Essay
Unit 1 P5,M2
- Institution
- Newham Sixth Form College (NEWVIc)
UNIT 1 BTEC BUSINESS LEVEL 3
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By: ana_ysla • 7 year ago
By: shadow • 8 year ago
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In this assignment I’ll be discussing the impact of two contrasting economic environments onbusiness activities within McDonalds. Subsequently i will compare the challenges that
McDonalds face within their business activities in two different economic environments.
McDonalds is the world’s most famous fast food restaurant. The company began in 1940 with
their headquarters located in United States. It is a large scale business as it serves around 68
million customers daily, is located in 119 countries with more than 35,000 outlets and still
growing rapidly. It specialises in hamburgers, with many other products to offer to
consumers. McDonalds is recognised not only for fast food, but also for their good customer
relationship which has earned them a positive reputation in the market. McDonalds tends to
adapt to the local culture enabling them to grow their social network as well as help the
business to earn profit. Another reason for McDonalds being recognised as a large scale
business is due to their employment rate. There are 91,500 employees annually and
McDonalds invest 43 Million on staff training and development.
Economic environment are all those economic factors that have an effect on the performance
of a business. Business depends on the economic environment for all the needed inputs. It
also depends on the economic environment to sell the finished products. It is rightly said that
the economic environment influences a business to a great extent, referring to all those
economic factors that affects the functioning of a business unit. A business can rely for input
as well as to sell its manufactured products. Trained economists who supply the Macro
economic forecast and researches are present in major companies, which demonstrate the
significance of economic environment in a business. Such economic environments include;
recession (also known as trough), growth, boom, downturn and recovery. Below are some of
the economic environments that I’ll be analysing:
Recession can be defined as two successive quarters of negative growth. A period where
economic growth slows down and the level of output may actually decrease. This results in
, unemployment and companies losing confidence resulting in reduced investment. During this
period, business experiences a fall in their sales and companies tend to save rather than spend
capital.
Recession Influence on McDonalds business activities
Interest Rates During recession, chances of increased
interest rates are likely to fall. Consequently
McDonalds develops new exciting offers to
attract customers, since during this time
customers tends to save money hence they
are convinced to spend. McDonalds could
also provide extra ordinary service, such as
air conditioning in the hot weather or
discounts on family deals that can increase
recommendation from customers resulting in
higher sales. Developing children area with
some exciting features such as more toys and
activities can also increase rates from parents
and children who use pester power, which
can be beneficial to the business. Product
designing could also play a vital role, since it
can attract more customers. This can be
applied to their packaging, play area as well
as on their menu. Unfortunately when the
interest rates are high, there is unemployment
and there’s a high demand for skilled
workers. As a result every business wants to
hire professional workers that can adapt to
the change in work and do multi tasks at a
same time. Which can save a business its
unnecessary cost of hiring another employee.
Employees are sometimes also fired to cut
down the costs of the company and
meanwhile there is no more employment,
which saves time of the senior staff as they
can focus on other objectives and the training
cost also drops to zero.
As a result business can survive and even
make reasonable profit, but however the
reputation is affected as some employees
might be fired as well as the staff might not
be able to provide excellent customer service
required as they might be under pressure of
being fired.
GDP (Gross Domestic Product) Due to shortage of sales GDP falls inevitably
leading to decreased consumerism. The
overhead costs stays the same but its unit
costs will be higher because it will be
producing fewer products but will still have
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