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P5,M2 Unit 1 Business Enviroment Essay
1604 WordsNov 4th, 20127 Pages
P5 - Describe how John Lewis would be influenced by economic factors in a time of economic recession and economic growth in the UK economy
The two economic environments that I would be describing about are recession and growth on the business activities of John Lewis. Growth occurs when more goods are being produced and consumed, and also incomes are rising. During growth people spend more money on goods and services as they have more money to spend and also businesses would invest more and hire more labour as it links to increasing demand. Recession however occurs when people involved in business become more cautious so they cut their spending down and also cut back on their orders as well as making workers unemployed or redundant.…show more content…
This will benefit John Lewis as sales for the good quality products would be increasing which furthermore could lead to John Lewis recovering from their losses if they were in one and go into break even or begin to start getting profits. John Lewis would buy more stock from its suppliers at this period of the economic environment as when demand increases you must get more supply to meet that demand. Also John Lewis at the time since they buy in bulk from their suppliers they can benefit from getting more stock at a good price that gives good value for money, as usually suppliers would offer you extra amounts of stock if you buy in large quantities. During this period of time interest rates would be low compared to in recession because there isn’t as much financial institutions to try get as much finance as they can from small amounts of borrowings from their company in this period as customers, business etc intend to borrow more money in this period of time as they are fairly financially stable, so to encourage the businesses and customers to begin taking sources of finance they lower the rates. So John Lewis is more likely to start borrowing sources of finance if needed then in the period of growth.
Recession affects the business activities for John Lewis because in recessions it