P5 BTEC Level 3 unit 38

1388 words 6 pages

In this task I am going to look at how The business are impacted by European and international factors, I will also look at what impact these factors cause The business

The first implication that will impact The business is the European Union, which has been in a deep recession this is because consumer demand has fallen, whilst unemployment rates are increasing across the European union. This has caused great concern to global markets as the possibility that Greece may not be able to pay of their outstanding debts, this could result into the them defaulting the Eurozone, however there is some stability but this situation is very delicate because the European Central Bank and also the International monetary fund, have
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However this can cause problems to whole global economy, a prime example is that this current recession started in the US where the original loans where given to people who weren’t likely to pay and these loans back these then encouraged other banks to the same to allow consumers to purchase goods and property’s, these loans are known as sub prime loans. The globally recession is worst in history and it has lasted longer than the great depression or the Wall Street crash in the 1930’s. This has affected The business this is because they had seen a drop in demand for there product because people did not have the confidence to purchase luxury items, however last year they have seen their profits go up by 26% in 2013, which shows that consumers are having more confidence in spending money, this is due to most countries have decreased their base interest rates. They are global concerns that will cause The business problems, a major concern would be the rising cost of Oil, this would result into the prices rising of all goods including food prices, which will result into consumers changing there buying patterns to ease the cost of goods increasing. This would affect The business because they would have to pay more to suppliers because cost of shipping