Notesale: Turn your study into money

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Edward Lynch
Describe the influence of two contrasting economic environments on business activities within a
selected organisation (P5) and Compare the challenges to selected business activities within a
selected organisation, in two different economic environments (M2)

In this task I will be looking at two contracting economic environments on business activities within a
selected business, the business which I will be looking into is Ipeco, which is engaged in the design,
development, manufacture and test of niche products for the aerospace and defense industries
...

The economic environment is the totality of economic factors, such as employment, income,
inflation, interest rates, productivity, and wealth, that influence the buying behavior of consumers
and institutions
...
Stability in the economy is forever changing again for good and bad and it all depends on if
we have changed are buying habits, if we spend more we will have a strong and stable economy and
it’s the opposite for a bad and unstable economy, if people spend less and save more the economy
will begin to full because the money is not being spent
...
Recession is
when there is a decrease in growth and this can be because of two reasons, the first is that the
consumer is cutting back on the amount on which they are spending (they may be saving more
instead of spending) and this will lead to the manufactures to cut back on how much they order
from suppliers and then this will result in cut backs and this will then lead to business making people
redundant because they cannot afford to hire them
...
Availability and cost of credit (borrowing
money) is the rate of interest, when the interest rate rises this can affect the business badly because
this means that the business will have to pay additional costs and if the business is not good finically
then this may put them in the breaking point and they will go bankrupt
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The
Government has the responsibility for managing the economy and they do this a number of ways
such as ensuring there is stability and growth, inflation is low, there is credit available and low
interest rate and also the business has access to suitable supplies of Labour
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Demand is the term which is used to describe the quantity of goods and services that consumer will
buy at a particular price; the consumers will buy more products when they are cheaper than when
they are expensive, there are different influences that demand includes, such as the following:
 Affordability

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Edward Lynch




Competition and availability of substitutes
Level of income
Needs and aspirations of consumers

Affordability is the price of the product, at lower prices goods are more affordable, as customers are
aware of what they can afford to buy
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Competition and availability of
substitutes is when more than one company has the same/similar products and they fight for the
customers, this is seen in the mobile phone markets
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This also applies to level of income in a country, known as GDP
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Needs and aspirations of consumers, is when consumers
buy goods because they have to, like food, drink and somewhere to live, and there is also stuff which
we not need but we still have because we think that we show are wealth in the goods we have, like
better cars than our neighbours and going on exotic holidays
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Then business will need more
supplies when the demand is high
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Logistics is also very important because this is the ability for the
business to get the goods to the customers and this all depends on the quality of the supply chain
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Competition for raw material is also very important because this is the business and
country’s ability to compete with each other for the supply of raw materials, this can be good for the
business because the business will gain a steady supplier at a low price as possible
...

In 2008 the British economy went into recession and the banks stopped leading and people stopped
spending and all businesses started to have cut backs and this lead to a number of things from
people’s wages being reduced and even people losing their jobs
...

This recession was linked in a way to the economic downfall which occurred in America in
2007/2008; Ipeco had the same problem with their businesses in America because again people
were traveling less reducing the plans needed and again reducing the business for Ipeco who supply
all the equipment
...
So instead they started looking at options abroad and

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Edward Lynch
started looking for clients who still had the money to travel and they started to build and
manufacture luxury items such as aircraft seats for wealthy business clients from Dubai, So both
businesses in both country’s went along with this and they managed to keep all of their staff and still
brought in a profit of 39
...

During the time of the great recession in Great Britain the only bad effect which affected them badly
was they missed out on lots of land which came up near their headquarters in Southend-On-Sea
...

In this present time of economic growth Ipeco is doing extremely well, this may be down to the pure
nature of the business because the aerospace industry is rapidly expanding and Ipeco is the leading
retailer in bespoke business class seats and piolet seats so they are always in constant demand
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3 million 1which
compared to the previous year its grown by 8
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7
million turnover, These number also include the branches in the USA and Hong Kong, So yes the
numbers are very positive for the business it may not be as good as first seemed because when you
compare the finical state of three countries you will find that England has the weakest economy and
Hong Kong has the strongest economy, but on the other hand these numbers show that even
though the finical state of England is not great when they are all put together they can get a great
turnover
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5 % to 0
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For their business in Hong Kong there inflation rate is 4
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1%
compared to the previous month then it was 4
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Finally when looking at the
United States their inflation rate at this current moment is -0
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When it comes to borrowing money (credit) Ipeco is good because if they got it from the UK due to
the banks having low or no interest rates for a certain period of time so if the business need money
for a period of 6 months then they may be able to borrow the money and only have to pay a small
increase of the original amount back, This may be a different case for the USA branch because they
have had a period of deflation putting them into -0
...

At Ipeco they have very skilled work forces which do different jobs in different sectors; Ipeco had to
pay the high price for their staff because they need to recruit people with the right experience and
qualifications to be able to work in the different sectors
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insidermedia
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tradingeconomics
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Government policies have changed since they have first started operating, since they have started
operating the inflation rate has fallen so there has exactly been deflation which is bad for the
business because they have debts the business will find it harder to pay back the money which they
borrowed
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Ipeco suppliers have also changed and also the way they operate has changed
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Logistics are very important for Ipeco because their
clients need their products as soon as possible so Ipeco has their own delivery firm to deliver their
customer made products to their clients on time
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Demand has also changed for Ipeco since they have set
out in the 1960’s because when they first started out they was only a small business which started in
Southend and they was only making crew seats for business aircrafts on a small scale so there
demand was high but materials and labour was cheaper compared to what it is today
...

Ipeco’s prices are very high for their products but this is because they are aiming for the business
market and not the general public market, in some ways this can limit the customer base but on the
other hand it attracts the wealthy customers from overseas and they are able to sell to the global
market
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Also in the aerospace industry
crew seats and passenger seats are extremely important so they are a must buy item; there is no
way around it

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