Evaluate how future economic, political, legal and social factors impact the strategy of an organisation
D2
Evaluate how future economic, political, legal and social factors impact the strategy of an organisation
Economic Factors
Economic factors have always been a concern for businesses like Tesco’s this is because the economy is continuously changing.
In 2008 we experienced a worldwide recession which affected every business after the stock market collapsed. Tesco’s were also affected by the recession which resulted in their profits decreasing however they did find a way to benefit from the lack of flow of cash in the economy they did this by changes the prices of their products to match the state of the economy to continue to generate sales. Tesco’s is a high risk company to the recession and credit crunch, we can see this because of what happened when Woolworths were hit by the recession and failed to recover from it this shows how even a profitable company can fall if they cannot cope with the changes in the economic environment.
Part of the economic crisis was inflation and the credit crunch, inflation is where there is a rise in the price of goods this means that customers were more likely to shop at discount stores rather than the likes of Tesco because they thought they were getting more for their money. If the economy was then to go into a recession again this would have serious consequences for Tesco which would leave them in a very risky position because after the first recession it would be too risky for Tesco’s to lower their prices anymore without suffering too much loss for the company, in the worst case scenario Tesco would end up having to close down stores in order to save money. If the opposite were to happen which would be that the economy recover then this would allow Tesco’s to have the freedom to increase their pricings which should lead to higher revenue and profits for their shareholders.
Political Factors
Political factors are a concern which all businesses have to face, if the government make changes to the law set in place
Evaluate how future economic, political, legal and social factors impact the strategy of an organisation
Economic Factors
Economic factors have always been a concern for businesses like Tesco’s this is because the economy is continuously changing.
In 2008 we experienced a worldwide recession which affected every business after the stock market collapsed. Tesco’s were also affected by the recession which resulted in their profits decreasing however they did find a way to benefit from the lack of flow of cash in the economy they did this by changes the prices of their products to match the state of the economy to continue to generate sales. Tesco’s is a high risk company to the recession and credit crunch, we can see this because of what happened when Woolworths were hit by the recession and failed to recover from it this shows how even a profitable company can fall if they cannot cope with the changes in the economic environment.
Part of the economic crisis was inflation and the credit crunch, inflation is where there is a rise in the price of goods this means that customers were more likely to shop at discount stores rather than the likes of Tesco because they thought they were getting more for their money. If the economy was then to go into a recession again this would have serious consequences for Tesco which would leave them in a very risky position because after the first recession it would be too risky for Tesco’s to lower their prices anymore without suffering too much loss for the company, in the worst case scenario Tesco would end up having to close down stores in order to save money. If the opposite were to happen which would be that the economy recover then this would allow Tesco’s to have the freedom to increase their pricings which should lead to higher revenue and profits for their shareholders.
Political Factors
Political factors are a concern which all businesses have to face, if the government make changes to the law set in place