"The recession has had devasting effects on UK businesses. Even long established companies have been unable to withstand the impact of the worst recession for 90 years." To what extent do you agree with this statement? (40 MARKS)
In order to analyse the impact on businesses during the recession, we need to definite what is a recession in financial terms. A technical recession occurs when the level of real national output declines over two successive quarters causing a contraction in the total volume of production in the economy of less than 10% in a country's Gross Domestic Product (GDP). The decrease must last for more than one consecutive quarter of a year. The GDP is defined as the sum of private spending and government spending on goods, services, labor and investment..
Historically, there have been five years of full-scale recession in the UK economy during the post-war period and the last recession occurred between 1990-92.
Even if the UK economy is actually on the "brink of leaving recession", according to the British Chambers of Commerce (BCC), fears are still on mind. Which we can easily be understood regarding the consequences and what happened during this recession as 1.3 million people were made redundant which has doubled the fall in employment and shops' closures by dozen occurred!
The first ones who have directly suffered from the recession were the local shops such as the one that you find on the next corner of your road, lots of them closed as they couldn't cut down on their prices like bigger companies to face the recession. Even long-established family shops has been forced to close as for example the family shop Rusholen in Northamptonshire was closed after 50 years with a loss of 35 jobs.
But the consequences have also dwelled on bigger companies such as Cadbury with the closure of its chocolate factory at Keynsham near Bristol with the loss of 500 jobs or even the famous well-established brand Mark & Spencers. The latter has closed 27 stores during the recession and has brought the loss of 1,230 jobs.
Directly link to the economic crisis, the difficulties which had suffered Mark & Spencer are a recession-proof. As the numerical datas stated before prove it, Mark & Spencer has also suffered of a consequent sales down of 5.1 percent and 7.1 in the run-up to Christmas. Furthermore, profits which having upped £1 billion has slumped below £600 during the recession.
As many firms and in order to face the recession, Mark & Spencer has introduced a short-term strategy. Therefore, the company has launched a new "Wise Buy" range of cheaper foods and other cut price offers such as "Dine in for £10" or "Family Favourites" which have made a significant cut in profit margins on...