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  2.  
  3. PEARSON (PEARSON)
  4.  
  5. Business 2010 QCF
  6.  
  7. Unit 1 - The Business Environment

Essay

Unit 1 - P5 + M2
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describe the influence of two contrasting economic environments on business activities within a selected organisation and compare the challenges to selected business activities within a selected organisation, in two different economic environments

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  • February 8, 2021
  • 6
  • 2019/2020
  • Essay
  • Unknown
  • A+

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The business cycle is a
cycle of changes based
on the Gross Domestic
Product (GDP) around
its natural growth rate.
In the graph it shows
the periods of eco-
nomic success and de-
pression. The business cycle represents the rise and fall of economic growth over time. By
using graph, its useful to analyse the economy and allow companies to make better finan-
cial decisions.


The business cycle has four phases; the boom, recession, slump and recovery. Each sec-
tion obtain certain characteristics.
Boom is the peak of the business cycle, where there is increasing employment, economic
growth, and upward pressure on prices. Despite above points, the economy is set for de-
cay later on. While there is a increase in employment, as there is such a high demand for
the product or service. Having a lot more demand which is rapidly increasing, the business
cannot maintain a sustainable work ethic, as employees are getting tired and are not able
to keep up with demand. The quality of work starts to decline and neither the business nor
the economy maintain the level of activity.


After the boom, a recession starts to occur this is where growth slows and employment
declines which increases the unemployment in a community and pricing pressures sub-
sides. It can only be called a recession if the economic status stays negative for six
months or two quarters. Business began to slow down and work, they were supposed to
do during the peak time is in-completed. As demand starts to decrease the need for high
amounts of employees decrease, leading to many roles being terminated. As many more
become jobless, the economic growth decreases as many are not spending money to-
wards the economy, thus creates inflation on products to sustain the business.


A slump is where the economy is still negative after the recession, a slump is not common
as it only accompanies a recession. However a slump is very impactful, as it increases un-
employment severely and decreases the GDP along with weakening economic growth.

, During a recovery or growth, economic factors such as production, employment, profit
and sales of the business is increasing. As business is increasing, they are able to repay
their debts, therefore allowing creditors to lend money at higher interest rates. The flow of
money is increasing and stabilising. There are more investment opportunities and the GDP
is increasing, to a Goldilocks economy.


The trend for the graph in will be increasing as the economic is at a natural increase. The
cycle would also be affected by external factors that could impact the cycle such as the
multiple natural disasters Japan faces.


Lexus which is a luxury car from the popular Japanese brand Toyota, was created in 1989.
The company which has almost been around for 30 years, has been impacted by the vari-
ous economic environments, and has developed different strategies to cope and ensure
the maximum growth possible within the different economic backgrounds. Two economic
environments most common throughout the business cycle is the recession and growth
period, during these times, the management strategies of Lexus will be analysed.


The GDP is the total
value of services pro-
duced and provided by
the country over the
course of a year. Japan’s
GDP has decreased and
increased over the last 10
years.
Japan's GDP had faced a
lengthy recession in 2008-2009. The whole world was also greatly affected by the reces-
sion, however the recovery after the recession sent Japan into its peak of GDP in 2009 at
a percentage over 2 percent. The recession had negatively affected the number of sales of
the cars, as many did not have as much money to spend.

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