Through these business cycles Berendsen would have to adjust their tactics for the purpose of keeping the firm efficiently running. Through the boom cycle the business will have an increasing interest in what the company provides. Mainly because of the high employment rates, this means more individuals have jobs and also more income.
In this state of economy the business would receive a general increase of demand for their services that they can raise the price of their GDP, which results in the economic growth of the business. However there are also downsides towards the recession, the firm will find it harder to recruit qualified staff with experience; this will resort in an increase of starting wages to attract staff with experience.
During the slowdown period there begins to show a decrease for demand on the services forcing the company to increase prices, also the company would have to re-advertise to create awareness of their products. Also the value added tax will steadily increase. Berendsen also will suffer from the lack of demand and will also have to start to make austerity measures.
The next is the recession, Berendson’s sales begin to plummet because the value of the pounds sterling increases; this means that money is more scarce due to the fact that many individuals do not have or are at risk of losing their jobs. Also wages begin to be lowers mainly because not enough capital is being generated into the business. Through the process of this there is no longer much job security so customers become more cautious with what they spend, making sure they only buy necessities. These types of businesses tend to suffer the most.
The firm will also have to reduce their work force because of the decrease in demand; in addition the company will have to reduce the prices of their services and also will evidently have to resort to mass advertising their services with additional deals to attract customers. This also will resort in the increase of trade surplus, as raw materials are cheaper abroad than in the UK meaning that the business cuts the cost of the price of goods however the manufacturing companies in the UK begin to struggle because of the of demand. They reacted to this by decreasing the amount of certain goods and services that were not high on demand. Also the company increased the amount they buy in bulk to for a larger discount, the firm targets developing countries such as china.
However since Berendson’s is a European business the impact of the recession is not has huge as some other companies. An increase of interest for the firm services grow more popular in different parts of Europe such Poland and Czech Republic.
Berendsen’s services steadily begin to increase in demand, which then allows more job opportunities due to the fact that the firm need more support. This means that the production beings to increase for the products and services that are purchasable. Due to the fact that many more individuals have an increase in income, this is because the employment rates being to rise. The firm also slightly reduced costs to gain back customer loyalty.
Poor balance of payment can affect Berendsen plc because it has many store locations nationally, the result of poor balance of payments would mean that less goods can be sold overseas thus affecting the firms profit. Through the process of this a lot of workers could be made redundant because their services will no longer be required.
The Uks GDP figure can also affect the business because the prices for raw materials will increase causing the business to either search for alternative sources or increase their prices however this can lead to a decrease in demand for their product as it is already costly enough.