Economic environment


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Economic environment

  1. 1. Economic Environment
  2. 2. BUSINESS ENVIRONMENT FIRM Internal Environment Mission / Objectives Management Structure Internal Power Relationship Physical Assets & facilities Company image Human resources Financial Capabilities Technological Capabilities Marketing Capabilities Financiers Suppliers Customers Competitors Public Mktg Intermediaries Micro Environment Economic Technological Socio-Cultural Political Macro Environment
  3. 3. ECONOMIC ENVIRONMENT…..  Economic Environment refers to all forces which have an economic impact on Business.  The economic environment consists of macro level patterns related to the area of production and distribution of wealth that have impact on the business of organization.  Economic environment includes:  Growth strategy  Industry  Agriculture  Infrastructure  Money and Capital Markets  Per capita and national income  Population  New Economic Policy .
  4. 4. ECONOMIC POLICIES…. Refers to all business activities and operations are directly influence by economic policies framed by government from time to time. Some important policies are as follow: • Industrial Policy • Fiscal Policy • Monitory Policy • Foreign Investment Policy • Exports And Imports Policy
  5. 5. Economic Factor That Affect Businesses…..
  6. 6. INCOME….. If the economy is going through a recession it is obvious that businesses generally will not be doing well due to low aggregate demand in the economy. On the other hand, a boom period will lead to higher business profits and revenue for most of the businesses in the economy.
  7. 7. INFLATION….. High rate of inflation leads to lower purchasing power for consumers resulting in lower demand for goods and services. Moreover, a higher inflation rate will make business uncompetitive in the international market leading to lower sales for the business.
  8. 8. RECESSION…… In economics, a recession is a business cycle contraction, It is a general slowdown in economic activity. Macroeconomic indicators such as GDP(Gross Domestic Product), employment, investment spending, capacity utilization, household income, business profits, and inflation fall, while bankruptcies and the unemployment rate rise.
  9. 9. INTREST RATE…… Higher Interest rates will lead to a fall in the aggregate demand in the economy thus leading to difficulty for business to find customers willing to buy its product. Lower interest rates will lead to a increase in demand in the economy
  10. 10. EXCHANGE RATE…… The price of one country's currency expressed in another country's currency. In other words, the rate at which one currency can be exchanged for another.
  11. 11. THANK YOU