Analysing Economic Environment Essay

2542 words - 11 pages


Analysis of the macro-environment may be analysed into six segments using the PESTEL framework. Political Economic Socio-cultural Technological Environmental Legal

Government is responsible for providing a stable framework for economic activity and, in particular, for maintaining and improving the physical, social and market infrastructure. Public policy on competition and consumer protection is particularly relevant to business strategy. GOVERNMENT POLICY Government policy affects the whole economy, and governments are responsible for enforcing and creating a stable framework in which business can be done. A report by the World Bank ...view middle of the document...

b) A monopoly would be detrimental to the public interest if cost efficiencies are not achieved. Oliver Williamson suggested that monopolies might be inefficient if “market power provides the firm with the opportunity to pursue a variety of other than profit objectives. For example, managers might instead try to maximize sales, or to try to maximize their own prestige. Consumer protection policies may be required. a) Control over markets can arise by firms eliminating the opposition, either by merging with or taking over rivals or preventing other firms from entering the market. When a single firm controls a big enough share of the market it can begin to behave as a monopolist even though its market share is below 100%. b) Several firms could behave as monopolists by agreeing with each other not to compete. This could be done in a variety of ways- for example by exchanging information, by setting common prices or by splitting up the market into geographical areas and operating within allocated boundaries. Such a collusive oligopoly is called a cartel and is illegal in most jurisdictions. For example, in 2007, British Airways was fined heavily by the US Department of Justice and the UK’s Office of Fair Trading for colluding with its rival Virgin Atlantic in fixing how much extra to charge on passenger and cargo flights, to cover fuel costs. POLITICAL RISK The political risk in a decision is the risk that political factors will invalidate the strategy and perhaps severely damage the firm. Examples are wars, political chaos, corruption and nationalization. To assess political risk, we may ask these questions: 1. How stable is the host country’s political system? 2. How strong is the host government’s commitment to specific rules of the game, such as ownership or contractual rights, given its ideology and power position? 3. How long is the government likely to stay in power? 4. If the present government is succeeded, how would the specific rules of the game change? 5. What would be the effects of any expected changes in the specific rules of the game? 6. In light of those effects, what decisions and actions should be taken now?

A wide variety of funding and other economic (market) factors need to be taken into consideration when assessing performance.

Gross Domestic Product a) Has it grown or fallen? b) How has demand for goods or services been affected by the growth of fall?

Local Economic Trends a) b) c) d) Are local businesses rationalizing or expanding? Are office/ factory rents increasing or falling? In what direction are house prices moving? Are labour rates on the increase?

Inflation a) Is a high rate making it difficult to plan, owing to the uncertainty of future financial returns? Inflation and expectations of it helps to explain short-termism. b) Is the rate depressing consumer demand? c) Is the rate encouraging investment in domestic industries? d) Is a high rate leading employees to demand higher...

Other Essays Like Analysing Economic Environment

International Fashion Textile Marketing Reading Recource

1075 words - 5 pages 1.2.1 The political and legal environment 1.2.2 The economic environment 1.2.3 The international cultural and social environment 1.2.4 The international financial environment Analysis of entry strategies 1.3.1 Exporting 1.3.2 Licensing 1.3.3 Franchising 1.3.4 Local and contract manufacturing, acquisition and joint venture 1.3.5 Strategic alliances 1.3.6 Direct investment Variety versus homogeneity Managing the marketing effort 1.5.1

A Comparison Of The Australian And North Korean Economies

1834 words - 8 pages produce one good over another. Australian individuals have quite a lot of economic freedom however the Australian economy works within an overall framework of government regulations which safeguard society. The government legislates hours of work and minimum wages, sets costs for some products and pays subsidies and social service benefits. The distribution and allocation of what is produced still takes place, largely through the market or price

Social And Cultural Anthropology: What Defines And Justifies The Study Of The Discipline

1840 words - 8 pages of anthropology can be traced to antiquity, it only emerged as a scientific discipline in the 19th Century. Two distinctive fields are Biological Anthropology, which studies man as an organism and his physical evolution, and Social and Cultural Anthropology, the comparative study of cultural variation through the myths, ritual, kinship patterns, political and economic systems in particular societies or social groups. In this paper I will attempt

Introduction to Marketing

1942 words - 8 pages the changing of external environment. Mullins said that ‘the PEST analysis is one tool for both analysing the current situation of an organisation and planning its development. Political, economical, social, technological factors and other influential areas are clearly of great importance to the planning process.’ therefore from carrying out a PEST analysis Max Factor can plan the development of the company for the future and improve marketing

Personal Statement

1068 words - 5 pages , techniques and concepts used in scanning the business environment for potential changes, analysing the potential implications of differing scenarios, strategies and processes before developing responses to potential changes. The 'Research Methods' covers the introduction to research, types of research methodology, formulating and planning a research project, data collection and analysis and presentation of research findings. After extensive research into the strength of academic programmes, I find the Master of Science in Accounting and Finance by The University of Northampton to be the most appropriate programme that meets my future career objectives.

Analysis of Culture and Organisational Structure of a Thoeretical Organisation

2598 words - 11 pages it is anticipated that this will remain until the economic situation improves. The current economic environment is a threat to the survival of TFC. | Environmental | In South Africa forestry is highly regulated. TFC has attained a forestry certification that puts it in good stead as a company that produces its products in an environmental friendly manner. The bio-energy concept is on the rise, and the drive to reduce carbon foot print will

Boeing Case

3051 words - 13 pages fails is that in the long term, how they are going to be able to sustain sales when there are increasing pressures on air traffic volumes due to limited airport space. 3. Strategic weaknesses in Airbus’s customer strategy 4.4. Strategic Analysis of Airbus Organisations do not exist in a vacuum but in the context of a complex economic, political, technological, cultural, and social environment. This environment changes constantly and

Drawing on What You Have Learned from the Making Social Livers Dvd and Learning Companion 1, Outline How Some Benefit and Others Lose Out on a Street That You Know

1011 words - 5 pages be noted that there are a lot of students shopping at the market. This shows insight into how people perceive society. This can in turn have an impact on economic equalities. There is a large fence surrounding the Mackintosh centre and its facilities, this could give the impression to the local people that this centre if private and out of their price range. Today’s society is created by objects, people and their environment. This creation

Assignment 1

1233 words - 5 pages company and its management 2 Discussion of competitive environment. 3 Economic climate and outlook. 6 4 Section C - Financial Analysis 1 Common sized income statements for the past three years. 2 Three year,gross profit margin, operating profit margin (EBIT margin) and net profit margin 3 Calculate its Price / Earnings ratio (using the most recent year's earnings per share). 4 Construct common sized balance sheets for the past three

New Public Administration in India

782 words - 4 pages be curtailed. Various studies went into analysing the phenomenal growth in the share of government in GDP in these countries since the Second World War. It was in this environment that William Niskanen, who was then at Harvard and currently heads Cato Institute, came out with a neat theory that, just as businessmen maximise profits and consumers utility, bureaucrats maximise budgets! The bureaucrat was identified as Public Enemy No. 1. It was

Bio and Socio Medical

701 words - 3 pages the health professionals are blamed of medicalization if they consider the societal influence of patient and if they ignore, the accusation still holds (Nettleton, 1995). On the other hand, the socio medical model focuses on the social factors that contribute to health and wellbeing in our society. From analysing the functionalist theory it shows that the socio medical model would explain and discuss the high rates of ill health and the short

Related Papers

How We Can Check Credit Worthiness Of Banks

1237 words - 5 pages analysis of the current and future activity and the financial situation of the loan applicant in the specific economic environment and the expected changes in the forthcoming periods. The priority of the credit analysis is to determine the following: 1. The managerial qualities of the loan applicant; 2. His ability to regularly repay the loan, the interest accrued and charges by using his current revenue from his business activity at present

Business Report

1478 words - 6 pages aimed at providing recommendations and suggestions through analysing and evaluating the company for a client who wants to do ethical investing in Cochlear. Background of Cochlear, critical evaluation of ethics and examination of financial performance will be provided. The information used for ethical analysis is based on secondary portfolio. In financial aspect, the ratio of return on invested capital is used for evaluating profitability. The

Successful Leadership Essay

1467 words - 6 pages . A thorough analysis should be carried out at least annually, with quarterly reviews. This will ensure that the leaders of the organisation are fully informed at all times, and are equipped with information that will enable them to respond appropriately to any changes which impact on the organisation. Analysing The External Environment, by: identifying the components and the boundaries of the external environment in which the organisation

Importance Of Environmental Analysis

4123 words - 17 pages environment can and often will affect the success of any business. The Macro environmental analysing includes the company operating and general environment such as demographic, economic, natural, technological, political and social cultural factors. The micro environment includes company’s internal environment. It influence marketing decision making. Customers, competitors, intermediaries, suppliers, government, financial community, local community