Business and the Economy: Analysis of Economic Factors for Morrison's

This report provides an analysis of the relationship between business and the economy, focusing on the retail firm Morrisons. It explores the causes and effects of economic growth, unemployment, and inflation. The report examines how businesses respond to changes in economic growth, including strategies to manage inflation and the impact of unemployment. The study includes an evaluation of the methods firms use to adapt to economic shifts, the effects of inflation on business operations, and the influence of rising unemployment rates on a company's performance. The analysis uses examples to illustrate these points, providing a comprehensive understanding of the economic environment's impact on business decisions and outcomes. The report concludes with a summary of the key findings and their implications for business strategy and performance.

Business and the economy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK ..............................................................................................................................................1
1.1 Two possible causes of economic growth, unemployment and inflation........................1
2.1 Evaluate using examples the methods through which firm respond to changes in economic
growth ....................................................................................................................................2
2.2 Effects of inflation and strategies to deal with them........................................................3
2.3 Effect of increasing unemployment on a firm..................................................................3
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Business is very important for growth of an organisation and for the economy as whole. It
also affects the company in different and unique manner. Hence it is crucial that enterprise
evaluate the environment and then takes decisions accordingly. Organization can take steps to
adopt the business factors and can earn huge revenues. This Assignment describes about
Morrisons which is a retail firm. It was established in U.K. In 1899. Report explains about the
possible causes of economic growth, inflation and unemployment (Galaskiewicz, 2016). It will
also discuss about evaluating with examples that firm can respond to changes in economic
growth and effects that inflation have on firm and monitor strategies that are used to deal with
them. It also describes about effects of increased unemployment on a firm.
TASK
1.1 Two possible causes of economic growth, unemployment and inflation
a) Economic growth: It is an important factor that leads to increase in the national income of
country. There are two factors that can lead to development in the economic growth of
Morrison’s which are described below:
 Increase in aggregate demand: An increase in aggregate demand is a factor which help
in increasing the economic growth. It can be due to decreasing the interest rates and
hence customers can easily purchase the product. This results in increasing of economic
growth.
 Increase in aggregate supply: It means that there is increase in aggregate supply. This is
due to many causes such as decrease in input prices as compared to prices of output. It
results in increase in aggregate supply.
b) Inflation: Inflation is the increase in prices of products and all prices of goods become high. It
reduces the purchasing capacity of people and people purchase less good. It can be due to
interest and debt. Inflation is increasing and this is due to many factors. First is that oil prices are
increasing rapidly and hence there is increase in prices of many commodities. Second is the
depreciation of pound since EU referendum in June (Ghisellini, Cialani and Ulgiati, 2016). Thus
there is inflation in the economy and there is increase in the money supply which also lead to
rising prices in the economy.
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c) Unemployment: It is the factor which results in increased poverty level in the country. There
are different factors which leads to development in the unemployment level . They are described
below:
 Increase in population: Population is increasing day by day. All people cannot get
employment and this results in creating unemployment in country. Individuals cannot
raise their income and standard of living. For example Morrisons cannot provide
employment to all people and this creates unemployment in country.
 Slow growth of industrialization: Rate of industrialization is slow. They are not rapidly
increasing and hence it cannot provide employment opportunities to many people. Hence
due to this reason also unemployment exists in the country. Hence many people cannot
increase their income level.
2.1 Evaluate using examples the methods through which firm respond to changes in economic
growth
There are various methods through which company can respond to changes in economic
growth. Hence as a result firm can create different plans and policies to adopt to changes which
can increase the income of country. The ways through which enterprise can respond to changes
in economic environment are described below:
Impact of population change: Population is increasing day by day. There is increase in
unemployment level in country. Company has to take effective steps so that firm can provide
jobs to all people. For example, population is increasing day by day and hence many persons do
not have jobs. Many persons cannot get money to earn their livelihood. In this case, company has
to create plans and policies to reduce the unemployment from country.(Muniesa, 2014). Firm
tries to employ more people so that they can reduce the unemployment level from the country.
Company can open new stores so that they can select new staff members . In this manner firm
can provide employment to all persons.
Effect on income tax changes on economic growth: If Government has increased the tax
rates, then company has to pay higher taxes to the authorities. Hence firm can create strategies
and policies so that organization can earn more revenues and can increase the market share. For
example, organization can create strategies to pay taxes in proper time so that firm can easily
survive in market (Rumelhart, 2017). If enterprise do not pay taxes in time, then in such case
company faces many problems and cannot earn revenues. Thus business has to pay taxes in time.
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This results in earning of huge profits and enterprise can maintain good image in market. Hence
it can easily expand their operations in minimum time.
2.2 Effects of inflation and strategies to deal with them
There is inflation in the market and this can impact the company in drastic manner.
Hence firm has to create effective strategies so that firm can easily perform the activities and
tasks. The effects of inflation on Morrisons and the strategies to deal with them are described
below:
Reduce the purchasing power: Inflation directly reduces the purchasing power of all
customers as prices of all commodities are increasing. Hence people do not purchase any
product. It results in decreasing the revenues and market share of company. For example, there is
reduction in purchasing power of all people if inflation arises in economy. It reduces the
revenues of firm. Hence organization has to sell products at low costs as then only it can capture
many customers. This helps the enterprise to earn more revenues and company can increase the
market share. Hence enterprise can easily expand the business.
Reduction in production: Inflation directly reduces the production level in the company.
Hence as a result firm has to create effective strategies so that company can directly increase the
manufacturing of products and hence firm can earn more revenues. For example company can
limit the wage growth and can reduce the inflation in market. Lower wage growth can reduce the
inflation level from country. This method is used by Morrisons to reduce inflation in country.
2.3 Effect of increasing unemployment on a firm
Unemployment is a condition where people searching for a job but unable to get
employment and it directly affect the economic condition of a country. Unemployment have both
negative and positive impact over the operations of business (The Overall Effects of
Unemployment, 2018). Following points shows how unemployment have negative impact over
the functioning of Morrison’s: Weakens consumer buying: When the unemployment rate increases, people generally
have less money to spend over goods and services as it have a direct impact over the
purchasing power of consumers. Unemployment largely affect the growth of Morrison’s,
as if the buying behaviour of consumers get affect it results in decrease in sale which in
turn will reduce the revenue generated by company.
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 Demand for inferior goods: Increase in unemployment rate results in decreasing the
spending habit of customer due to lack of fund. Hence customers started demanding for
product and services which are of inferior quality as a result it affects the market share of
Morrison’s and higher customer turnover (Steers and Nardon, 2014). Consumers started
switching to different brands which provides product and services at low price this will
put pressure over company to reduce prices of their offerings which may result in
occurrence of heavy loss.
Apart from these negative factors there are certain ways in which unemployment have
some positive affect over Morrison’s which are as follows: Recruitment: With the increase in unemployment rate there is also increase in number of
people or applicant who are searching for job. This in turn will make the process of
recruitment easier for Morrison’s as they have larger number of candidates to select
from. It also helps in selecting the best person eligible for the job out of large number of
applicant as per the required skills and competencies and at the time of unemployment
they can also get employees at lower pay off salary.
 Lower staff turnover: Increase in unemployment generate a sense of insecurity for job
among employees, hence they put more efforts to improve their performance in order to
secure their job and they avoid searching for new jobs. This help Morrison’s in
improving their level of performance and also provide them with some employee for
long period of time (Scarborough, 2016). So, they are not required to spend more over
recruitment and selection process.
CONCLUSION
From the above report it has been concluded that operations and activities performed by
business have a direct impact over the economy of nation. Economic growth will help in
increasing the national income which is highly influenced by demand and supply of country.
Apart from this inflation and unemployment also affects the growth of economy. Inflation has a
negative impact over the economy as it results in increasing the price of commodities which
affects the demand and supply of good & services. On the other hand, employment affects the
purchasing power of customer which reduces the sale and profitability of Morrison’s and apart
from this it also have some positive impact. Unemployment provide large number of candidates
for employment and also ensure company with lower staff turnover.
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REFERENCES
Books and Journal
Galaskiewicz, J., 2016. Social organization of an urban grants economy: A study of business
philanthropy and nonprofit organizations. Elsevier.
Ghisellini, P., Cialani, C. and Ulgiati, S., 2016. A review on circular economy: the expected
transition to a balanced interplay of environmental and economic systems. Journal of
Cleaner production. 114. pp.11-32.
Meyer, K. E. and Peng, M. W., 2016. Theoretical foundations of emerging economy business
research. Journal of International Business Studies. 47(1). pp.3-22.
Muniesa, F., 2014. The provoked economy: Economic reality and the performative turn.
Routledge.
Rumelhart, D. E., 2017. Schemata: The building blocks of cognition. In Theoretical issues in
reading comprehension (pp. 33-58). Routledge.
Scarborough, N. M., 2016. Essentials of entrepreneurship and small business management.
Pearson.
Steers, R. M. and Nardon, L., 2014. Managing in the global economy. Routledge.
Online
The Overall Effects of Unemployment. 2018.[Online] Available through
<https://smallbusiness.chron.com/overall-effects-unemployment-37104.html>./
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