A key aspect of the external environment is the trade cycle. Analyse the impact of boom upon business and evaluate how business can take advantage of such a change in the trade cycle.(40)
Economic growth is an increase in the capacity of an economy to produce goods and services, compared from one period of time to another. During this time most businesses enjoy more opportunities to gain success and also will be selling in a culture where the consumer confidence will be high and their purchasing power will also be stronger. We can look at the business cycle also to help us assess whether the economy is in a boom state or bust state.
During periods of strong economic growth, we can often experience high rates of unemployment. One of the reasons this may occur is because during recession we are in need of a more skilled workforce as high tech industries will be booming and them sectors will need a large amount of skilled workers. But many unemployed may not have the right skills for this job. Alternatively, we could see geographical unemployment. This occurs when the economy is booming in the south, but unemployed workers in the north are unable or unwilling to move to the south (for example, difficulty of getting housing in London, where jobs are available. Another problem maybe that due to the boom the workers skilled labour may require higher pay which will prevent companies to hire more workers. There is evidence that supports this as in the 1980’s threre was a High level of unemployment even though the economy was increasing at a strong rate. This can be explained as manufacturing output fell significantly, causing a big loss of jobs in the north and amongst unskilled manual workers. New jobs were created in the south and service sector, but there was a lag in these unemployed workers finding new employment. A strategy businesses could use to take advantage of