BUSINESS ECONOMIC ENVIRONMENT LBSEC2051 Essay Example | Topics and Well Written Essays - 1500 words

BUSINESS ECONOMIC ENVIRONMENT LBSEC2051 - Essay ExampleSimilarly, a pass away in the price of a particular item shows a rise in the demand for that item. On a graph, a fall in price will show an inward shift of demand rationalize and a rise in the prices will show an outward shift of the demand curve. The diagram below shows a fall in demand due(p) to a price rise. Figure 2 Shift in Demand This happens when the demand of a particular item rises or move due to discordant factors which include an increase or decrease in the consequence of consumers an increase or decrease in the prices of substitute products and complements a change in consumer incomes (ability to generate that particular item) changes in tastes and preferences of consumers and price expectations. On a graph, a rise in demand is shown as an outward shift while a fall in demand is shown as an inward shift of the demand curve. McConnell, Brue, Flynn, 2009 Shift in Supply This happens when the supply of a particu lar item rises or falls due to various factors which include an increase or decrease in the prices of the resources used to manufacture that item or render a particular answer an increase in technology which is more likely to increase the supply an increase or decrease in the number of suppliers and a rise or fall in the price of a substitute or a complement item. ... For any business, its risk management will be naturally come to with avoiding such negative factors which could kill the business. Therefore, the first task for any such manager is to identify what might potentially harm GoFast Airlines in the future. Prices of Fuel As a strategist, the first factor to consider is the rising prices of fuel, which is the most important raw material for any form of a travel company today. With the increase fuel prices, GoFast will naturally have to increase fair prices to cover the costs, while still competing with giants like British Airways which have been there since a hourlong tim e and are more financially secure. Higher prices may cause a fall in demand for air travel which can right off reduce the number of fares for GoFast Airlines, as which happened with Singapore Airlines earlier in 2011 Singapore Business News (SBN), 2011. This will directly affect their low-price flights approach which, mixed with quality service, gained them the customer base they have today. Economic Recession Economic recession is potentially the most important economic factor which could affect the profitability and the market leading of GoFast Airlines. In times of economic recession, the consumers purchasing power is weaker. In such times, although important corporate business trips may be made anyway, the little business may think twice before making an expensive trip. Most importantly, however, leisure trips are more likely to decrease in great numbers in time of recession than business trips. Even in this situation, the consumer would be able to afford lesser than before and this will affect the number of fares. The demand will naturally fall for flights and so will GoFasts sales and profitability Milmo,