Case
P5 Describe the influence of two contrasting economic environments on business activities within a selected organisation
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The P5 task describes the influence that a boom and a recession has on ASDA.
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P5 – Describe the influence of two contrasting economic environments on businessactivities within a selected organisation
ASDA
Boom: A boom is initially caused via a period of time where the economy suddenly rises at a
rapid rate meaning that there are less people in the country that are unemployed,
companies are earning more money and are able to sell products cheaper, hence more
people are buying the products. When the economy is in a boom ASDA will thrive, as the
products will be “flying of the shelves” as ultimately its customers will have more money
allowing them to buy more consumer goods from the company.
Recession: A recession is essentially the total opposite of a boom in the economy. When the
economy is in a recession it means that there is mass unemployment and the prices of
common household goods skyrocket whilst working class as well as higher class are all out
of money; these reasons are usually the cause of why a country would go into a depression.
Changes in government policy – The fiscal policy is an essential way of the government
stabilising economic growth at any point in the economic cycle whether the economy is in a
boom or a recession. The fiscal policy attempts to keep the economic cycle balanced by
preventing a boom whilst also attempting to stop a recession.
Recently the economy has been disturbed due to the events that are following Brexit, which
means businesses will be unable to trade with other companies in the EU. ASDA have
started their negotiations with suppliers and changing outsourced products for British
Products as this will ensure that ASDA’s products will always be able to be supplied in the
same country of which they are located. This means that Brexit’s aspect of stopping trades
between different countries in the EU will not affect big businesses like ASDA.
Demand curves, Influences on demand
and Elasticity of demand – A demand
curve is a graph that represents and
clearly displays the relationship between
the cost/ price of a product or particular
service with the supply/ quantity. The
graph essentially shows that when the
supply/ quantity of the product is low the
price as well as demand will be high as
the product is not easy to get. However,
on the other hand when the quantity is
high the product is no longer rare and
hard to get there the demand decrease
which means the price of product must
also be decreased in order to sell the
product.
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