What do you know about how economic factors affect business? Be sure to include it below with any questions or comments you might have. Examples include interest rates, exchange rates, and taxes - and can be seen in all organizations, from relatively small fashion chains like Anthropologie to world-leading countries like the UK. Although they relate to the economy on a greater scale, they have a profound effect on the inner-workings of any and every company. In conclusion, economic factors are one of the many environmental, external factors which can affect businesses.
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Changing exchange rates might affect how much a company has to pay to its international supplier to satisfy them, which can affect profit margins, as well as take a lot of resources to stay on top of. It’s obvious that the status quo for interest rates is of great interest to banking institutions, but it might also affect companies whose strategies rely on taking out large loans.Įxchange rates - Exchange rates are a complicated topic, but they clearly have to apply to those who deal with export or import. Interest rates - Interest rates might appear in a range of different places, imposed by a range of different people. Let’s look into a few of those examples in more depth, to see how exactly they can affect a business… Examples of economic factors affecting business include: The reason for this is that the state of the economy can decide many of the important details that come up in an operating company, including topics such as consumer demand, taxes and asset value. Despite directly affecting businesses, these variables refer to financial state of the economy on a greater level - whether that be local or global.
Support quality journalism and subscribe to Business Standard.Economic factors are connected with goods, services, and money. Your support through more subscriptions can help us practise the journalism to which we are committed. We believe in free, fair and credible journalism. The ‘returnee’ class The remittances Ethiopia receives represents a quarter of the country’s foreign exchange earnings and, in 10 months in 2016, exceeded overall export earnings. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. In 2018, consumers will scrutinize the entire business chain, and are increasingly aware of cultural preservation and the social value of every purchase.
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