Compare the challenges to selected business activities within a selected
organisation, in two different economic environments. (M2)
Costa
UK Russia
GDP GDP
The annual growth rate is 2.3% currently. The The annual GDP growth rate of Russia is -0.6%.
trend shows that the current GDP in the UK is The trend shows that the GDP of Russia is
rising. This means that the standard living in the falling. Due to the falling GDP, a recession has
UK is rising and there is less unemployment. occurred in Russia. This means consumer
Because of this people will have more money to confidence have fallen and unemployment
spend on luxury goods. This will lead to the have increased. Therefore, customers will
sales of Costa to rise leading to a rise of profits. spend less money on luxury items and this will
affect sales and profits of Costa.
Interest rates
The base rate of the UK is 0.75%. The trend Interest rates
shows that the interest is increasing due to The base rate in Russia is 10%. This is quite high
Brexit. As the interest rate is increasing in the compared to the UK. However, the trend is
UK it is bad for Costa as applying for loans showing that the interest rate is falling. The
during this time is bad because higher interest falling interest rate is good for Costa as they
rates and therefore no chance to expand grow. can borrow money from banks and increase
This will lead to people not spending on goods their investment in Russia by opening new
because they are trying to save up. This means stores in different regions.
decrease in profits for Costa.
Inflation
Inflation The inflation rate in Russia is 6.4%. The trend
Inflation rate in the UK is 1.8%. The trend shows that the inflation is falling. The trend
shows that it is going to go a slight bit higher to shows that inflation is falling. This is good for
2% and then go up and down but by a really Costa as the demand will rise due to fall in price
small percentage. This is good because levels for the products. So therefore, their sales
although sales might decrease a bit it won’t be will increase. However, it is bad for Costa as
a lot. However, if sales and profit increase then they will not earn much profit.
it will have an impact on the demand of coffee.
Adding onto this, coffee will reduce due to rise Unemployment
in price levels. This means that buying coffee The unemployment rate is Russia is 4.5%. The
will be expensive as there is more of a demand trend shows that the unemployment is
on it. increasing. The increasing unemployment
means that there is usually a boom in declines
Unemployment between 4-5 percent. There are always people
The unemployment rate is the UK is 3.8%. The who move between different sectors of the
trend shows that the unemployment rate is economy or between cities. When the economy
falling. The falling unemployment rate means it goes into recession, then unemployment can
is bad for Costa as this means to hire new reach much higher numbers, sometimes even
workers for Costa should increase the wage in the double digits. For Costa this means that
rate as the supply of workers will be less, that employment in Russia is high so more staff
however, falling unemployment is good as it applying which means better for Costa.
means people are earning more so they will
spend more.
https://tradingeconomics.com/russia/unemployment-rate?embed
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