Unit 1 the Business Environment P5

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Unit 1 Exploring Business Activity Assignment 3 P5

In this essay I will be describing how three external factors are impacting upon the business activities and stakeholders of John Lewis and Oxfam.

The first of the three external factors I have chosen is the credit crunch. The credit crunch is a decline in the availability of loans or a tightening of conditions required to take out a loan from banks. It also means that there are reductions on the interest rates set up by banks for saving. Credit crunches are normally caused by a period of careless and risky lending to people who don’t necessarily fit the exact requirements, these careless decisions lead to no return and leave the banks losing a lot of credit.

Impact in business activity

John Lewis

The credit crunch has a big impact on all organisations but a bigger impact on department stores as they have more products to manage and must make sure that they are not losing out in profit because of the public saving back money. This means for John Lewis a loss of total income meaning they might not be able to afford to give out certain wages, thus resulting in loss of jobs over the entire organisation. With the loss of many jobs comes a possibility of having to restructure the business’ organisation chart trying to think of what ways to manage staff is the most effective. Because of the loss of overall income there is also a reduction budget over all of the operations they can do, this means careful decision making in order to not lose money.

Oxfam

The credit crunch also affects charities such as Oxfam who rely on the public for donations. Having a economical climate like the credit crunch means less people willing to donate as they need to save money due to the lack of loans and the recent cut on interest rates. Having people not donating will lose publicity for Oxfam and they will need to get the message out that it is still important that they receive donations even though in the hard



References: http://en.wikipedia.org/wiki/Interest_rate http://en.wikipedia.org/wiki/Credit_crunch http://en.wikipedia.org/wiki/Carbon_footprint

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