Question

An independent report has predicted that economic growth in the UK will slow and even become negative by the third quarter of 2020, resulting in high unemployment levels and lower investment within the UK economy. Higher oil prices are also predicted which will have a knock-on effect of a general and persistent increase in prices (inflation). The report has urged the UK government to engage more with non-European markets which it says will result in more trade, more foreign investment and more knowledge transfer and sustained economic growth.

a. The management of Ace Body Gyms has asked you to evaluate the effects of the predicted changes in the UK economy outlined above on the performance of the company. Specifically, you should write an essay to address the effects of the independent report on the performance of Ace Body gyms. Performance should include, but is not limited to, the effects on price, cost, demand, investment opportunities, profits etc.

b. Your report should also include recommendations as to how Ace Body Gyms could maintain a solid performance despite the predicted economic downturn.

Answer 1

(A)As per the facts provided in the case, UK economy is going to face a downtime, in the near future.

It shall plan in advance the measures to be taken in case the situation becomes worst.

Firstly it must try to stabilise the market conditions and the economy at large from economic distress.

If the economy collapses then automatically it will have an adverse impact on the financial health of the entities operating in the country.

If situation goes out of control then economy will face huge financial crisis.

Prices of goods and services will increase leading to decrease in the purchasing power of money, including falling demand for goods and services due to price rise.

When an economy faces so many problems GDP and National income will decline.

Investors would not like to trade in such an economy, hence no or low investment opportunities for investors which will reduce the economic growth and development.

(B) Recommendations

Ace body gyms must try to control the situation by reducing unnecessary costs and reducing the prices to assume a decent income in future despite economic slow down.

It must not retrench it's employees, as this will help in maintaining the level of employment in the organisation, however if it is facing financial problems then it could negotiate with its employees and come to a conclusion of reduced salaries for some time.

It can attract investors by crafting an attractive marketing strategy ahead of the crisis, and making them aware about the Misson, Vision goals, objectives and strategies of the organisation.

It shall make arrangements for working capital in advance.

CONCLUSION: Thus above were some of the points which Ace body gym can consider for dealing with upcoming economic crisis.

Thank you.

Feedback and suggestions are Welcomed.