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Describe the influence of two contrasting economic environments on business activities

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Introduction

´╗┐Nagina Begum Unit 1 ? P5 I will be writing about the influence of two contrasting economic environments on the business activities. I will consider economic factors, supply and demand and global interaction. McDonalds Availability and cost of credit If McDonalds has high availability of cost and profit, then McDonald?s will have high availability and low cost. This means that people spend more and there is a higher demand for goods and services. If this is the case then McDonalds will be able to grow and will be able to expand their business. They will have higher sales revenue. Sales revenue means the income that a company receives from its normal business activities, usually from the sale of goods and services to customers. They will also have more opportunities to invest in new projects and it is easier to control costs. This could be the opposite and McDonalds will then have low availability and high cost. This means that people spend less and there is a lower demand for goods and services. ...read more.

Middle

If McDonalds has low levels of inflation then it will be easier to control costs. There will be higher levels of profitability because there will be more customers. They will have more confidence in the future to do things and they will also be able to invest in new projects in the future. Stability If the business of McDonalds is stable they will have high levels of demand, as people are spending more money. McDonalds will be more confident and optimistic in the future. Many people may also want to invest in franchises if they are able to see that they are doing well. The government will be pleased as there will be more jobs created for people who are unemployed. Also there will be an increase in sales revenue, an increased range and quality of products. McDonalds will also make more profit therefore more dividends for the shareholders. If McDonalds are in recession then all of this could change. There will be a low demand therefore not many people will be spending much money. ...read more.

Conclusion

McDonald?s have a lot of competitors therefore they have to ensure that there prices are very competitive and cheaper then the rest of the other competitors. They have to make sure that there menu appeals to the customers and the location that they occupy. There are various different substitutes for McDonald?s for example, Burger King, Kentucky Fried Chicken, and Sub-way. If the prices of McDonalds increase then customers may have to go elsewhere if there is a cheaper alternative. Also in periods of recession when there is less money to spend on goods and services customers might switch to substitute products that are cheaper. McDonald?s is not an expensive restaurant therefore it won?t be as affected then other restaurants during a recession. Some businesses actually do better in a recession as people switch from a more expensive restaurant or take- away to a cheaper one. Globalisation Globalisation involves the creation of global markets, global businesses and global products. Key aspects of globalisation include the creation of global brands; like McDonalds when people round the world see the yellow letter M they instantly recognise that it means McDonalds. The creation of global products and global advertising for example global advertising and branding for McDonalds. ...read more.

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