Causes of Uncertainity

Causes of Uncertainity

• Shocks
• Commodity price fluctuations e.g. food
• Competitor actions
• Exchange rates
• Government policy

 1. Shocks

• 9-11, 7-7 are perfect examples but many shocks affect business that are not so large scale

• E.g. – what would happen if Southend Pier was to burn down today?  Who would win and lose?

2. Commodity Prices

3. Competitors Actions

• How has Easyjet and Ryanair affected the likes of BA?

• How Would a sudden price decrease from Coca-Cola affect Pepsi?
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• Often such a change can come as a surprise!
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4. Exchange Rates

• Look at the table below - what is it showing?

          (22/11/10 - who would bewinner is suddenly changed to

• 1.00 GBP = 2.00 USD???
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 Currency Converter GBP/USD

5. Government Policy

• The new coalition government scrapped Building Schools for the Future (BSF) - winners and losers??

                                               Expect The Unexpected

• With so much uncertainty and uncontrolled variables - businesses MUST be ready to cope with change!!

                                                Uncertainty and Risk

• Uncertainty Brings a variety of risks
• Businesses do not like risks especially lenders such as banks who are percieved to be risk averse
• Poor risk taking decisions in financial markets by lenders lead to the recent crisis and subsequent credit crunch