P5- Describe the influence of the two contrasting economic environments on business activities within a selected organisation
The chosen organisation to which I am going to be writing about is Asda. This is from the fact that Asda is a large supermarket to which everyone knows about. I am going to be looking at their contrasting economic environments on their business activities. There are 2 important economic environments that have an influence on business activities, growth and recession When economic growth occurs, when more goods are being produced and consumed, and incomes are rising. A growth company tends to have very profitable reinvestment opportunities for its own retained earnings. Economic growth will affect Asda as it would increase their profits due to more people wanting more products and wanting to spend their money. As people have more money to spend on luxuries instead of the essentials it means that the higher value products will be brought. For example the finest range or more expensive brands will be bought instead of Asda’s value range, because of this it means more money is being spent in the store which is an advantage for Asda. Fast economic growth also means that Asda’s output is high due to increased demand in products. This would mean that unemployment is lower than it should be. With the business confidence, this means that it may be a high leading to increased investment and could also be classed as a boom.
With boom what happens is that they may have the experience of businesses producing more products for them to sell. Boom is also shown as a period of time in which sakes of a product or a business activity may increase rapidly. The actual economy in general suggests that with a boom, there is strong economic growth. A boom could be very bad news for the smaller stores that Asda own, as the higher earners may switch to more