In this task, I will explain how the selected economic influences can affect
the Coca Cola PLC.
Changes in economic environments can affect the activities of the
organisation. The first economic environment that I will talk about is the
recession.
A recession is a period of general economic decline. During this time,
there is normally a high level of unemployment and stagnant wages and
therefore businesses will experience a fall in demand and sales.
Customers will have less disposable income and therefore, they will firstly
try to satisfy their basic needs, mainly food. They will spend their money
wisely, mostly on essential items and as Coca Cola PLC sells soft drinks,
which is quite non-essential, it is quite obvious that the company will
experience a decline in sales. Due to such circumstances, competition will
tend to get fiercer as everyone will try to offer better deals in order to
attract each other’s customers. However, it can also cause the weaker
competitors of the Coca Cola PLC to struggle and close their business as
well.
In case of such crisis, the Coca Cola PLC can increase its export to other
countries like Asian continents, which are very desperate for European
products. It is more likely that there will be better demand there.
Another economic environment is when there is a rise in demand. When
prices are low, it is very likely that customers will buy the products of Coca
Cola. This will create a rise in demand and therefore lead to an increase
in profits as well. A rise in demand may also occur if people have higher
income. They may then choose to buy more products, even if the prices
are a little bit higher, as they can afford it.
The demand and sale of a product may also depend on the season. In the
case of Coca Cola, demand of products increases in summer time, as
people need more refreshments.
However, nowadays, the company is trying to pull itself back up in winter
as well in order to increase its demand throughout the whole year. It has
achieved this by annually advertising for the winter holidays and
repeating the same theme every time. The Coca Cola PLC has developed
a strong link with Christmas as it uses the Santa Claus mascot in
advertisements. As consumers want to get into the special spirit, it is very
likely that they will purchase the Coca Cola products.
The level of inflation can also affect the business activities of the Coca
Cola PLC. During an inflation, the price of the products being sold rises.
The inflation disrupts the whole process in the business. Firstly, Coca Cola
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