut back on spending on non-
essentials as their income has dropped. This can impact Mercedes as most people wouldn’t
have the incentive to spend money for any Mercedes products. In the long run, this could
mean that Mercedes would loss out with a lot of profit, which could also cause the business
to decline.
However, it is a different story if the interest rates are low. This normally does encourage
customers to have the incentive to spend and invest more. Due to this, it means that the
demand for Mercedes will drive up as consumer don’t want to save money. This then could
lead to economic growth. As the consumer spend more money the businesses would start to
increase prices, this then could generate profits. From here on Mercedes would be able to
produce more goods and provide more services. After this it can increase the businesses
activity the prices will slowly offset, then gradually the price will rise. So, realistically
Mercedes would want a low interest rates only because it can change consumers minds into
spending more, which then leads to generating more profits.
Inflation rates
Currently the UK inflation is that 3.1% according to the Bank of England, which is bad as
high inflation cause the general price level to increase for good and services. This could also
impact Mercedes as a company because the inflation can disrupt the business from
borrowing money in a event of an emergency.
D2 - Evaluate how future changes in economic political, legal and social factors, may impact
on the strategy of a specified organisation.
In this task I will be evaluating how the any changes in the future on economic, political, legal
and social factors could impact my chosen organisation, which is Mercedes. For a business
to be successful they will always have to be one step ahead and should be preparing for any
changes in the future, especially if they are changes in economic, political, legal and social.
Businesses will have to come up with and create a plan or a strategy so they are ready for
the future.
Economic
Interest rates
The base interest rates in the UK is currently 0.5% that is currently held by the Bank of
England. From the Bank’s Monetary Policy Committee (MPC), all nine members voted to
keep the interest rates low, where it has been like this for about seven years now.
An increase in the interest rates can impact Mercedes. The customers who are in debts
would now have less income for them to spend, as they are actually having to pay more
interest to lenders. As a result this could decrease the amount of sales, this could impact
Mercedes as their profit would slowly but surely start to fall, this is when the business is
having a breakdown and will soon start to struggle. Another way Mercedes is affected is that
the interest rates can change from business to business, this means that companies that
produce luxury goods being Mercedes at impacted the most especially when the interest
rates are high. This is due because as most of the customers cut back on spending on non-
essentials as their income has dropped. This can impact Mercedes as most people wouldn’t
have the incentive to spend money for any Mercedes products. In the long run, this could
mean that Mercedes would loss out with a lot of profit, which could also cause the business
to decline.
However, it is a different story if the interest rates are low. This normally does encourage
customers to have the incentive to spend and invest more. Due to this, it means that the
demand for Mercedes will drive up as consumer don’t want to save money. This then could
lead to economic growth. As the consumer spend more money the businesses would start to
increase prices, this then could generate profits. From here on Mercedes would be able to
produce more goods and provide more services. After this it can increase the businesses
activity the prices will slowly offset, then gradually the price will rise. So, realistically
Mercedes would want a low interest rates only because it can change consumers minds into
spending more, which then leads to generating more profits.
Inflation rates
Currently the UK inflation is that 3.1% according to the Bank of England, which is bad as
high inflation cause the general price level to increase for good and services. This could also
impact Mercedes as a company because the inflation can disrupt the business from
borrowing money in a event of an emergency.
