P5 Analysis

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P5- Economic environment
Boom- A period of significant output within a population. The period is marked by productivity increases, sales increases, wage increases and rising demand. An economic boom may be accompanied by a period of inflation. http://www.businessdictionary.com/definition/economic-boom.html Recession- A significant decline in activity across the economy, lasting longer than a few months. It is visible in industrial production, employment, real income and wholesale-retail trade. http://www.investopedia.com/terms/r/recession.asp GDP- The total market value of all final goods and services produced in a country in a given year, equal to total consumer, investment and government spending, plus the value of exports, minus the value of imports. http://www.investorwords.com/2153/GDP.html Inflation- Inflation is defined as a sustained increase in the general level of prices for goods and services. It is measured as an annual percentage increase. As inflation rises, every dollar you own buys a smaller percentage of a good or service. http://www.investopedia.com/university/inflation/inflation1.asp The effects on Jolly’s drinks
The boom affects can cause some positives and negatives for Jolly’s drinks. By having this boom affect, it gives people High’s so they spend more money until they are in debt. That is good for the company because they will be making more of a profit. However, when the customers reach a low, it means that less money will be coming into the company, which means that they will be making less of a profit. Therefore Jolly’s drinks would then have to put sales on to ensure that customers keep on using their business.
By having the boom affect, when people reach the low point on this affect, it leads of rece...

... middle of paper ...

...keep the prices the same, they risk of losing a profit.
Bank of England- sets interest rates
The bank of England can also have an impact of the wider environment. The bank of England can have an impact on the money going in and out of England. In England we import more than export products so it means we spend more compared to selling. Exchange rates can also have an impact on the money we have to spend to buy products. For example, if the exchange rate is £1 to $1.5 it means that products that costs £100 in England, costs $150 abroad. If the exchange rate increase to £1 to $1.7 it means that England will be making a loss as they wouldn’t buy anything different but the products are costing more money. They will then have to decide whether to have a loss or increase the prices of their products. By increasing the prices it means that England will have fewer sales.

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