8 Pages
2051 Words
TASK1: Inflationary Pressure and Cost Of Living
Introduction - Effects of Inflation and Brexit on Business Sustainability
In recent times, the escalating global concerns surrounding inflation have garnered considerable attention, exerting widespread effects on economies across the globe and, by extension, influencing the living expenses of individuals. This report delves into the aftermath of these inflationary pressures within a local town, centering on the analysis of a particular establishment—Greatway Grocery Store as a case study to illuminate the broader consequences for both businesses and consumers.
Business models, macro and internal environment
Macro environment analysis is a crucial component of a company's strategic management, allowing it to assess and recognize potential opportunities and threats that could affect its operations. The objective is to equip management with proactive insights, enabling informed operational decision-making.
Global Inflationary Pressures:
Various elements contribute to the escalation of global inflationary pressures, encompassing factors such as the ascent of commodity prices, disruptions in supply chains, and a heightened demand for goods and services (Bien, 2020). These combined elements set off a chain reaction, resulting in elevated production costs, diminished purchasing power, and an overarching surge in the prices of goods and services.
Impact on Cost of Living:
The direct consequence of global inflation is the surge in the cost of living for individuals and families. As prices rise, consumers find themselves grappling with increased expenses for essential items such as food, housing, and transportation. This, in turn, has implications for local businesses and retailers as consumer spending patterns shift. Analysis model for chosen town and business.
PEST Analysis
Despite the ongoing economic downturn, Greatway Grocery Store has sustained respectable growth. However, Greatway Grocery Store cannot afford to disregard emerging threats posed by various global, regional, and local competitors. The competition for emerging markets is anticipated to intensify, leading to a fierce contest between industry giants such as Unilever and Procter & Gamble, alongside a multitude of local players, potentially resulting in a race to the bottom.
- Political- The government stability allows such local stores to expand regionally and internationally. It also attracts investors and resources with favourable tax policies.
- Economic- A moderate inflation rate will boost the economy resulting in increased overall disposable income. This will also affect the interest rate and the consumer spending trends.
- Social- A large number of young population, that are more educated and skilled will add depth to the human resources and talent pool. This will provide advantage to the company to focus on quality.
- Technological- Due to high rate of innovation across the different industries, the company is incorporating technological infrastructure for further advancement and development. This will result in competitive advantage and social media connectivity.
Impact of global macro-environmental events upon business
Case Study: Greatway Grocery Store
Greatway Grocery Store a local grocery store in small town of UK has experienced the brunt of these inflationary pressures. The store carries a diverse range of products, from fresh produce to household essentials, making it an ideal case study to examine the localized effects of global inflation.
Rising Costs for Greatway Grocery Store.:
The initial discernible effect on Greatway Grocery Store has manifested in the escalation of procurement expenses. Due to global disruptions in the supply chain and heightened transportation costs, the store has encountered difficulties in acquiring products at prices that are competitive. Consequently, the operational expenditures of Greatway Grocery Store have risen, thereby leading to a contraction in profit margins.
Pricing Strategies:
In response to the mounting expenses, Greatway Grocery Store has modified its pricing tactics. In an effort to stay competitive, the store has found it necessary to transfer a portion of the heightened costs to consumers. Consequently, this has resulted in an elevation of prices across a spectrum of products, impacting the local clientele who depend on Greatway Grocery Store for their daily necessities (Bilbao-Ubillos et al., 2023).
Consumer Behavior Changes:
The prevailing inflationary conditions have instigated shifts in consumer behaviour within the local community. Faced with stretched disposable incomes, patrons have become increasingly price-conscious, actively exploring alternatives and economizing on their expenditures. This change in consumer behaviour has had repercussions on the sales and revenue of Greatway Grocery Store.
Challenges for Local Economy:
The difficulties encountered by Greatway Grocery Store mirror the overarching challenges that the local economy is grappling with. As consumers adopt more frugal spending habits, local businesses find it challenging to sustain revenue levels reminiscent of the pre-inflation era, potentially resulting in job cuts and diminished economic activity within the community. This underscores the interconnected nature of the global economy, with the effects of inflation permeating down to the grassroots level (Hill et al., 2020).
Conclusion
In summary, the impact of global inflationary pressures has resonated within the local town, influencing enterprises such as Greatway Grocery Store and reshaping the community's dynamics. The surge in costs, shifts in consumer behavior, and the hurdles confronted by local businesses emphasize the importance of a thorough comprehension of the interdependence between global economic influences and local economies. Given the ongoing inflationary pressures, it is imperative for businesses and communities to adapt, innovate, and devise sustainable solutions to alleviate the negative consequences on the cost of living and overall welfare.
TASK 2: Bexit Impact on Businesses
Introduction
The aftermath of Brexit has introduced a new era of economic migration, characterized by changes in demographics that hold considerable implications for small independent businesses in local communities. This report examines how the evolving patterns of economic migration post-Brexit have affected the entrepreneurial growth of small independent businesses, substantiated by relevant examples.
Evidence based resources on government actions impacting the sector
The impact of Brexit on the UK has led to notably elevated inflation rates, primarily due to introducing disruptions into the nation's crucial trade partnership and negatively affecting the value of the pound. This depreciation has resulted in increased costs for imports. According to a recent analysis conducted by the London School of Economics, Brexit has been identified as the cause of approximately one-third of the inflation in UK food prices since 2019 (Carstens et al.,2021). This has consequently added nearly £7 billion ($8.8 billion) to the overall grocery expenses in Britain.
Changing Demographics of Economic Migration
Following Brexit, the United Kingdom has undergone a restructuring of its economic migration demographics. The implementation of more stringent immigration policies has modified the makeup of the workforce, affecting the availability and skill sets of migrant workers. Grasping these alterations is essential for evaluating their effects on small businesses functioning within local communities.
Brexit has established impediments to trade for both UK-based businesses and foreign companies that previously utilized Britain as a European hub. These barriers are negatively impacting both imports and exports, diminishing investment, and contributing to shortages in the labour market. Collectively, these challenges are intensifying the inflation issue in Britain, adversely affecting both workers and the business community (Kamber et al., 2022). Although Brexit is not the root cause of the cost-of-living crisis in Britain, it has compounded the complexity of resolving the issue.
Primary research using field observation and interviews
Brexit has played a role in the heightened inflation in Britain by creating disruptions in its crucial trading ties and devaluing the pound, leading to increased costs for imports. A recent analysis conducted by the London School of Economics revealed that Brexit contributed to approximately one-third of the inflation in UK food prices since 2019, resulting in an additional expenditure of nearly £7 billion ($8.8 billion) on the country's grocery bills.
Impact on Entrepreneurial Growth
Skill Gaps and Employment Challenges:
A key obstacle confronting small businesses is the rise of skill gaps within their workforce.
Illustration: To address this, a local software development company that previously depended on European programmers is currently dedicating resources to training programs and collaborating with local educational institutions. This initiative aims to overcome skill gaps and nurture the development of local talent (Cannice et al., 2021).
Diversification of Consumer Preferences:
Alterations in the demographics of economic migration can impact the makeup and preferences of the local populace. Small independent businesses serving distinct cultural or demographic groups might discover avenues for expansion by adjusting their products or services to align with the changing demands of their customer base.
Illustration: A neighborhood grocery store notices a change in consumer preferences stemming from an increase in residents from a diverse cultural background. In response, the store diversifies its product offerings to accommodate the diverse tastes of the incoming demographic.
Local Entrepreneurial Initiatives:
The evolving economic migration scenario has inspired local entrepreneurs to seek inventive strategies. Acknowledging the importance of nurturing local talent, certain businesses are launching training initiatives and forming partnerships with educational institutions to tackle skill shortages and encourage entrepreneurial development within the community.
Illustration: A modest manufacturing enterprise collaborates with a nearby technical college to offer apprenticeships and training programs, guaranteeing a steady supply of skilled workers while making a positive contribution to the local economy.
Entrepreneurial Collaborations:
The difficulties arising from shifts in migration demographics have spurred collaborations among entrepreneurs. Acknowledging the power of unity, local businesses may unite to combine resources, tackle shared challenges, and jointly capitalize on the opportunities arising from the changing economic environment.
Illustration: A coalition of local businesses comes together to collectively negotiate with suppliers, exchange marketing resources, and pool expertise, establishing a collaborative ecosystem that nurtures growth for each participating entity.
Conclusion
In summary, the post-Brexit alterations in the demographics of economic migration have presented small independent businesses in local areas with a intricate array of challenges and opportunities. Despite the persistence of skill gaps and employment issues, strategies such as entrepreneurial initiatives, adjustments to consumer preferences, robust supply chains, and collaborative endeavours are proving crucial for navigating and prospering in the changing economic terrain. The ability of small businesses to adapt and show resilience in response to these demographic shifts will be pivotal for their ongoing growth and achievement.
References
- Bien, B.X., Vu, N.T. and Hung, N.T., 2019. Brexit and risks for the world economy. International Journal of Research in Finance and Management, 2(2), pp.99-104.
- Bilbao-Ubillos, J. and Camino-Beldarrain, V., 2021. Reconfiguring global value chains in a post-Brexit world: A technological interpretation. Technology in Society, 67, p.101716.
- Cannice, M., 2022. Entrepreneuring Through Inflation: Perspectives of Silicon Valley Venture Capitalists. Rutgers Business Review, 7(1), pp.22-29.
- Carstens, A., 2022. The return of inflation. speech at the International Center for Monetary and Banking Studies, Geneva, 5.
- Feldkircher, M. and Siklos, P.L., 2019. Global inflation dynamics and inflation expectations. International Review of Economics & Finance, 64, pp.217-241.
- Forbes, K.J., 2019. Has globalization changed the inflation process?.
- Ha, J., Kose, M.A. and Ohnsorge, F. eds., 2019. Inflation in emerging and developing economies: Evolution, drivers, and policies. World Bank Publications.
- Hassan, T.A., Hollander, S., Van Lent, L. and Tahoun, A., 2020. The global impact of Brexit uncertainty (No. w26609). National Bureau of Economic Research.
- Hill, C.W., 2022. Global business today. McGraw-Hill.
- Kamber, G. and Wong, B., 2020. Global factors and trend inflation. Journal of International Economics, 122, p.103265.
- Leong, K. and Sung, A., 2023. Co-movement clustering: A novel approach for predicting inflation in the food and beverage industry. Journal of Event, Tourism and Hospitality Studies, 3, pp.1-21.
