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What Effect will the Stansted Expansion have on the Surrounding Business?

Extracts from this document...

Introduction

CONTENTS Page 1 Terms of Reference 2 2 Objectives 2 3 Methodology 2 4 Primary Research 4 5 Secondary Research 12 6 Evaluation of Research 15 7 Conclusions 15 8 Bibliography 17 Terms of Reference In this investigation I will be focusing on just the business aspects and effects of the proposed expansion to Stansted Airport, and the benefits this may have to certain business and also possible disadvantages. I will not be covering any social, political or environmental problems unless they have a direct effect on a business. Any issue that does not directly affect a business will be irrelevant to this investigation and therefore will not be involved. Objectives Through this investigation I am aiming to: 1. Specify what effects to business will occur if the expansion goes ahead. 2. Asses what these effects on both directly related and unrelated businesses will be, and what the specific business's views are on these. 3. Identify why these effects may not occur, the possible reasons for this and the alternatives Methodology In order to achieve my objectives properly, much research is going to need to take place. I will conduct some of my own primary research which will involve creating a questionnaire and then asking some local businesses to complete it for me. The questionnaire will include questions which will give me information on the businesses views on the expansion's effects on demand, profit, competition, customer base, employees and employee transport. Different businesses I am hoping to receive a completed questionnaire from include banks, estate agents, hotels, taxi firms and businesses in the airport itself. The data I will collect through primary research will be quantitative data with which I can create graphs in order to compare results and form an idea of trends. It's important to remember however that these results are very time relative and could become of less value over time because situation and views will change with the changing economy and times. ...read more.

Middle

70% of the businesses believe that competition will increase through direct result of the expansion. This will be due to the increase in the amount of businesses moving into the area to cater for the increase in demand for certain products. This will mean they may have to lower prices, spend more on advertising or make their product somewhat more competitive through a specific USP, all of which will affect their overall profits. The customer will benefit however from the lowered price and greater amount of choice. The 30% who answered no (their business will not face more competition) are probably running businesses that are not catering for any need of a customer of the airport, and their market is therefore not expanding as a result of the expansion. 10. Do you believe this expansion will enable your business to expand further itself? These results show that 70% of businesses believe the expansion will allow them to expand, even if it is only slightly. This will most likely be due to the increase in demand enabling them to expand due to higher profits, or expanding out of necessity to access the larger market and cope with it. For instance computerising the system they work on so the business managers can cope with the increase in customers, and employing people to look after it. The 40% of businesses who claimed a great amount of expansion is possible are most likely directly involved with the airport and only catering for customers ad employees using it. Those businesses that expansion will not be an option open to them as a result of the expansion; will be again those businesses whose customer base is not linked to that of the airport. Evaluation of Primary Research To summarise, it is important to notice that all businesses are going to be affected one way or another by the expansion on the airport, and therefore all have a vested interest in it. ...read more.

Conclusion

This increase in business activity and success resulting from the expansion is likely to prove very beneficial for the local economy and its residents. With unemployment lowering due to the new jobs created and money circulation increasing due to increase in demand in the area, resident's disposable income will increase. Therefore those businesses not directly connected to the airport, but in fact catering for the needs of the local community, will also receive greater demand for their goods as people have more flexibility with their money to buy luxury goods. However these increases in demand for the products are only a desired prediction of the future based upon possible forecasts. The aviation industry is likely to hit a slump due to raising prices as a result of the economic downturn, oil prices and increased air travel taxation. With these many factors all contributing towards price increases, it is unlikely they will go unnoticed and therefore seriously harm their demand level. It is also worth mentioning that an important reason for the increase in taxation was the amount of empty seats on flights, and the effect this waste of space has on the environment. The very fact that there are many empty seats questions the success of introducing more flights when all the seats aren't being filled already. So is an expansion really going to be beneficial to Stansted Airport? With the inevitable increase in prices being introduced into the evidently price elastic market, and seat capacity currently not being anywhere near 100%, it seems it may be an expansion to cater for nobody. So overall I believe that the expansion of Stansted Airport, despite bringing great initial benefits to business with the initial influx of those looking for work and passengers not yet affected by the economic downturn, will eventually prove incredibly unprofitable for the airport. Over time the increase in demand that the businesses internal and external to the airport enjoyed will decline and sales will drop to previous levels, if not lower. ...read more.

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