Macroeconomics Affecting The Business Environment

Every organization has to analyze its business environment before making policies and strategies for its day to day operations, marketing and promotional efforts, and competing with the industry rivals (Loudon, Stevens, & Wrenn 2004). The key factors of the business environment that affect the business operations of a company include political, economic, technological, environmental, cultural, and demographical factors. In addition to these factors, an analysis of the competitive forces is also essential in order to assess the potential threats and intensity of rivalry present in the industry (Ritchie & Crouch 2003). If an organization does not give importance to the analysis of its business environment, it may not be able to compete in the industry for a long period of time (Hill & Jones 2007).

Environmental factors in a business are identified, their impact is assessed and a strategy is developed to mitigate and/or take advantage of them. While frameworks do exist to aid in

Despite its impressive size, the strength of the US economy is currently shaking as a result of the economic crisis commenced in 2007. Whereas the country only entered recession in 2008, the economic crisis has in fact revealed some problems that already existed within the country, such as unstable and insufficient financial policies, dangerous lending practices or insufficient fiscal regulations. The recession however deepened as the country witnessed the burst of the real estate bubble, the deflating property prices, the failures of investment banks and the contraction of credit

| Economic 1. Downturn in the economy has negatively affected the manufacturing and construction sector – resulting in some clients going out of business, and having implications upon credit insurance 2. The financial system remains vulnerable to setbacks in both the global economic recovery

This position has given it some of the substantial reasons for it to stir the economies of the world, and in the 1990s, the banks in the USA became the financial instruments for deposits of the surplus from the oil producing countries. The Real domestic product (GDP) began to contract towards the third quarter of 2008, with a gradual annual fall since the 1950s (Suter 45). The capital investments which was on the decline in 2006 matching the 1958 post war record in the first quarter of 2009, dropping by 23.2%. Furthermore, the rising tide on bad debt threatened the solvency of most of the banks. The changes in the Federal Reserve policies created panic in the inter-blending market (Gup 44). This was due to the uncertainty in which banks would survive their tenure in the lending of money to anyone leading to the censure of the economy. The investors in the stock market panicked making them send all their stock shares to a free fall. The decline in the shares significantly reduced the capital shares that greatly affected the bank regulatory system as it is based on the idea that the loans borrowed have to be a certain multiple of the bank capital (Dalton 63). This led to a massive decline in the lending system that significantly threatens the stability of the system. The significant effects of the financial crisis were more apparent was first detected in the US

Owning a business, or managing, within a business, can be a challenging process and ultimately effect the success, failure and bottom line. There are many external forces, or environments, that influence decisions that are ultimately made by Board of Directors, executives, supervisors and management teams. This can have an economic effect locally or ultimately have a global reach. Today’s focus is on the differences between the macro and competitive business environments (Jones et al., 2006).

The origins of the financial crisis can be attributed to multiple inter-related factors. The biggest single contributor of the crisis, however, was the practice of

A firms external environment is divided into two composites: the general environment and the industry environment. Fahey (1999) states that the general environment encompasses the broader society that influences an industry and the firms within it. The industry environment is the set of factors that directly influences a firm and its competitive actions and responses (Chen et al. 2010). Identifying opportunities and threats is an important objective of studying the general environment. Opportunities help companies achieve strategic competitiveness whilst threats may hinder a company's efforts to achieve strategic competitiveness (Gilad 2011). A firm will scan, monitor, forecast and assess the seven segments of the general environment to determine their effects on the firm. Firms identify early signals, detect meaning,develop projections, and determine the timing and importance of environmental changes and trends for firms' strategies and their management.

The environmental scan of the industry is based on the internal and external sections of the environment. The internal is what a business has influence over and controls that section of the environment. The external part is the opposite of the internal. The business does not have the influence over the section of that environment, nor does it have the ability to control it. “The surveying of a variety of indicators in order to gauge the overall business, economic, social, political, or financial conditions that could affect a project’s development”, Moschetti, T, 2015. This part of the outline I will go over issues that can affect the movement within the industry and at the same time decide the fate of any business.

There are many different views as to what brought on the financial crisis of 2008. One of these views are that of global imbalances. On the one hand, the United States have an extremely large current account deficit. On the other, there are countries, especially oil-exporting economies and China in particular, with large current account surpluses. The concept of global or external imbalances is often seen as a synonym for this situation.

The banking panic of the fall of 2008 set economies around the world into a severe recession. The spark of the panic was seen in mid-2007 the credit boom, followed by the demise of subprime mortgages and securitized products. This, in turn, raises worries about the solvency and liquidity of financial institutions, evolving into a full-blown banking panic. Resulting in the failure of the Lehman Brothers and Washington Mutual, and multiple governments run financial institutions. (Ivashina & Scharfstein, 2009). As a result during 2008 the prices of most asset classes and commodities declined, although the cost of corporate and bank borrowing rose significantly. In both the USA and the UK interest rates peaked at over 5% (See Appendix A). Consequently, Syndicated lending started to fall mid-2007, then accelerated during the banking panic September 2008. The lending in the fourth quarter of 2008 2008: Q4 was 47% lower than the previous and 79% lower than in 2007: Q2 (ibib).

The Influence of Economic, Political, and Social Factors on Firms The long controversy exist over the influence of economic , political and social factors on the success of the firms. With many economist believing that economic factors such as management structure contribute to the success of the firm. Karl Marx (1976)[1] and other economist argued that economic factors are not the sole determiner of firm’s success. Marx believes that political, social and economics plays a part in making the firm to be effective.

The recent financial crisis in the U.S. that spread to other countries and caused massive turndown in the global economy had its roots in the recent waves of globalisation. Since the developed countries’ production had shifted dramatically towards services, specially to financial services, and this in turn led to financial liberalizations, developed countries experienced massive capital inflows, lending booms, housing and / or stock market bubbles. Financial crises are usually followed by hard and sharp contraction in economic activities, which requires government intervention to bail out banks and restore banking stability. However, government intervention

Unemployment can occur in jobs because of frictional, structural, cyclical, technological and seasonal problems. Unemployment could be short or long term depending on the job because if you were working at a theme park the summer time will have more people employed because the theme park will be shut in the winter and there will be no employment but if you work at Tesco and you lose your job it could be because of

Financial crises are fundamentally, periods of economic turmoil. This essay is an analysis of the underlying economic scenario in three specific financial crises that have occurred, since the Wall Street crash of 1929. It goes on to explain its impact on global trade and the lessons that G20 governments can learn from them.