Unit 1 P5 Describe the influence of two contrasting economic environment on business activities within Tescos

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P5 Describe the influence of two contrasting economic environment on business activities with in a selected organisation

This report will be describing the influence of two contrasting economic environment on business activities with in a selected organisation, which will be Tesco plc. The report will be looking at how the demands and supply affect the economic and how it influences recession and excessive growths affect the economic. This report will be also explaining the interaction of how globalisation influences businesses.

The economic is made out of two things which are the buyers demand and the suppliers that sell goods.

The types of groups who make up the economic environment are the demands and the suppliers.

Economic environment is the factor that influences the economic such as recession when a period where the economic growth slows down and the level of output may actually decrease. Unemployment will be likely to increase the recession. The boom factor influences the economic by a period of fast economic growth which is a high output due to increased demands and unemployment. Another factor is the slump which is a period when an output slows down due to a reduction in demand. Recovery is another factor which is a period when the economy moves between recession and a boom.

The importance of stability will keep the economic sustainable this is because it will decrease the chance of the ripple effect and recession. For example if the economic is booming the prices of products will increase and people will demand more money from work and it will also cause the businesses to keep on increase the prices. If the county is in recession the people will lack confidence in demanding from supplies this is because the people will not be earning enough money and people will not get jobs due not earning enough money in businesses.    

If the demand from consumers is increasing the suppliers will increase the amount of goods in the economy for consumer, but increasing the demand and supplies in businesses will have its, down fall for example the prices of products will increase prices which means it will create a high level of inflation.

When the supply is in recession the prices of the products will decrease this is because demands will decrease. This is caused by the people not earning enough money and people are not demanding enough from the suppliers. This gives an indication that suppliers need to break even or their business will close down.  

The factors such as the GDP (gross domestic products) growth is shown on a trade cycle graph which shows the supplies in businesses. Level of inflation is the measurement of prices in businesses which can influence the GPD for example high level of inflation can produce more goods, businesses can invest more machinery, consumers spend more money, more money is collected by the government in income tax and VAT. This indicates that having more money could lead to more demands and consumers may lead to extra spending. Low level of inflation can cause a recession in the GPD this is because less people are demanding so businesses will cut back on production some businesses may go bankrupt, less money is collected by the government income tax and vat, consumers will spend less and prices will start to fall due to less demands. This indicates recession on the GPD shows that businesses could be bankrupt because more money is spent by the government on unemployment benefits and there are less demands because people are not confidence in the future.

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The ripple effect is when in economic is in recession and creates an indirect effect that spreads out from the direct or main effect to reach businesses in areas. For example, People begin to cut down their spending when they are laid off and that has a ripple effect throughout the entire economy.

The problem associated with excessive growth is that it creates tax’s to increase which will increase the prices of products in stores so it won’t be beneficial to the people and employed people will want a pay rise because since the company is getting lots of money, taxes are ...

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