Economic Environment
The economy of each country has features that could be measured in different ways to see how they are changing. The economic environment of countries has an effect on countries due to the trading between countries affecting the money coming in and out of the country which then affects the cost of goods and prices.
The economic environment would affect jaguar land rover as the goods and prices will have been affected. By this happening it would result in the prices of the cars costing more due to the resources used costing more for the manufacturer.
Business Cycle
Increases and falls in the production are shown through the business cycle as well as income and the expenditure of the country over a period of time. During a boom the demand of products get so high that manufacturers cannot supply these products and as an alternative they have to put the prices higher. With the prices going higher the result of this is rising inflation.
As there are so many costs increasing the price of products becomes so high that the demands of these products start to fall as people are unable to pay for them. If this occurs this then leads to productivity falling as businesses do not need to make as many products or services being used so they start to cut costs. At this point businesses start to reduce the number of staff that they have or reduce prices to try and increase the demand of products. Profits also start to fall. After this an economy could fall into a recession. Once an economy has reached recession getting out of it could be difficult for it to get out because of the cycle of recession. For an economy to get out of recession is by some form of external stimulus either from the government or another investor.
Once jaguar Land rover increases their prices, the demand for their products starts to fall. As the demand of their products start to fall the amount of products made will have to be reduced to save money. The amount of employees they have will also have to be reduced to save money. The cost of the products they use will have to be purchased cheaper by them as the amount of profit made will also decrease as a result of the demand of the products not being high.
Indicators
Knowing the different stages of the business cycle is important in understanding how the economy is measured. There are different indicators of an economy’s status which could be measured to indicate how well it is doing which are:
Changes in Gross Domestic Product (GDP)
Gross domestic product (GDP) is what is used to measure how much is being made in the UK. Changes in the GDP specify which stage of the business cycle the UK economy is in. GDP output measures the value of the products and services that have been made through the economy. GDP income measure the total income generated by the production of goods and services in the economy. GDP expenditure measures the total expenditure on all finished goods and services that have been produced in the UK.
By jaguar land rover producing more cars and making a lot of sales will help to add to the UK economy which will also contribute to the GDP increase. With these GDP statistics it will help the government to predict what is going to happen in the future.
Rates of inflation and deflation
Inflation and deflation both relate to the measure of prices within the UK economy. Inflation is when the price of products and services are increasing. Inflation is measured using consumer price index, this looks at the prices in the UK. When the prices of products are increasing it means it is inflation.
Deflation is when the prices of products and services decreases for a period of time. This could show that an economy is in a recession. As the prices are decreasing it can cause problems as a business would have to decrease their costs in order for them to survive.
Jaguar land rover may have to make redundant some of their employees when inflation is rising as people may not buy their products and this will help them save money. Jaguar land rover would have to reduce its costs when in inflation as the prices of their products start to decrease. They could also cut their costs by making people redundant which would mean they will be giving out fewer wage.
Employment rates
During boom employment levels will be high and during recession unemployment levels will also be high. When the employment levels are high employers may find it difficult to find suitable people because there may not be many people that are suitable for the job not finding work. When unemployment levels are high sales may fall because of many people not being able to afford to buy products from businesses.
In some countries with a lot of technology there may be more machines doing the same work that was previously done by people.
If jaguar land rover expand their business in different countries it will mean they will need more people to do the work which will mean unemployment levels will stay low. But if jaguar land rover gets robots (as they have in their Liverpool company) to do the same work that people can do the unemployment levels will stay high which will not be good for the UK economy.
Trade surpluses/deficits
This is what indicates how the UK economy is doing is the measurement of trade surpluses or trade deficits with other countries. A trade surplus means that the value of exports from the UK economy is bigger than the value of imports. A trade deficit means that the value of exports from the UK is less than the value of imports.
For jaguar land rover trade deficits and surpluses are an essential part of the business as the small parts and paint will come from other countries for them to get them cheaper so they can sell it off for a higher price and make more profit. This will mean that the value of exports will be higher than imports.
Balance of payments
Balance of payments is the difference between the amount of money that is coming into the country against the money going out of the country. For the UK to make the balance of payments balance the amount of money that is held in the current account should balance against the capital and financial accounts added together.
Jaguar land rover has a big effect on the balance of payments as they should balance the amount of money coming in to the country to going out. They would balance this by making sure more money is coming into the country than going out. They would do this by selling more of their cars to people from outside of the UK.
Conflicting Objectives
There are five different indicators that can be used to measure how the economy is doing. If the government wants to increase the number of people in employment that would pay tax they must also be careful that it could lead to inflation if a business employs too many people. This could also lead to more people asking for a rise in their wages. If the business don’t make a profit and lose money they will have to pay their employees even though they didn’t make their target money.
Ripple Effects of Downturns in Particular Industries
Big industries in the UK have an effect on the UK Economy because if they are showing a downturn in production it could affect different industries and potentially the economy. Industries such as housing, construction and manufacturing have this impact.
Jaguar land rover will be affected by this because people may not have money to buy their products so they will have to make up for this by selling their cars overseas. If the selling of their cars is not high in the UK it will have an effect on the economy.

Manufacturing
The UK economy may feel the effect of a decline in manufacturing in a number of different ways. If manufacturing companies need to reduce costs it may lead to redundancies which will lead to less skilled people in the industry as well as a higher number in unemployment. If the goods to sell for export will affect the balance of payments by making it more negative
Jaguar land rover also manufacture goods and would have to follow the procedure of lowering costs to do this they manufacture their goods in different countries where the economy won’t get affected by the decrease of manufacturing of goods and won’t have to worry about losing any experienced staff.