P5 Unit 3

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P5: Impact of Economic Environment on Business Introduction: In the following task we are selecting a business which is located in 2 different countries which have very contrasting economic environment. We need to analyse the economic status of those country and explain how the economic condition is affecting/beneficial for the business. My chosen business for this task is Coca cola beverage multi-national company and I will compare the effect by economic environment on Coca cola Company located in UK and China. UK economic environment and its effect on Coca cola: To understand the economic environment in UK, we need to analyse the different aspect which affect economic, which are: 1) Inflation: The action of increasing and declining prices of goods and services in a country is called inflation. Government of a nation always tries to keep their inflation low because if the price of a goods and services goes higher than it will be out of limit of the people and it will be hard to survive. Present inflation condition in UK: The following is the present inflation statistic from Nation Statistic of UK. http://www.tradingeconomics.com/united-kingdom/inflation-cpi In the above figure we have a National statistics of UK’s inflation rates from 2012-2013. When we studied the figure and we can see that the inflation rate is 5% before 2012 and 2.7% in present state, what does that means? The higher the rate there will be more increase in price of goods, which is called high inflation. Before 2012 we can see the rate of inflation is very high (5%) compare with 2013 rate (2.7). There are two general theories which are the causes of high inflation: - Demand pull inflation: When there are high amount to spend and fewer amounts
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