P5 - Describe how John Lewis would be influenced by economic factors in a time of economic recession and economic growth in the UK economy
The two economic environments that I would be describing about are recession and growth on the business activities of John Lewis. Growth occurs when more goods are being produced and consumed, and also incomes are rising. During growth people spend more money on goods and services as they have more money to spend and also businesses would invest more and hire more labour as it links to increasing demand. Recession however occurs when people involved in business become more cautious so they cut their spending down and also cut back on their orders as well as making workers unemployed or redundant.…show more content… As during this period of time customer’s behaviours change to usually only spending on good quality products for what they essentially need but nevertheless if it was a want customers usually look for a substitute product that still meets the needs and purpose of a particular product but is just found at a cheaper price because of the type of brand it is etc. As usually this is when we see customers taking more care of their money and become more cautious on what they spend their money on. When customers change their behaviour in spending it would affect also John Lewis as since it’s concentrated solely on selling good quality products at high prices they would suffer from a reduced amount of income coming into the business at times of recession. Therefore businesses would usually cover their losses and begin unemploying workers at the business so it reduces businesses costs in the long term. As a result John Lewis may start encountering losses during this period of economic recession as most of the products they sell are high quality products which are sold at its reasonable valued price so the price may still be high for most existing customers at the time, therefore sales in these products would reduce. The methods John Lewis would try to recover from the losses in the short term would be to begin unemploying workers and making other employees redundant. However, in recession John Lewis would have a drawback of not benefiting at all from their suppliers as
