Inflation for Business Students
The rising cost of goods and services - or as we know it, ‘inflation’ is one of the key measures that affect our financial well-being and also a word that scares many AS Business students. This article from the BBC helps to explain it in simple terms, which I think any AS Business student should be able to grasp. The Q&A section is particularly useful and may help with those PESTLE and Level 4 Evaluation Marks come the exams in May.
UK manufacturing - GlaxoSmithKline invests in 1,000 new jobs
The relationship between business and the government - one important element of this is government support for business investment through fiscal policy (taxation), regulation and legislation. Yesterday Glaxo announced that they were investing £500mn in a new factory in Cumbria which will provide 1,000 much needed jobs. And this extract from the BBC article about this shows how government has helped to bring this about:
Glaxo said it was motivated specifically by Chancellor George Osborne’s confirmation in the Budget on Wednesday that the government would introduce so-called patent boxes.
These allow corporations to pay a lower rate of tax on profits generated from UK-owned intellectual property.
“The introduction of the patent box has transformed the way in which we view the UK as a location for new investments, ensuring that the medicines of the future will not only be discovered, but can also continue to be made here in Britain,” said Glaxo chief executive Sir Andrew Witty.
“Consequently, we can confirm that we will build GSK’s first new UK factory for almost 40 years.”
A useful little piece of evidence to use if writing BUSS4 essays on this topic.
Game Over?
Sometimes the decline of a business enters a spiral. Conditions in the marketplace change. New competitors emerge. Poor trading conditions lead to disappointing revenues. Cash flow dries up. Suppliers become reluctant to supply. Shareholders begin to pull out, and it gets progressively harder to raise finance to reverse the decline. That seems to be a fair summary of the current woes of Game Group, which is looking increasingly like the latest casualty on the troubled UK High Street.
read more...»Pampering - demand booms as consumers seek an affordable treat
Consumers might be feeling the pinch, but despite the downturn, demand for nail treatments is booming. Is having a nail and other spa treatment an affordable luxury what some of us simply can’t do without in times of austerity? This great BBC video looks at the history of products that have boomed in tough economic times.
read more...»Lesson video : Franchising for beginners
A wonderful topical video clip here from the BBC which introduces pupils to the pros and cons of setting up a Franchise. Four minutes long, the video is perfect as a lesson starter for just about every business course that requires students to develop their understanding of business startups.
read more...»Froth on the beer versus froth on the coffee?
A short BBC video on Whitbread’s huge strategic shift from brewing to retailing coffee and budget hotels.
Whitbread abandoned beer brewing and pub retailing and off licence sales, an industry in which had been a significant presence since 1742. By 2001, the sector had low profits growth and declining sales. Capital has been diverted into areas with higher growth coffee shops and budget hotels. Whitbread’s main brands include Costa Coffee, Premier Inns.
read more...»Economics for Business: Is an economic recovery underway?
A ‘crossover’ blog here, since most Business students will be spending at least some of their time thinking about the external environment that firms operate in. For most businesses, the dominating external issue has been the deep recession – a long period in which the UK economy has struggled. Analysis from The Economist suggests that the economy has taken so much damage we’re basically back to where we were in late 2003! A pretty depressing thought, but there are some signs that things might be picking up.
What follows is a link to an article giving reasons to be optimistic, and to a short series of blogs from last year that take you through what you need to know about economic ‘fundamentals’ at A2 level.
read more...»More perspectives on our changing shopping habits
There have been plenty of recent blogs on the problems faced by struggling firms on the UK “High Street”. You’re all encouraged to think through these problems, perhaps using a framework like PEST analysis.
This blog adds a couple more perspectives, from recent articles in The Guardian and The Economist that paint a pretty grim future for the High Street - at least in its current form. All is not well for the out-of-town grocery chains either.
read more...»Tesco’s Big Price Drop - on the Stock Market, or, Porter and Ansoff in action
Such is the importance of Tesco’s and their dominance of the retail market that the effect of a 2.3% drop in their like-for-like sales knocked almost 16% off their share price yesterday. Perhaps not so much a reflection of the figures themselves - although they compare poorly with Morrison’s and Sainsbury’s both of whom managed to increase their sales over the same period - as the admission by the new CEO Philip Clarke that Tesco’s got their strategy wrong, both in the short and the long term.
read more...»Tesco takes it ‘easy’, controlling costs in its US operations
You may already know about Tesco’s overseas expansion strategy, and its Fresh & Easy venture in the States. The US expansion is taking place in challenging economic conditions and according to The Guardian, the business is ‘mothballing’ a second wave of Fresh & Easy stores, suggesting that the supermarket group’s loss-making US start-up has hit another bump in the road.
read more...»Would you work harder - for nothing? The hidden costs of employment fear
In one sense, employers have never had it so good. Not only do they have a vast and growing pool of unemployed people from which to select. But, their employees are also likely to be working harder, putting in unpaid overtime and keeping their heads down in times of great uncertainty for those in work. That is the conclusion of a new survey reported here in the Telegraph.
read more...»Unemployment and motivation
What a bleak picture for the job prospects of millions of people in the UK in 2012. Two separate surveys - one from the CPID and another from totaljobs.com - both predict a dire 2012 for employment in the UK. Unemployment is predicted to move towards 3.0 million as further public sector job cuts are not matched by employment growth in the private sector.
The CIPD (the professional organisation representing HR directors and managers) makes a link between rising unemployment and worsening employee motivation. Their logic is pretty simple. The doom and gloom surrounding prospects for the economy feeds directly into greater uncertainty amongst those in work. The pressure of lower demand rising costs forces employers to squeeze pay, resulting in employees experiencing a continued squeeze on their take-home pay, with the cost of living still set to outpace wages, despite expected falls in inflation.
Those out of work face a desperate challenge to find employment. Those in work face uncertainty about their job prospects and pay. A miserable situation in which to enter a new year.
The human story of long-term unemployment
Behind the dreadful and rising UK unemployment figures are millions of very personal stories. This video provides us with an insight into one man’s relentless search for work.
1,500 applications eventually lead to one interview for accountant Steven Stubbs, a visually-impaired, well-qualified accountant living in an unemployment black spot. Mr Stubbs’ persistence is inspirational - but will it be enough to help him find the work he wants? A telling insight into the problems faced by the long-term unemployed in the UK.
read more...»Strategies to revive the High Street: Mary Portas reports
The woes of the UK High Street had begun long before the Credit Crunch and recession. It seems that a combination of factors (think PEST analysis) have combined to create the difficulties that are squeezing this traditional sector of business activity. Nobody has the answers to saving the High Street, but Mary “Queen of Shops” Portas has given it a go.
Why not try this exercise for yourself?
Firstly, use a form a marketing analysis like PEST or the Porters’ 5 Forces model to identify where the problems lie. Secondly, make 3 recommendations to either firms or governments as to how they might resist the decline (there’s some background here to help). Then read on…
read more...»Optimism and expansion in consumer leisure markets
Consumers are cutting spending, unemployment is expected to rise over the next year and in a week of ever-gloomier forecasts for the economy, business and consumer confidence has been dropping like a stone. So what do Starbucks, Hilton and Marstons know that the rest of us don’t? All three have chosen this week to announce expansion in the UK - Starbucks with a market development move to open 200 drive-through outlets, Hilton with expansion of over 20 new hotels (part of a plan to open 110 across Europe) and Marstons with a market penetration plan to build 19 new pubs this year and a further 25 a year from 2012.
Good news all round - how nice to see some evidence of growth amidst all the dire news about the economy. But it is intriguing to see these plans just now - where do they get their confidence from?
Unilever hit by rising costs
Here is a good example of a global giant in consumer products whose profitability has been affected by external headwinds over which it has little control.
The Anglo-Dutch business Unilever - the world’s second-biggest consumer-goods company – has announced that profitability might fall in 2011 even after it increased prices to offset soaring costs for the commodities used to make its products.
read more...»Batten down the hatches - strategies for the next downturn
Is it really 18 months since many of us were pouring over research sources for the 2010 AQA BUSS4 research task on strategies for handling an economic downturn? Well dust those notes off folks cos here we go again with a second looming UK recession. But this time, will UK industry be ready?
read more...»Shoppers switch stores as income patterns change
Some of the UK’s biggest grocers lost market share to cheaper rivals in the last three months as household incomes came under further pressure, according to this useful article in the Guardian
read more...»A level playing field for football on TV
Pubs and clubs that want to show live football, cricket or rugby on Sky TV have to be extremely confident that it will raise their profits - the monthly cost of subscription runs to over £500 per month. For many, showing live sport is a way to keep customers coming to the pub rather than drinking at home, so may be the only strategy available to stay in business.You can easily see the benefit of finding a cheaper source of satellite broadcasts if possible, and this is the background to the well-publicised case in which Karen Murphy, landlady of a pub in Portsmouth, was taken to court by Sky and the Premier League for using a cheaper Greek decoder to bypass controls over match screening. The European Court of Justice has ruled that national laws which prohibit the import, sale or use of foreign decoder cards are contrary to the freedom to provide services.
read more...»Industrial disputes - the UK data
The Timetric site is a terrific resource for business and economics teachers who want to call up some latest data onto the screen or whiteboard to generate some student discussion. I wanted to take a look at the extent of lost days arising from industrial dispute and found this chart which enables you to illustrate the long-term trend in industrial disputes…
read more...»Who is Britain’s biggest manufacturer? The answer may surprise…
The impact of the turbocharged emerging economies continues to grow and I was certainly surprised by the answer to this question. Having spent a long time thinking and reading about outsourcing and offshoring it’s easy to forget how the process runs in two directions. It’s not just that British firms have massive overseas investments – over the last few years foreign multinationals, many from the developing world, have been building up their bases here.
read more...»Premium market segments: Waitrose at Canary Wharf
Further evidence that the economic downturn hasn’t affected everyone equally: there are still groups of high income consumers out there. Effective marketing requires firms to target groups of consumers with similar buying habits – or market segments. Waitrose are gambling on their target market with a £15m refurbishment of their Canary Wharf store, featuring delights such as wines at up to £425 a bottle.
read more...»The puzzle of rising profits
Would you have guessed that a whole host of companies are reporting bumper profits, even as the economy struggles?
Apparently so. Despite all the concerns about the world economy, many corporations have still been recording large profits which, on the whole, have been much better than analysts had forecast.
read more...»The world’s biggest car market
You guessed it. The rise of the emerging markets continues apace, with the US car market now in 2nd place behind China.
read more...»Motivation in a time of austerity - financial benefits become more important
What motivates someone to want to change their job? Many factors come into play, but during a period of poor consumer confidence and economic austerity, financial motivation climbs to the top of the table. That’s the conclusion of a new survey from the CPID…
read more...»Where there’s muck there’s brass
On the face of it, this is a good end-of-term case study which is bound to raise a smirk or a grimace from most students, but actually there is a wealth of good solid business studies theory in it. In answer to the question “What to do with 12,000 tonnes of pig poo?” a farm in Gloucestershire has taken advantage of government grants to set up their own biogas generator, which enables them not only to provide their own power for the farm and farmhouse, but also to sell about 2.2 million kilowatts of electricity each year to the National Grid, and even better, to save money on fertiliser as the by-product has been broken down into a form that can be used on the fields. Even better, the process prevents huge amounts of methane from being released into the atmosphere - apparently each year it saves the equivalent of almost 9,000 return flights from London to New York.
read more...»Hardship on the High Street – what’s the problem?
We’re currently receiving daily reminders of the problems on the UK High Street. Today it’s Thorntons, following on from Jane Norman, TJ Hughes and Homeform, which controls Möben Kitchens, Sharps Bedrooms and Dolphin Bathrooms. Habitat, HMV, Waterstones – the list goes on and on. Do these high profile business failures threaten the High Street? And what is behind their problems?
read more...»The Irresistible (?) Rise of the Super Rich
I wasn’t surprised to pick up on the news that the world’s wealthiest people are now richer than before the credit crunch. A striking feature of the last thirty years has been the emergence of a tiny group of people capturing a relatively enormous slice of national income. You may be astonished to learn that in the UK, the wealthiest 1000 people have assets worth more than £330 billion (that figure alone represents a sum equivalent to almost 40% of the entire debts of the UK government).
This raises a number of issues in Business. Firstly, you might focus on the marketing opportunities this offers to some firms. Equally, you might reflect on the CSR and ethical implications of this state of affairs. And finally: will it last? Might the tide be turning, with the next thirty years seeing attitudes change and tolerance for this situation coming under attack from electorates and their governments?
read more...»Evan Davis ‘Made in Britain’ - and a new trade data tool to play with
I am cross-posting this item from the Economics blog because it should be of great value to A2 Business students as well as those studying Economics.
The first episode of a 3-part series, Made in Britain, was shown on BBC 2 last night, and was a really useful hour for business students. It examined how and why Britain has lost thousands of manufacturing jobs over the last two or three decades in the low-value part of the sector, with some film of outsourcing shot in China as well as plenty of archive material from this country, but argued that the move to high-end, low scale manufacturing has become Britain’s area of comparative advantage in industrial manufacturing. This included Evan being taken for a test drive in the new McLaren sports car, which was clearly an amazing experience - watch the clip to see his reaction! And this surely emphasises the Economic Importance of Manufacturing to the UK economy - see this link to Geoff’s blog on this topic! Sadly this episode is not to be broadcast again, but is available on i-player for another 21 days and is thoroughly worth watching. I will certainly be setting the recording machine for the next two programmes, on Mondays at 9.00 on BBC2 - episode 2 is to focus on how innovation can help keep Britain ahead in the global economy.
read more...»Business investment: the UK corporate cash pile
“Plan A” is that the economy grows rapidly, pulled along by high levels of demand from business investment and rising exports. The government and consumers can spend less and pay back debt.
There are plenty of potential problems with this route map to recovery. But there’s good news too. I was amazed to see data on how much cash is being hoarded by UK firms – potential fuel for the kind of expansion we’re hoping for.
read more...»
