Economic Influences on Marks and Spencer

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Economic Influences Business cycle – The fluctuations in economic activity that an economy experiences over a period of time. A business cycle is basically defined in terms of periods of expansion and recession. During expansion, the economy is growing in real terms (excluding inflation), which is shown by rises in indicators such as employment. During recessions, the economy is getting smaller, and this is measured by decreases in the components such as employment. Expansion is measured from the trough of the previous cycle to the peak of the current cycle, while recession is measured from the peak to the trough. During a boom there is high levels of consumer spending, business confidence, profits and investment. In addition, prices and costs also tend to rise faster and unemployment tends to be low as growth in the economy creates new jobs. During a recession falling levels of consumer spending and confidence means lower profits for businesses, which then start to cut back on investment. Also recession increases spare capacity and unemployment rises as businesses cut back and reduce stocks. During slump, there is a prolonged period of declining GDP which leads to very weak consumer spending and business investment falls. We will have to be careful when the economy is in recession as it is easy for businesses to fail, and also there is rapid rising unemployment. Also during a recession we will be in fierce competition and competitors will be pushing for the lowest prices. When the economy is in recovery things are beginning to get better, therefore Marks and Spencer will begin to get more sales revenue as consumers begin to increase spending and therefore we at Marks and Spencer will be more confident. Therefore we will begin to invest again and build stocks, however, it does take time for unemployment to stop growing. Inflation – This is the rate at
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