Whether a weak or strong economy, it maintains prime influence in how organizations behave and adjust to the macro-level economic factors. Interestingly, the nature of the economy has varying impact experienced by different firms; either positive or negative impacts. For instance, while some types of firms yield benefits from weak economies, strong markets generate negative experience for others. The bottom line for the business success lay in monitoring economic shifts and understanding them through the market impact to the business sector.
The concept of markets is essential to strategic decision-making and analysis of environmental trends, to understand the impact they have to the nature of business operations and how they affect the choice behavior of various actors. Ordinarily, the list of market factors influencing operations in the business environment is endless. However, listing them would generate no significant contribution to the business preparedness beyond being aware of them. The essence of knowing market factors demands identifying what factors are bound to change, and which bear the greatest impact on the present and future operations of the firm.
[...] In view of this, it is possible to estimate the impact of the exchange rate movements to the domestic businesses. Since rate reflects the price at which one can buy or sell other currencies, firms should understand the economic implications of fluctuations in the foreign exchange market. Not only the firms which are trading in the international markets, but even the firms confining their operations to the domestic territory need to understand the implication and dynamics of such interventions on the economy and their business operations (Pailwar 429). [...]
[...] Estimating the impact of fiscal policy to the business involves examining how the government finances the policy. For example, if the government finance increased expenditure through revenue obtained from increased taxes, the spending offsets decreased consumption spending. On the other hand, increased spending from borrowings hits the economy with Surname 8 increased interest rates as the financial market witness increasing borrowing demand. This generates crowding-out effect where the increased interest rates reduce consumption spending and private investment (Folsom and Boulware 200). [...]
[...] Secondly, patterns of revenue generated from sales reflect the prevailing purchasing power of consumers. Specifically, this arises when the company experience product demand directly tied to changes in interest rates, thus the need to consider expected changes in interest rates when analysing the projected financial performance of the firm (Risius 58). This emerges when the company products ordinarily sell on deferred payment structure such as acquisition of motor vehicles and furniture. In particular, when the customer is required to pay a down payment, thereafter settles the balance through a loan. [...]
[...] Mason: South-Western Pailwar, Veena Keshav. Economic Environment Of Business New Delhi: PHI Learning Private Risius, Jeffrey M. Business valuation : a primer for the legal professional. Chicago: American Bar Association Salisbury, Philip S. The Current Economic Crisis and the Great Depression. Xlibris Corporation Tucker, Irvin B. Macroeconomics for Today Mason: South-Western Cengage Learning, 2010. [...]
[...] Producing firms face higher input prices as suppliers are increasing their prices. This puts firms in a dilemma of either retaining their existing prices or adjusting their prices to recover the higher costs of inputs. Irrespective of the decision embraced in the situation, it leads to declining revenue and profits for the firm (Madura 80). Inflation leads to increased uncertainty in the economy in relation to future pricing of products. This generates a general trend where the business community defers committing to long-term deals. [...]
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