M2: Compare the challenges to selected business activities within a selected organisation, in two different economic environments

Compare – what are the similarities and what are the differences

Country: UK

Economic variable | Effect on supply | Effect on demand | GDP (growth (low growth), recession) | The suppliers will start reducing their supplies to Toyota, which further decrease the GDP of the country. Toyota will also start producing fewer cars to be sold if less people are buying and upgrading their cars. | If less people have extra money to spend on goods, they’ll be looking after their car, which means all the cars that they’ve made are stuck on the production line, untouched and wasting away. | Inflation | Inflation prices in the UK are high compared to other countries i.e. china that produce and make things at cheap prices, if they prices go up for raw materials, Toyotas profit margin decreases or they can drive their prices up. | High inflation rates means demand will fall because as suppliers increase their prices, Toyota will want to have roughly the same profit margin, so their prices go up and with GDP at an all time low, less people will be buying their cars | Interest rates (cost of credit) | Companies borrow large sums of money if there looking to expand their operations, low interest rates could result in banks restricting the amount they give out and who they loan to, so if it’s a relatively small business, which might not be able to pay back the amount they’ve been loaned. | | Unemployment | | |

What therefore are the key challenges facing the business in the UK: |

Country: Japan

Economic variable | Effect on supply | Effect on demand | GDP (growth (low growth), recession) | | | Inflation | | | Interest rates (cost of credit) | | | Unemployment | | |

What