Question 1: Assessing how global inflationary pressures and the subsequent impact upon the cost of living has impacted the local town
In the current time the inflation is increasing continuously. The inflation refers to increment in the price of goods and services over a particular period of time. The global inflationary pressure is increasing and impacts the cost of living of the country as it reduces the purchasing power (Jordà and Nechio, 2020). It means that a person can purchase few goods and services from the given amount of money. The main reason of increment in prices because there is imbalance between demand and supply.
The global inflationary pressure impacted several local business, the impact of inflation also impacted the Morrison supermarket that located in United Kingdom. It is a retail store doing business with physical store and through online.
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Decline in profits: Increment in the inflation leads to reduce the purchasing power of the consumer as a result the consumer reduce purchasing goods which are not necessary for the daily use. This leads to impact the local businesses in the country. As a result the sales of Morrison Company reduce due to which revenue decrease as well as there is decline in rate of profits.
Demand for products decrease: Increment in the inflation is main cause for declining demand for products of the Morrison Company. It deals in grocery items, breakfast cereal, tea, coffee, cooking ingredients and so more. As inflation decrease the purchasing power due to this the consumer demand for the Morrison product decreases. It significantly impacts the sales of company lead to decrease revenue and profits.
Increment in cost: Due to inflation, the price of raw material and other overhead increase. As a result company expense increase such as transportation, electricity as well as wages (Khudaykulova, Yuanqiong and Khudaykulov, 2022). This subsequently impacts the prices of the products as a result it will impact the purchasing power of the consumer. It make difficult for the Morrison to cop up with this situation and leads to lower profits.
Demand high wages: The increasing pressure of the inflation decreases the disposable income of people. Because of this the employees of the Morrison Company demanded high wages to the company but it is impossible thing for the company. The company is unable to increase wages because the profit of the company decreases.
Increment in interest payment: The global inflationary pressure leads a rise in the rate of interest. It increases financial liability on the Morrison Company. The company has debt increment for this the company need to pay the of interest payment annually.
Unable to expand business: The Morrison Company is unable to expand its business more because the global inflation increases the cost of operating a business. The prices of essential resources increase like raw material as well as grocery items. Also, the company has to take important decision to being remain in a profitable situation such as needed to increase prices for goods and services and dismiss the employee.
There are some recommendations to overcome the impact of global inflation on the Morrison Company.
The company should decrease other expenses which are not necessary such as advertising expenses, more packaging expenses, marketing. The company should maintain the inventory in store according to the sales so that there are no chances of any loss or damage to the goods. This can help the Morrison to manage its profits in the times of inflation.
The company should decrease the manufacturing of goods as the demand for it decrease. It assists the company in managing its revenue as the cost also decrease when production decreases (Prohorovs, 2022). The company may increase its production when demand increases.
The Morrison should give emphasis on the increment of the cost in the time of inflation and must reduce expenses which are not necessary so the company able to maintain its profits.
The pressure on the company increases to pay high wages to employees. For this, the company should furnish other kind of support to the employees such as financial advice or feeling of belongingness. This influence employee to not demand high wages and understand the company`s situation.
Increment in the interest rate due to inflation is a major impact on Morrison. The company should take debt keeping in mind the economic situation in the world. This reduce the chances of overburden on the company.
In the times of inflation the company is unable to expand its products range. The company should offer those products in times of inflation which are necessary for the consumer. But the company must plan the expansion of product range and execute it when the conditions become normal.
Question 2: Explaining the impact of changing demographics of economic migration, Brexit on the entrepreneurial growth of small independent businesses
The Brexit is a removal of United Kingdom from the European Union. The purpose of this to replace the status of UK as a independent so that enable to determine the future as well as able to best serve the priorities of the people of the country. After this the small businesses have been fighting to discover some new ways to save money as well as ways to adopt the new landscape (Vibert, 2020). Due to this, there are several impacts on the local businesses of UK. The small businesses thought that the Brexit will directly impact the businesses and it is difficult to survival of the business and because of this it negatively impacted economy of UK. There are some impact of Brexit which impact the growth of small business, this are as follow-
Shortage of labour: Due to Brexit, The local business of UK faces shortage of labor. Because of Brixit, the EU citizens have no right to work in the UK, needs visas for this (Early impacts of the post-brexit immigration system on the UK labor market, 2024). This new system impact the movement of labors in the economy of UK. As a result, the local business impacted by the shortage of labor and it is a barrier for the growth of businesses. For Example, The Luton Company is largely impacted by the shortage of labor as this company is engaged in manufacture of straw hat. For this the company needs skilled labor to attain and fulfill its objective. But due to Brexit, the company have to face problem of scarcity of labor, the business is unable to manufacture goods as a result it impact the growth as the revenue as well as profits decline.
Increase cost of business: Before Brexit, there are number of skilled or lower- skilled employee’s work in the UK as there is a free flow of labor and capital between two countries (Fingleton, 2020). But after the Brexit, the new rules and regulations prevail that leads to make restriction on the movement of labor. This leads to increase the cost of doing business of UK, it is an hindrance for the growth of local business as they are unable to do business without enough labor. The cycle pharmaceutical company is a great example of increasing cost due to Brixit. The pharmaceutical company is in a large extent relying on the process with EU. The Brexit build a wave for the company because it increases cost of doing business as the free flow of labor and capital hindered. The company face problem in arrangements of medicine in the company as well as for the supply.
Employment: The great impact of Brexit occurred on the job market as it creates an uncertainty for both the employers as well as employees. The local small and other businesses have been attentive and cautious on hiring and investing on new employees because of the uncertainty prevails in UK. The Brexit bring numbers of challenges and difficulties for the economy of UK. Due to this it is challenging for employers to attract talent from EU. Now the businesses need to work harder for hiring and recruiting the best employees for their company. The small businesses have to give higher packages of benefits as well as salaries to attract the candidates of EU to employ them in the company.
Recommendation
Brexit cause the shortage of labor in the country that affected the growth of local businesses. To overcome this kind of impact, there is a need to implement the skill- based policy of immigration for labor. The country should remove restrictions so that able to recruit skilled workers from the EU for the short- term as well as long- term jobs.
The country should give some relief in the rules and regulations regarding movement of labor. The relief may include involvement of EU skilled workers through the fulfillment of required conditions like visa (Gant, 2020). This will aids in solving the problem of increasing cost due to lack of workers for business.
There is much emphasis given while recruiting, the business must considered the rules and regulation before hiring employees. According to the regulations and after considering all precautions the company should recruit employee from the EU. The company should offer salary and packages to the candidate according to the earning capacity of the business. It might be difficult to pay if company is not able to earn subsequent profits in the near future.
References
Books and Journals
Fingleton, B., 2020. Exploring Brexit with dynamic spatial panel models: some possible outcomes for employment across the EU regions. The Annals of Regional Science, 64(2), pp.455-491.
Gant, J.L., 2020. Britain and Brexit: A forecast of the future of employment protection during corporate insolvency. International Insolvency Review, 29(1), pp.61-82.
Jordà, Ò. and Nechio, F., 2020. Inflation globally. Serie Banca Central, análisis y políticas económicas, no. 27.
Khudaykulova, M., Yuanqiong, H. and Khudaykulov, A., 2022. Economic consequences and implications of the Ukraine-russia war. International Journal of Management Science and Business Administration, 8(4), pp.44-52.
Prohorovs, A., 2022. Russia’s war in Ukraine: Consequences for European countries’ businesses and economies. Journal of Risk and Financial Management, 15(7), p.295.
Vibert, F., 2020. Brexit: What are the lessons?. Revista mexicana de sociología, 82(3), pp.705-717.
Online
Eearly impacts of the post-brexit immigration system on the UK labor market. 2024. Online. Available through:< https://www.cer.org.uk/insights/post-brexit-immigration-uk-labour-market#:~:text=EU%20citizens%20no%20longer%20have,has%20led%20to%20labour%20shortages.>
