Inflation & Unemployment Effects Essay

2190 words - 9 pages

Assignment Question1- Discuss how the macroeconomic phenomena, at least two interrelated, can impact how the organization performs within its market and use this theoretical discussion to explore that impact on your company, recommending courses of actions that enable it to survive the existing conditions and make use of the coming changes.Acknowledgement:Sincere regards to Mr. Salman AL Fardan, for the valuable insights provided and practical examples he gave throughout the lecture, which has helped me to better understand the course material and prepare for this paper and exam. Many thanks also go to the Mr Zaki, Manager of Marks & Spencer Bahrain branch, for the helpful information he provided me, which aided me in preparing this paper.Table of ContentIntroduction................5Marks & Spencer .........5Aggregate Demand.........5Interest Rate....Fiscal policy.........8Marks & Spencer.........9Future Growth...........9Conclusion..........11References...........12IntroductionThis essay looks at the macro economic phenomenon of inflation and unemployment in an economy and how they affect the businesses. This essay looks at the UK economy and takes into account various other macroeconomic phenomena such as aggregate demand and interest rates. Since 2001 the government in the UK has lowered interest rates to boots consumer spending and increase economic output. This essay looks at the example of the Marks and Spencer and analysis how this economic policy has affected the company and its earnings over the past three to five years.Marks and SpencersMarks and Spencer is one of the leading retailers in the UK it offers clothing. Foods, home ware products and financial services. The company serves around 10 million customers in a week and has over 300 stores in the UK. The Marks and Spencer group is present in 30 countries and it has a turnover of above $ 8 billion, BD 6 billion (Company Annual Report).Given the increased spending of the consumers M&S was able to increase its profitability. In 2003 the company achieved high profits in their clothing business the group operating profits rose to $ 761.8m BD 548m which was a remarkable increase of 21.1% this shows that the company had been successful in implementing their new customer focused strategy. The core operations continued to generate huge profits, which included the retail operations however the Financial services also improved their performance. The $ 8.1bn BD5.8bn an increase of 6 % the international performance of the company also performed well. The company focused on maintaining on improving sales volumes by offering cheaper process and better quality. The company has consolidated its supply base, which led to an improvement of the cash flow. The food business at Marks and Spencer outperformed the market and showed strong growth (Company Annual Report).Aggregate DemandTo deflate the economy the government has to reduce the economic activity. The excess level of demand...

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