For this assignment I will compare the challenges to selected business activities within my chosen business in two different economic environments. I will analyse whether national demand and GDP are rising or falling and how they are affecting my chosen business.
Recession
Recession is a significant decline in economic activity spread across the economy, lasting more than a few months.
Recession would impact in Rudding Park Hotel due to the fact of recession effects.
During recession, as sales revenues and profits decline, they will cut back on hiring new employees. In an effort to cut costs, they are going to stop buying new equipment and to develop new services.
As declining revenues show up the price may decline. Dividends may also slump, or disappear entirely. Shareholders and advertising agency may become upset. Shareholders may call for a new CEO and the advertising agency may be dumped and new agency hired.
When the stock falls and the dividends decline or stop, the investors who hold that stock may sell and reinvest the proceeds into better-performing stocks.
The customers of the Rudding Park Hotel that owe it money may pay slowly, late or not at all. Then, with reduced revenues, the affected Hotel will pay its own bills more slowly or late. Late payments will reduce the valuation of the corporation's debt and ability to obtain financing. The Hotel's ability to service its debt, may also be impaired, eventuating in defaults other debt, further damaging the Hotel's credit rating and preventing further borrowing.
Debt will have to be restructured or refinanced, meaning new terms will have to be agreed upon by creditors. If the hotel's debts cannot be serviced and cannot be repaid as agreed upon in the lending contract, then bankruptcy may ensue. The hotel will then be protected from its creditors as it may go out of business completely.
The hotel