Discuss current trends affecting businesses in the services sector of the Irish economy:
Provide examples to support your answer. - Leaving Cert Business - Question C - 2013
Question C
Discuss current trends affecting businesses in the services sector of the Irish economy:
Provide examples to support your answer.
Worked Solution & Example Answer:Discuss current trends affecting businesses in the services sector of the Irish economy:
Provide examples to support your answer. - Leaving Cert Business - Question C - 2013
Step 1
Tax policies affecting disposable income
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Answer
One major trend is the impact of tax policies on disposable income. Taxes such as the household charge and property tax have led to a decline in disposable income for consumers. This decrease affects consumer spending, which subsequently diminishes the demand for goods and services offered by businesses in the retail services sector.
Step 2
Recession and its effects on SMEs
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The ongoing recession has particularly hit small and medium enterprises, including suppliers to the construction industry. This downturn has resulted in many of these businesses facing significant challenges, leading to closures and insolvencies.
Step 3
Competition from discount retailers
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There has been a noticeable growth in discount retailers such as Aldi, Lidl, and T.K. Maxx. These businesses have successfully attracted consumers looking for more affordable options, thus posing strong competition to traditional retail outlets.
Step 4
Deregulation in specific industries
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Deregulation in some service sectors, such as the taxi industry, has also influenced market dynamics. This deregulation has led to increased competition and changes in how services are offered to consumers.
Step 5
Impact of VAT increases
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Answer
Recent increases in VAT have caused prices for goods and services to rise, which can negatively affect consumer behavior. For instance, the costs associated with various services in the hospitality industry may increase as a direct response to these tax hikes.
Step 6
Urbanization and service demand
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As urban areas expand, the demand for various services such as travel and hospitality increases. Events like The Gathering 2013 positively impacted services related to tourism, hotels, and travel as they attracted a higher number of visitors.
Step 7
Shifts in consumer purchasing behavior
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With the rise of e-commerce, consumers are increasingly opting to purchase goods and services online instead of visiting physical locations. This trend has required retailers to adapt by developing strong online sales strategies to remain competitive.
Step 8
Technological advancements in the ICT sector
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The growth of the ICT sector has introduced new business models and opportunities. Educational institutions, for example, are leveraging technology to connect with students. Companies in this sector are also facing challenges in recruiting qualified personnel.
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