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GCSE Applied Business Strand D Theory

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IDENTIFY THE MAIN EXTERNAL INFLUENCES ON THE TWO CHOSEN BUSINESSES, INCLUDING REFERENCE TO COMPETITORS, ECONOMIC CONDITIONS AND ENVIRONMENTAL CONSTRAINTS ASDA STORES LTD COMPETITORS As a large national supermarket, Asda has many competitors including Safeway plc, Wm Morrison Supermarkets PLC, J Sainsbury plc, Sommerfield plc and Tesco plc. These are all grocery retailers and Asda has many other competitors. http://www.competition-commission.org.uk/rep_pub/reports/2003/481safeway.htm#summary tells us that Tescos is the largest grocery retailer in the UK with Sainsbury's 2nd, Asda 3rd, Safeway 4th, Sommerfield 5th and Morrison's 6th. Asda faces national and local competition. National Competition refers to any business competing for the same customers, within the same nation. In Asda's case any businesses competing for the same customers within the UK (England Scotland and Wales); national competitors are the main competitors for Asda. Tescos, Sainsbury's, Safeway, Sommerfield and Morrison are the five main national competitors for Asda. Any supermarket in the UK is a potential competitor of Asda; however the larger supermarkets pose a bigger threat and therefore are bigger competitors to Asda. Local Competition refers to any business competing for the same customers, locally (within a few kilometres). Co-op, Tesco, Sommerfield, Sainsbury's, Morrison's, Rajas, Spar, Iceland, Waitrose, Costcutter, Bacton stores and Mace stores are just a few of Asda's local competitors. ...read more.


A monetary policy is when governments use interest rates to try to manage the economy. Interest rates are lowered making it cheaper to borrow money, but people do not get as much interest when they put money in the bank. This makes individuals and businesses borrow and spend more and save less. This increases spending and the same effect as in expansionary fiscal policies occur. Because individuals are spending more, there is a greater demand for products and so businesses will need to employ more workers to meet these demands. This decreases the unemployment rate, but increases the risk of inflation. Interest rates The GCSE Applied Business FOR OCR book, tells us "Interest is the cost of borrowing money" and http://www.google.co.uk/search?hl=en&safe=vss&defl=en&q=define:interest&sa=X&oi=glossary_definition&ct=title tells us that interest is "a fixed charge for borrowing money; usually a percentage of the amount borrowed". However, interest is also the reward for saving money. The interest rate is usually expressed as a percentage. An example of how interest would affect businesses borrowing money is that if a business were borrowing �1000 at an interest rate of 5% then they would be charged an extra �50 by the lender. ...read more.


When there is high inflation consumers may save more and spend less. Businesses find it hard to be as competitive during times of high inflation because they are forced to either raise their prices or achieve lower profits. Inflation is another economic external influence on Asda. The current rate of inflation is 2.8%. Exchange Rates www.rba.gov.au/Glossary/text_only.asp tells us that exchange rates are "The price of one currency expressed in terms of another currency (or vice versa)". Exchange rates are the cost of foreign currency. They exchange rate changes in the UK depending on whether the UK has a strong or weak pound. The effects of the strength of the pound are shown below. Strong Pound Weak Pound �1 = 2 Euros �1 = 1 Euro Good for the British that are travelling aboard Good for foreign Tourists Bad for businesses because exports are expensive Good for businesses because exports are cheaper Good for consumers because foreign goods are cheaper Bad for consumers because foreign goods are more expensive A strong pound has both advantages and disadvantages to businesses because although exports are expensive raw materials that have been imported are less expensive. When there is a strong pound this means that usually Britain will have fewer exports and more imports. ?? ?? ?? ?? ...read more.

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