External Influences on Land Rover economic conditions

Task 1

Land Rover customers in the UK

If interest rates rise by 2% people will not borrow money to help purchase cars, it will cost too much to pay back a loan provided by the bank. In addition, car sales will decrease and if inflation increases the price of cars will begin to increase. Then customers will find that it costs too much to buy cars due to the increase in bank loans.

Land Rover customers in the USA

If inflation increases people in the USA will find that it is too expensive to purchase cars. If the pound rises against the dollar, people in the USA will find that it is costing them more money to buy cars from the UK than in the USA so car sales will decrease. This also means that Land Rovers exports will decrease

Land Rover

As Land Rover is a British company, it will become less competitive in other international markets, so they will lose out on profits form abroad. Borrowers will have to pay more on their loans due to the increase in interest rates and so will buy less Land Rover vehicles, which will make the sales decrease. As the interest rates increase, purchasing components and goods will become more expensive and car prices will rise.

Land Rover suppliers in the UK

Prices in the UK are increasing by 3%, which will make it more expensive to purchase the parts and components for making of cars in the UK. As a result of this suppliers will buy their stock from abroad where inflation rise will not affect them, making the cars cheaper there.

Land Rover suppliers form Europe or USA

Suppliers of raw materials from abroad will probably fall on the pound rises against the dollar. As the pound rises against the dollar Land Rover will be able to afford more, therefore increasing their sales abroad.

Task 2

To overcome the problem of inflation/interest rates we would:-

Could import components form abroad if exchange rates is increasingly cheaper then other components.

Put pressure on government to tax imports therefore foreign goods to become more expensive

Restrict wage increase to keep costs down

May have to increase prices of their own vehicles

Keep costs down: introduce more efficient methods of production.