Unit 4: Economic environment – Unemployment

There’s some indication that the UK unemployment picture is improving (Unemployment drops to 2.46m) but it’s still a pretty bleak picture out there. What does this mean for business?



Like all good evaluative responses in business, the short answer is “it depends”. There’s a clear upside as well as a downside. On one hand, higher rates of unemployment will tend to hold down demands for wage increases, which are typically the largest cost for most UK businesses. On the other hand, lower wages and less spending power in general is bad for many of the traditional High Street retailers and service providers.


Other points you might like to consider are:

- Higher rates of unemployment strain the government’s finances. The Treasury receives less in income tax and VAT, for instance. At the same time, welfare expenditure rises. This increases the likelihood that at some point, the government will have to cut expenditure in other areas, and/or raise taxes (see debt bombshell).

- Many firms don’t sell direct to the public (they sell to other businesses or government organisations like the NHS). To some extent that shields them from the immediate negative consequences of unemployment.

- Think carefully about the income elasticity of demand for a firm’s products. Stated simply that means asking how demand for goods/services responds to changes in consumers’ income. Some firms have been devastated by the recession, rising unemployment and falling incomes (such as electrical retailer Comet). Others have enjoyed a boom (Poundland).

- Unemployment tends to have a strong regional component see the jobs map on the BBC economy tracker. For this reason, any discussion you have about the impact of unemployment on firms might well also ask about where they are located, and the local circumstances they find themselves in. Some firms in regions with very low levels of income (almost always because of high levels of unemployment) have the possibility of getting UK/EU government aid as an incentive to expand and hire workers.

- Eventually, the economy will recover to full health and many firms will be anxious to hire rapidly to deal with an upsurge in demand. Unfortunately however, unemployment may leave a long term mark. Many formerly unemployed workers will need extensive retraining – much of it provided by firms – before they take up places as effective and productive staff.

Unit 4: External Influences - Important Economics for Business Students

External influences Business Year 13

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Unit 4: More Morrisons and CSR (Added Value?)

Unit 4: Morrisons - it's on Facebook!!!

Click here for the Morrisons facebook group. Dedicated to Unit 4a - Questions.........I'm all over it!!!

Unit 4 - Online shopping & Morissons + practice Question

Click here to access an article from the Telegraph on 'Online Shopping'.

Here are some questions you should attempy also...

Evaluate the effectiveness of Morrison's marketing mix. (30 marks)

Below is a simple plan that you might want to follow when attempting the question....

What is included in the marketing mix? Think about the theory that needs to be included.


Analyse Morrison’s marketing mix

Introduction


Point

Application

Analysis

Evaluate

Point

Application

Analysis

Evaluate

Point

Application

Analysis

Evaluate

CONCLUSION

Unit 4: Strategy explained - Insights into Amazon

A quite brilliant deck of analytical slides here from Fabernovel which explain the business strategy of Amazon.com. Lots of detail, of course, but within this presentation is a gold mine of strategic insights into all aspects of Amazon.

Activity: Read the presentation below and highlight five key points or pieces of evidence that illustrate how a firm can be so successful online. (really useful exercise as it could easily be a question on your unit 4 paper)


Students might be surprised by the sheer variety of businesses owned by Amazon. The business has diversified significantly since it launched its original online bookselling operation. Amazon’s growth has been both internal (organic) and external (via acquisitions).-

Another key point is that Amazon incurred substantial losses during a prolonged “start-up” phase. It invested to ensure that it had significant competitive advantage from its e-commerce platforms. The subsequent return on that investment is impressive.

Amazon’s revenue growth is particularly impressive. One slide compares the total revenue earned in the first five years. Amazon achieved $2.8bn, compared with $1.5bn for Google and just $0.4bn for eBay.

The essence of Amazon’s e-commerce business model can be summed up in three words (which underpin all its e-commerce activities):

- Convenience

- Low prices

- Large selection

Here is the streamed presentation via slideshare;

Amazon.com: the Hidden Empire

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Unit 2: June 10 - Mark Scheme

Business Studies Unit 2 Jun 10 - Mark Scheme

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Unit 4: Morrisons strategic plan: now with possible questions attached!

Click here to access the Morrisons website. It is really useful to understand how they want to increase sales in a saturated market.

Key issues include:

Fresh & cheap
Vertically integrated
Skilled workers

See below for some possible exam style questions...(thanks to Miss Meeajan for these)

Unit 4: Exam style Questions

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All Units: Business Studies Revision Presentations

Click here to access a link to a host of revision presentations from Tutot2u web site. They focus on key parts of the Business Studies course - the links are listed in alphabetical order. A must for last minute revision...