Name: Cameron Nwanze Subject: D1 Evaluate the impact of changes in the economic environment on a selected business. I am required to evaluate the impact of changes in the economic environment on marks and spencer’s in relation to government decisions, policies, spending and economic management Government Decisions In 2012 the government decided to raise the minimum wage and change the vat rules this had a massive effect on marks and spencer’s as a company.
The government raised the minimum wage to ? 6. 18 an hour, This had a bad effect on marks and spencer because all the people at marks and spencer that were on the smaller minimum wage ? 6. 08 (off which It was estimated that nearly half of their work force were on) this lead to an increase on cost that was estimated to be over ? 0 million pound, this cost would have impacted on marks and Spencer’s because this firstly their cost would have gone up and marks and spencer would have had to make the decision to raise their prices to cover the cost however if they were to raise the prices this would have meant that it would be even harder for customers to afford their food and this would have then meant that these customers may have found another way firstly their cost would have gone up and marks and spencer would have had to make the decision to raise their prices to cover the cost however if they were to raise the prices this would have meant that it would be even harder for customers to afford their food and this would have then meant that these customers may have found another supermarket they may be cheaper to shop at, Marks and spencer could of also absorbed the cost however if they were to do this this would affect their profit margin and their mean that the customer would make a smaller profit and it is likely that they share price will then become smaller due to the week earnings.
This wage rise could have also be seen as a good thing for marks and spencer because it would means that more people would be earning more money however this is not good for marks and spencer because the type of people that shop at marks and spencer are working professional on a decent wage and therefore would not have been affected or help by this increase. The Vat rise has been a problem for marks and spencer because it has meant that goods at marks and spencer’s have become much more expensive and because of this people may find it difficult to shop at marks and spencer and therefore this would lead to sales to decrease and fall and this would lead to profits to fall. Policies A government policy that has effect the marks and spencer is the government policies to reduce the deficit and balancing the economy.
This policy is seen to have effect marks and spencer’s in a good way because the government have lowered the tax rate for top earners allowing these top earners to have extra money to spend at marks and spencer because it is persevered to be that a high percentage of these employees are the top earners. This Policy has also had an effected marks and spencer because the government have launched the National Infrastructure plan which has impacted marks and spencer because it has meant that the government would now be spending a lot money on Infrastructure for stuff like transport which makes it much easier for potential customers to buy product from marks and spencer because it is easier to get to a marks and spencer and shop there Spending
Government spending has really impacted marks and spencer for a few reason, firstly because the government is cutting jobs to public sector workers, this has impacted marks and spencer because those’d public sector worker that used to shop at marks and spencer would no shop there because they would rather shop at a different (Cheaper Store) in order to get more products for their money considering the fact that they are not earning anymore and just relying on saving on even may be on benefits. Another example to show have government spending has affected the government can be seen in regards to the amounts of cuts the government have made, this has made it easier for marks and spencer to hire new employees because due the vast amount of people that have been made redundant due to cuts it has meant that there is now vast pool of people looking for jobs and therefore making it more competitive for Marks and Spencer to high good employees.