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Macro Factor Affecting Business

In: Business and Management

Submitted By Rohit0308
Words 879
Pages 4
Various macroeconomic factors that influence the business are: a. Economic Growth
Economic activities refer to the level of buying and selling activities happening in an economy over a time period.
It is a highly complex activity and keeping accurate track of it is beyond comprehension.
Economic activity is not constant and can change rapidly, thereby affecting the business.
Economic activity changes could happen due to the following reasons:
Changes in income levels Future prospects of individuals.
Future of the economy The level of economic activity in the world as a whole Political activity around the world Natural disasters - like hurricanes, earthquakes, or flood etc.
Changes in prices of raw materials - oil, metals, fuel, energy and so on Changes in world stock markets The level of economic activity is usually measured by GDP (Gross Domestic product).
It refers to the total amount of goods and services a country produces.
Businesses are greatly influenced by the economic activities.
When GDP rate falls or slows down, there will be a fall in demand for good or services offered by businesses.
As a result, businesses will witness a fall in revenues and profit margins.
To curb this business will have to reduce their prices to increase the sales.
This could further lead to increase in unemployment.
On the other hand, when there is an increase in GDP, the demand for products will automatically increase and hence the prices will go up.
To cope with the increase in demand business will need to employ new people resulting in reduction in Unemployment rates.

b. Inflation
With the increase in Inflation there will be an increase in the level of prices of products and services over a specific period of time.
As a result, the firms will have to incur higher costs of operations.
This will be also due to the increase in wages of the…...

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