The business cycle is often expressed like the diagram below.
BOOM:
During the boom period, buyers find themselves paying increasingly higher prices for their goods. Profit can be made during a boom period during a boom cycle of the market but fortunes can be lost and when the boom period ends and stock prices may rise.
RESESSION:
A recession is when an economy experience slow growth. During this period, we notice that the number of unemployment rises, interest rates is high and the amount of buying and selling is reduced.
SLUMP: Slump a period of economic or financial weakness. Prices and values of things suddenly fall. Most businesses experience slumps and it happens without any warning. Some slumps happen when businesses spend a lot of money to effort on promoting their business.
RECOVERY:
Recovery is the period where the economy starts to grow again. People start spending more and business starts to grow, as more people are the confident to invest their money.
WHAT HAPPENS TO KFC DURING THE BOOM PERIOD
KFC also knowned as Kentucky friend chicken is a fast food restaurant. Their main product is chicken, which they sell in different menus. Like most businesses, the business cycle affects KFC.
During the boom period, KFC notice an increase in sale. More investors start getting interested in their business and start opening franchises. The rate of unemployment is low so a lot of people start spending more money everyday. This increase demand and also increase business confidence.
Because demand is very high, KFC will have to increase their product and also increase their prices. Because the level of demand higher than the ability of the economy to supply goods and services, KFC find it difficult as they don’t have enough resources to meet the needs of the customer. They will need to employ more people with the right skills and qualifications, and during this period, it is going to be difficult to find a suitable candidate for the job as most of them are already employed. So in order to attract people to apply for jobs, KFC needs to offer a higher salary or something similar. Doing this might get KFC suitable employees but it will also increase cost, which they will pass on to customers in a form of higher prices.
WHAT HAPPENS TO KFC DURING A RECESSION?
During this period, the economic growth is very slow and unemployment is high. KFC will notice a low sales figure as people tend to save than spend money during this period. Unemployment is likely is increase and investment will also go down. This can make KFC lose confidence. During the recession, it is likely that KFC may go bankrupt as demand is too low and not a lot of customers are buying their product. They can solve this problem by making sure that they come up with cheaper prices than their competitors for example McDonalds.
During this time, KFC might cut down on staff to cut down cost.
WHAT HAPPENS TO KFC DURING A SLUMP?
KFC goes through the same situation as it did during the recession, but much worse as the economic has reached rock bottom. Confidence suffers, demand rises and rate of unemployment also increases. Most of the time slumps can be predicted so KFC wont have no clue what is about to hit them until it actually happens. Jobs are lost.
ECONOMIC INDICATORS:
Employment Rate:
This is the percentage of people who are willing to work, but are without jobs. When employment rate starts to increase, it shows that economic stability is not good. This is one of the main economic indicators. When employment rate is high, this shows that businesses are running out of money and they can’t afford to pay all their staff, so they fire some of them in order to decrease cost. So this leaves people jobless, and also puts pressure on the government, because they need to pay out unemployment benefit.
Consumer price index and inflation:
CPI is the key measure of inflation for the UK and it’s used by the bank of England in making interest rate decisions. In order to manage inflation, the bank of England may raise interest rates, which slows economic growth. High interest rates attract foreign investors and if demand is also high, it might affect the value of the pound.
GDP:
This is an indicator for broad overall growth in the UK: Robust UK GDP growth signals a heightened level of economic activity, and therefore a high demand for currency. Economic expansion also raises concerns about inflationary pressure, which generally prompts monetary authorities to increase interest rates. This means that positive GDP readings are generally bullish for a given currency, while negative readings are bearish.
Retail Prices:
If retail prices increase, it indicates s that the economy is in crisis. Retail prices increase.
Retail price index measures the changes in prices of goods and services bought for household use in the UK. An increase in the index means that prices have increase on average (inflation) and a decrease means that prices have decrease on average (Deflation)
Property Prices:
A rise in house price indicates a strong housing market, which generally means a strong overall economy. If house prices fall, they will not only leave house owners with negative equity, but it will also have an impact on the impact as it will course serious consequences for the wider economy.
QUARTERLY BASIS:
A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends:
Every three months, the economic overview and outlook is published on a quarterly basis and it provides an in depth look at the main economic indicators.
