Unit 1 Business Environment Analysis

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Remember: Write in paragraph format. Use full and descriptive sentences. Use one sentence to make one point. Check your spelling and punctuation. Introduction I am going to evaluate the different economic factors that impact Tesco and the challenges that Tesco would have to deal with, also I am going to compare and show which economic factor poses the greatest challenge. Boom Boom is a period of time during which sales of a product or business activity increases very rapidly. This period of time will have a good affect on the economy because businesses will increase price of products as they know that people will be willing to spend money on goods and services. As consumers spend more demand increases so Tesco would increase production,…show more content…
High Interest Rates Interest rate is a rate which is charged by a lender to a borrower for the use of money. A high interest rate is when the lenders charge higher for the money borrowed, interest rates keep on changing they are not always the same. High interest rates will have a bad affect on the economy because it can slow down the growth of the economy because during this period of time customers desire to save and so demand falls due to customers buying/shopping less and businesses such as Tesco make less profit. During high interest rates the customers of Tesco and other businesses will save their money rather than spending it because they can earn more on top as interest rates are high. Also as customers are saving their money there will be a fall in demand and so Tesco’s sales decreases which leads to them gaining less profit. During high interest rates as much as its good for the customers as they can save their money but it’s a bad thing at the same time because businesses do not have enough money to pay workers so they will probably fire them, this will mean an increase in unemployment. High interest rate can lead to…show more content…
Then this means that the government will be able to get more tax because the higher the businesses profit the more tax the more they would have to pay the government. The challenge that Tesco will have to deal with is that because demand is high Tesco would have to increase its production in order to meet consumer’s demands and wants. This would be a challenge as Tesco would have to hire/employ more staff so that production increases and Tesco would have to advertise job vacancies, this means they would have to spend a lot and pay more workers. This can also be time consuming as they would have to go through a long procedure in order to find employees who are best suited for the role. They can overcome the challenge because during this period it would be cheap for Tesco to borrow money or they will have a high amount of profit so they can buy machines which can do the job of not one but many staff and this way production will increase. In the short run it will be expensive but in the long run it will be

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