Unit 6.2 The economic climate Flashcards
How much a business will be affected by a change in income will be influenced by what?
1) How much the income changes
2) The type of product the business sells
3) How other businesses respond to the change in income
4) How the business itself responds to the change in income
How much a business is affected by a change in employment is influenced by what?
1) How much employment changes
2)The change in the type of employment
How may a production department be able to reduce costs?
1) To improve control which would reduce wastage
2) Worker productivity could be increased so that output per worker rises
How could the human resources department improve productivity?
It could do this by motivating workers through schemes
How might the finance department look to reduce costs?
1) Improving cash flow and reducing the interest payments on an overdraft to finance any negative cash flow
2) If the business has loans, it could look to change these to get a lower interest rate
What are the main features of an economic recession?
1) Jobs are lost, so unemployment rises
2) As unemployment rises, average incomes fall
3) As average incomes fall, total spending in the economy falls
4) As spending falls, business profits fall, so they need to cut costs and the cycle starts again
What are the positives for businesses during a recession?
1) Businesses that sell basic needs might not suffer, as consumers need to keep buying these things
2) Businesses that operate at the cheaper end of the market might not suffer/ might even do better as consumers switch to cheaper options
What are the negatives for businesses during a recession?
Businesses that sell large, expensive, luxury items are likely to suffer from a fall in demand, people will cut back from luxury items
What will human resources need to do during a recession?
Might need to freeze wages, stop bonuses, make redundancies and cut money spent on training
What are the effects on marketing of a business during a recession?
Might need to reduce prices, use special offers and change the product range
What are the effects on the operations of a business during a recession?
Look for cheaper suppliers or replace workers with technology
What are the effects on the finance of a business during a recession?
Cut budgets for departments in the business and look to change loans/ overdrafts onto lower rates
What is the economic climate?
Refers to how well the country is doing in terms of the levels of income and employment
What is gross domestic product?
A measure of how much a country produces in a year. It influences the level of income and employment
