Sudanese Business

1. Nahda College
Graduate Studies Program
Diploma Of Business Administration
Sudanese Business Environment
Business Macro-Environment - 2
PESTLE Analysis
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2. Contents:
• Forces that compromise PESTLE model of
Macro-environment analysis:
–Political
–Economic
–Socio-cultural
–Technological
–Legal
–Environmental
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3. PESTLE Analysis
• PESTLE analysis is a useful tool for
understanding the “big picture” of the
environment.
• Originally it is designed as a business
environmental scan; this analysis is an analysis
of the external macro environment in which a
business operates.
• In order to take advantage of the opportunities
and minimize the threats.
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4. PESTLE Analysis
• These are factors which are beyond the control
or influence of a business, however are
important to be aware of when doing product
development, business or strategy planning.
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5. Economic Environment
• Three points are worth highlighting :
– First, business activity not only is shaped by the
economic context in which it takes place, but helps
to shape that context;
– Second, economic influences operate at a variety of
spatial levels – governments can find that
circumstances largely or totally beyond their control
can affect businesses either favorably or adversely.
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6. Economic Environment
– Third, the economic (and for that matter, political)
influence of industry and commerce can be
considerable and this ensures that business
organizations – both individually and collectively –
usually constitute one of the chief pressure groups
in democratic states.
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7. Economic Systems
• The term ‘economic’ tends to be used in a variety of
ways and contexts to describe certain aspects of
human behavior.
• Modern definitions stress how that behavior, and the
institutions in which it takes place (e.g. households,
firms, governments, banks), are concerned with the
satisfaction of human needs and wants through the
transformation of resources into goods and services
which are consumed by society. These processes are
said to take place under conditions of ‘economic
scarcity’.
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The concept of economic scarcity:

8. Economic Systems
• The economist’s idea of ‘scarcity’ centers around the
relationship between a society’s needs and wants and
the resources available to satisfy them.
• In essence, economists argue that whereas needs and
wants tend to be unlimited, the resources which can
be used to meet those needs and wants are finite
• Choices have to be made by both individuals and
society concerning priorities in the use of resources,
and every choice inevitably involves a ‘sacrifice’
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The concept of economic scarcity:

9. Economic Systems
• This sacrifice - ‘opportunity cost’ or ‘real cost’ of the
decision that is taken , and it is one which is faced by
individuals, organizations (including firms),
governments and society alike.
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The concept of economic scarcity:

10. Economic Systems
• Key decisions on production are taken by a central
planning authority.
• Decision making devolved to subordinate agencies,
• An array of planners and a central plan or blueprint
normally covering a number of years
• The emphasis at firm level tends to be more on meeting
targets than on achieving efficiency
• Firms are mainly servants of the state
• Tends to encourage bribery and corruption and the
development of a substantial black market
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The centrally planned economy

11. Economic Systems
• Key economic agencies are private individuals
(sometimes called ‘households’) and firms, and these
interact in free markets, to determine the allocation of
resources.
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The free-market economy

12. Economic Systems
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The free-market economy
Figure 4.1

13. Politico-economic synthesis
• The economic problem of resource allocation,, clearly
has a political dimension “ownership, control and use of
wealth-producing assets within society” .
• This allows links to be made between a country’s
chosen economic system and its political regime
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Figure 4.2

14. Politico-economic synthesis
• In democracy individuals able to express their
preferences to replace one government at periodic
intervals.
• In free markets individuals effectively ‘voting’ for goods
and services through the price system , express
preferences are reflected in the pattern of resource
allocation.
• The relative absence of democratic mechanisms, such
as free elections and choice between alternative forms
of government, is echoed in the economic sphere by
the inability of individuals to exercise any real influence
over resource allocation.
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15. Economy: Levels of analysis
• Economist typically distinguishes between two types of
analysis:
1. Microeconomic analysis, which is concerned with the study
of economic decision taking by both individuals and firms.
2. Macroeconomic analysis, which is concerned with
interactions in the economy as a whole (i.e. with economic
aggregates).
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16. The Flows in the Economy
• The real flow
• Figure 4.3
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17. The Flows in the Economy
• The income flow
• Figure 4.4
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18. The Flows in the Economy
• The real and income flow
• Figure 4.5
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19. The Flows in the Economy
• The model shows, for example, that:
1. Income flows have corresponding real flows of
resources, goods and services.
2. What constitutes an income to one group (e.g.
firms) represents an expenditure to another (e.g.
households), indicating that income generation in
the economy is related to spending on consumption
of goods and services and on resources
3. The output of firms must be related to expenditure
by households on goods and services, which in turn
is related to the income the latter receive from
supplying resources
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20. The Flows in the Economy
• The model shows, for example, that:
4. The use of resources (including the number of jobs
created in the economy) must also be related to
expenditure by households on consumption, given
that resources are used to produce output for sale to
households.
5. Levels of income, output, expenditure and
employment in the economy are, in effect,
interrelated
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21. The Flows in the Economy
• It is necessary to refine the basic model by
incorporating a number of other key variables
influencing economic activity.
• These variables – which include savings,
investment spending, government spending,
taxation and overseas trade
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22. Government and the Macro-economy
:Objectives
• Economists frequently indicate the following
notation:
• AMD = C + I + G + X – M
• Consumer spending (C) is regarded as most
important factor in determining the level of total
demand.
• While economists disagree about what are the
most significant influences on the component
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Aggregate Monetary Demand = Consumer spending+
Investment spending +
Government spending +
Export spending + Import spending

23. • elements of AMD,4 it is widely accepted that
governments have a crucial role to play in
shaping demand
• Government policies on spending and taxation
or on interest rates clearly have both direct and
indirect influences on the behaviour of
individuals and firms, which can affect both the
demand and supply side of the economy in a
variety of ways
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Government and the Macro-economy
:Objectives

24. • Most governments appear to have a number of
key economic objectives, the most important of
which are normally :
– The control of inflation, as an upward and persistent
movement in the general level of prices; it can also
be characterized as a fall in the value of money.
– Economic growth, growth is an objective shared by
governments and organizations alike. For
governments, the aim is usually to achieve steady
and sustained levels of non-inflationary growth
– Reducing unemployment, government
pronouncements on employment tend to focus on
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Government and the Macro-economy
:Objectives

25. job creation and maintenance and on developing the
skills appropriate to future demands.
– A favorable balance of payments, the net balance of
credits (earnings) and debits (payments) arising
from its international trade over a given period of
time
– Controlling public borrowing, is best tackled by
restraining the rate of growth of public spending
rather than by increasing revenue through changes
in taxation,
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Government and the Macro-economy
:Objectives

26. – A stable exchange rate, a country’s currency has
two values: an internal value and an external
value. Internally, its value is expressed in terms of
the goods and services it can buy and hence it is
affected by changes in domestic prices. Externally,
its value is expressed as an ‘exchange rate’ which
governs how much of another country’s currency it
can purchase
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Government and the Macro-economy
:Objectives

27. Government and the Macro-economy:
Policies
• Governments play various key roles in their
respective economies. These include the
following functions:
– consumer of resources (e.g. employer, landowner);
– supplier of resources (e.g. infrastructure,
information);
– consumer of goods and services (e.g. government
spending);
– supplier of goods and services (e.g. nationalised
industries);
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28. Government and the Macro-economy:
Policies
• Governments play various key roles in their
respective economies. These include the
following functions:
– regulator of business activity (e.g. employment
laws, consumer laws);
– regulator of the economy (e.g. fiscal and monetary
policies); and
– redistributor of income and wealth (e.g. taxation
system).
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29. Government and the Macro-economy:
Policies
• Governments has intervention that occur in
three main forms:
1. Fiscal policy involves the use of changes in
government spending and taxation to influence the
level and composition of aggregate demand in the
economy and, given the amounts involved, this
clearly has important implications for business
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30. Government and the Macro-economy:
Policies
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Figure 4.6

31. Government and the Macro-economy:
Policies
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• Fiscal changes can be used to achieve specific
objectives, some of which will be of direct or
indirect benefit to the business community.
• Reductions in taxes on company profits or
increased government spending targeted at
firms involved in exporting

32. Government and the Macro-economy:
Policies
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2. Monetary Policy :
– Seeks to influence monetary variables such as the
money supply or rates of interest in order to regulate
the economy. While the supply of money and interest
rates (i.e. the cost of borrowing) are interrelated, it is
convenient to consider them separately.
– Changes in the money stock (especially credit) affect
the capacity of individuals and firms to borrow and,
therefore, to spend. Increases in money supply are
generally related to increases in spending and this
tends to be good for business prospects,

33. Government and the Macro-economy:
Policies
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2. Monetary Policy :
– By use of fiscal policy, government is usually able
to manipulate monetary variables in a variety of
ways, including taking action in the money
markets to influence interest rates and controlling
its own spending to influence monetary growth.

34. Government and the Macro-economy:
Policies
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3. Direct controls:
– Governments, however, also use a number of
other weapons from time to time in their
attempts to achieve their macroeconomic
objectives.
– Designed essentially to achieve a specific
objective – such as limiting imports or controlling
wage increases – tend to be known as direct
controls

35. Government and the Macro-economy:
Policies
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1. Incomes policies, which seek to control
inflationary pressures by influencing the rate at
which wages and salaries rise.
2. Import controls, which attempt to improve a
country’s balance of payments situation, by
reducing either the supply of, or the demand for,
imported goods and services
3. Regional and urban policies, which are aimed at
alleviating urban and regional problems,
particularly differences in income, output,
employment, and local and regional decline

36. Assignment
• Write an essay about the role of financial
institutions “ will be discussed in class next
week”
• Send via email
• HEBATSULIMAN@hotmail.com
• To be submitted by 23 Jule 2022
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38. 7/17/2022
Us. Hebat Suliman Administrative
Sciences Program
38