Economics and Financial Management of Maplin

ECONOMIC AND FINANCIAL
MANAGEMENT

Table of Contents
..........................................................................................................................................................2
INTRODUCTION...........................................................................................................................3
1 Identification and evaluation of impact of economy on business organisation.......................3
2. Economic theory to a range of contemporary business contexts............................................4
3. Macro and micro economics forces on contemporary business .............................................5
CONCLUSION ...............................................................................................................................6
REFERENCES...............................................................................................................................7

INTRODUCTION
Micro and macro economics are two major categories of various factors of an economy.
Micro economic factors covers a study of individual or group. On the other hand, the macro
economic factors provides study of factors of whole nation. Maplin is a retail business of UK.
that sales Electronics items through online sources. The present assignment shows a description
of reason by failure of Maplin by showing impact of economic factors over business
organisation. It will provide impact of various economic theories and range and its application
over business. Further, it would also show a brief analysis of numerous micro and macro
economic forces on the contemporary business.
1 Identification and evaluation of impact of economy on business organisation
Economy plays the major role in business organisation as both are affected by the factors
of another. Economic factors may favourable or unfavourably affect the business organisation.
There are may factors of economy which have direct impact on the MAPLIN.
Some economic factors like impact of BREXIT, labour market, competition, inflation.
Changing technology, and many other which have great and direct impact on the business of
MAPLIN organisation (Busch and Matthes, 2016).
Major impact of BREXIT over the MAPLIN was it lost its major customers due to
implication of new rules over the business organisations about trading. Moreover, BREXIT also
resulted in enhancement of cost due to incapability of business of as to trade with the many
suppliers. Due to BREXIT
BREXIT resulted in a huge reduction in it's the export sales. Although, it developed
various strategies like reduction of price of its electronic products, lowering the profit margin,
etc. But these strategies failed to provide enough result to company that resulted in bringing the
MAPLIN into the administrative stage.
Further, inflation is also one of the key reason behind the failure of MAPLIN's business.
Inflation in the UK resulted in lowering the spending capacity of the customers. It had a direct
impact over the sales volume of MAPLIN organisation and over its profitability as well (Dhingra
and et.al., 2016). Due to lack of sales, the company started suffering loss from the sales of
electronic equipments due to which it caused in failure of business.

Moreover, due to the lack of availability of skilled workers, the MAPLIN failed to
develop the efficiency in its performance. Migration of population towards EU resulted in failure
of retaining the talent in the company. It lowered the overall business performance which
directly impacted the success of MAPLIN.
2. Economic theory to a range of contemporary business contexts
The economic theories consist of laissez-faire and Keynesian economics. With the help of these
theories it will provide understanding about the factors due to which the business of MAPLIN
leads to failure.
Keynesian economic theory : It is an economic theory related to the total spending in
the economy and its impact on the output and inflation. It focuses on using the government
policy for managing the demand in order to prevent from economic recession. Maplin
electronics collapsed into administration due to reduction in the demand for the products as they
were not able to provide the customers with the products which can offers high satisfaction to
them. Moreover, it was identified that the consumer were attracting towards online stores rather
than in store which also affected the demand of the products and thus there was a reduction in the
sales volume of this company (Hein, Detzer and Dodig, 2016). Due to this the company was
collapsed as the firm was not able to gain the customer confidence which resulted in to reduction
in their customers. Maplin products prices increased due to the Brexit vote out which will have a
great impact on its operation and thus its affect the company growth.
Monetarist
Monetarist is an ideological theory of economics that in focusing over impact of macro
economic factors over the business organisation. MAPLIN organisation can also apply this
theory over its own business organisation for the purpose of analysing the macro environmental
factor's effect on its business operations.
Analysis of these impacts will help the business in analysing and detecting its future risk.
It would result in analysing the impact over its business organisation *(Major Theories in
Macroeconomics, 2018). This theory involves controlling the economy by maintaining the
supply of money in the economy which affects the purchasing power of the people in UK.
People tends to spend more if they have good amount of money as well as credit facility
available to them. Hence this theory targets mainly on the growth rate of money rather than

focussing on the other factors. The role of central bank and government is mainly involve in this
theory as it they control the flow of money in the economy and controls the aggregate demand
of the consumers. Maplin could have studied this policy which may give them the idea about the
current inflation the economy faced as well as the purchasing power of the people (Wadsworth
and et.al, 2016). The company could have fix the prices of its products as according to the
current purchasing ability so as to survive in the competitive market and conducting their
business activities. Thus it would be easier for them in knowing the direct cause for their decline
in sales as well as know the current inflation rate in the market and then act accordingly to the
situation.
3. Macro and micro economics forces on contemporary business
The micro economics factors which have their impact on the consumer decision making
include the demand of the product and the market trend which have the influence on the decision
making by the customer. In the case of Maplin, the customers base for the company was
reducing due to the non - fulfilment of the customer demand which resulted into shift in their
customers base. The micro economic forces which leads to the failure of the business consist of
revenue and earnings (Moutinho and Vargas-Sanchez, 2018). Moreover, due to Brexit vote out
the company was significantly affected as the people were losing jobs and the Maplin was not
able to -provide the employees with the salaries due to which the labour market was also
affected to the large extent. The revenue for the company was degrading as the firm was not able
to gain the customer confidence as the customers were shifting to the online platforms rather
than using the in - store for buying the products which hampered the operation of Maplin. The
business was not able to find the buyers for their products which reduced the sales and hence the
profitability of the company was hampered.
Macro economics forces consist of inflation, technology, competition, impact of Brexit
etc. that have their impact on the business.
Due to the Brexit vote out the consumer spendings were reduced and thus fewer buyers were
attracted towards the products provided by the Maplin which have a great impact on the business
profitability (Veselovsky and et.al., 2015). The Brexit vote out increased the prices of the
products and services provide din the market which leads to increase in the inflation and the
prices of the products increased which have the negative impact on the customers spending as
the buyers purchasing power also reduced. With the changes in technology the Maplin customers

shifted from physical stores to the online stores which provided the competitors with competitive
advantage against the business of Maplin and the business was facing problems as the fewer
customers were attracted to the products of Maplin due to advancement of the technology.
Moreover, there was job redundancy as the Maplin profitability was reduced due to which the
employee turnover increased and the labour market for the business was affected tremendously
as the business was not able to generate sale for gaining the revenue (Wright and Coyne, 2018).
Also, due to the changes in the economic condition and the impact of Brexit the business was
having difficulty in attracting the customers but was not successful and thus the business
collapsed. The demand of the product was reduced with the increase ion the prices due to impact
of Brexit which have a diverse impact on the functioning of the organisation.
CONCLUSION
From the above it has concluded about micro and macro economics factors which have
their impact on the business operations. It has provided in formation that the business of Maplin
was collapsed due to the lack of customers attraction the reasons for the lack of customers
includes the impact of Brexit, technological advancement, high competition existing in the
market , reduction in job due to which the labour market was affected. Moreover, it has includes
the explanation the theories of economics which included laissez-faire and Keynesian
economics.

REFERENCES
Books and journals
Wright, M. and Coyne, J., 2018. Management buy-outs. Routledge.
Veselovsky, M. Y. and et.al.,2015. Development of financial and economic instruments for the
formation and management of innovation clusters in the region. Mediterranean Journal of
Social Sciences. 6(3).p.116.
Moutinho, L. and Vargas-Sanchez, A. eds., 2018. Strategic Management in Tourism. CABI
Tourism Texts. Cabi.
Hein, E., Detzer, D. and Dodig, N. eds., 2016. Financialisation and the financial and economic
crises: country studies. Edward Elgar Publishing.
Busch, B. and Matthes, J., 2016. Brexit-the economic impact: A meta-analysis (No. 10/2016).
IW-Report.
Dhingra, S. and et.al., 2016. The impact of Brexit on foreign investment in the UK. BREXIT
2016, 24, p.2.
Wadsworth, J. and et.al, 2016. Brexit and the Impact of Immigration on the UK. Centre for
Economic Performance. LSE, pp.34-53.\
Online
Major Theories in Macroeconomics. 2018. [ONLINE] Available through :
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macroeconomics/>