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Explain the effects, of changes in the economic environment on Wimpey Homes.

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Introduction

´╗┐Yasmin Akhtar P1: explain the effects, of changes in the economic environment on a selected business: The name of the company that I will be using for this assignment is Wimpey Homes. This graph bellow shows the business cycle: Slump is a period when output slows down due to a reduction in demand this may because less people may want to build new houses so Wimpy homes will not have many homes to build so sales will decrease and confidence may begin to suffer Recession is when wimpy homes have made less from their money that they had in their base year which was their closing balance from the year before this is because economic levels slows down and the level of output may actually decrease. Unemployment is likely to increase. Firms may lose confidence and reduce investment. Individuals may save rather than spend. Recovery is a period when the economy moves between recession and a boom. The sales starts to increase and the employment levels start to rise. Boom is a period when the economics is growing and it grows very fast and the employment levels are very high and the unemployment levels are low. The business confidence become high and they may lead to increased investment. The consumer confidence may lead to extra sending on luxury items. Growth is a period of improving economic circumstances more than the recovery. ...read more.

Middle

This would also affect these suppliers as they will be making less sales as they will have less demands form Wimpey homes to build the house as many people will not be buying new house because of him unemployment. 3) The managers of Wimpey homes should look out for is the trade surplus to see the economic recovery. This is when goods are exported more than goods imported. This means the country does not need to look for cheaper goods from foreign markets. The GDP is also a good way of indicating whether the economy is recovering from a recession as it is a measure of the national income and output for a given country?s economy. The GDP can be measured through the expenditure method: GDP = consumption + gross investment + government spending + (exports ? imports). The GDP is the value of goods and services produced in a country within one year. Economic growth refers to the increase in GDP which leads to the improvement in the standard of living for the citizens of a country. Steady growth in the GDP leads to additional earned income which leads to buyers of homes which is beneficial to Wimpey homes. The increased share prices and firms declaring profits is a good indicator. 4) In the boom period it is harder to find the right person for a new job at Wimpey homes. ...read more.

Conclusion

Input costs are the cost of direct material, labor and other overhead items for the production of houses and other properties produced by Wimpey homes. The input costs will affect the business from high and low period s of inflation. The input costs for Wimpey homes would be very high as buying the building materials to build the houses will be expensive and the costs of wages would rise. In the low periods of the inflation the input costs would be low as the building materials would be cheaper to buy and the wages for the employees would be less or just the average amount of money that they should get paid. There would be an increase in the sales of good and services in the periods of low inflation as the business and the consumer confidence is high. However the sales of goods and services would increase in the periods of high inflations. This is because consumers will not be able to purchase house as they may not be able to afford it and will refuse to take out loans and mortgages because they may not be able to pay the money back. The ability to expand will be present during low inflation as profits will be very good for Wimpey homes and they can expand into more regional areas or on a global scale. Whereas, the ability to expand during a high inflation period will not be present and will not be very good as the cost would be higher than it normally is. Unit 38 Qasim Matsemela ...read more.

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