Abdulalah Al-Jobore
Unit 38 - Business and the economic environment
D1
D1 Evaluate the impact of changes in the economic environment on a selected business
Huge automotive company such as Jaguar Land Rover will be impacted by many different factors and
changes in the economic environment that usually controlled by the government and the market
within the United Kingdom. Many different elements and factors such as the political, social and the
economics of the country as well as the global economy could have significant effects on the
company. However, many elements and factors of these could affect Jaguar Land Rover positively or
negatively. Although it is difficult to identify which one of these factors and elements could have the
largest impact that affecting the company, but the global economy is usually considered as one of
the greatest factor that could have a dramatic impact on the success of a company such as Jaguar
Land Rover. This is due to the fact that it is operating internationally not only the UK.
In general, political factors and government decision play a very important role in how business such
as Jaguar Land Rover operating their business. Since the fact that politics could add, change, adjust
or remove some of the laws, which could really influence Jaguar Land Rover as an overall. For
example, one of these factors that could be led by on the administration is that they may be very
environmental friendly and enact legislation that could dramatically changes the amount of
greenhouse gasses that cars produced by Jaguar Land Rover can emit (produce ad discharge the
gases). In addition, when the government and politics leaders produced new law on how the
administration deals with regulation that concerned about taxation, Jaguar Land Rover will have a
great impact on their profit as it might goes down. This is what happened in 2011 when the
government increases the rate of VAT from 17.5% to 20%, as a way of boost tax revenues to cut the
country deficit as improve the economic in the UK [1]. Therefore, the changes in VAT rates required
Jaguar Land Rover to increase its prices on their cars and vehicles as well as other products that they
are producing (such as clothes and car accessories). Although this change might be suitable and
affordable for some people, but for other it is not. This changes is not alone increase the prices of
Jaguar Land Rover products, but also other products such as the material and resources that
provider by other supplier which is used in manufacturing Jaguar Land Rover cars and vehicles which
therefore increase the company expenses. The reality of the economic environment is that when
prices change due to the taxation or any other factors and it becomes higher, consumers will not be
will to buy products as for example Jaguar Land rover will have a higher prices on their cars and
vehicles which might not be affordable for consumers to purchase. Therefore, this will affects the
overall profits growth of the company which might fall. Furthermore, the change in other types of
taxes such as income tax and national insurance could affects prices as whole, the prices of company
will increase or decrease depend on the individuals’ incomes which could impact the company
positively or negatively. This is because if the individuals get higher tax rates on income and national
insurance, then the will have less money left in their account which might not be able to afford to
buy certain products and vice versa if the taxes decrease.
Moreover, on the 23rd of June 2016 when the Brexit referendum took place in the United Kingdom
for leaving the leaving or remaining within the European Union, Jaguar Land Rover will be affected
so hard during this period of brexit. This is according The Guardian, where it stated that the chief
executive of Jaguar Land Rover who is one of the most ‘powerful chief executives has predicated’
that the key industries will be destroyed by a hard Brexit. As result of this Ralf Speth speech, the
boss of Jagura Land Rover, we can predict that this outcome would lead to have a country’s plants
and major job losses as some of the exposed industries would have ‘’now way to survive a hard
Brexit’’ [2].
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