Every organization has a common purpose to maximize profit. There are many processes of ensuring the
maximization of profit. Examine the demand of potential customers and render
appropriate supply according to the demand with high quality and amount. It is
simple business of a particular country affects the overall economy of that
country and vice versa. There are however many factors what affect this kind of
basic commercial activity. These aspects are often classified as macro and
micro. Within these classifications everything related to economy is involved. Besides, production, products and services,
production, procurance with the business organizations direct or even
circuitously depends on these factors. Even the profitability depends on these
affecting economic factors. Hence, you will understand why business people
closely analyze the economic factors of their potential market affecting
business organizations.
Nov 3, 2011
Understanding Business affecting factors of economics
We cover here some integrated and comprehensive factors of
economy those affect making decision, developing of business organizations.
Demand and supply
factors
The demand and supply are two main factors those affect the
whole circle of the economy of a country. Those factors also affect the working
of any business organization. Simply demand and supply are co-related. Business
people supply in accordance with the demand of the people. But balancing these
factors is a big challenge. The demand is actually the will and ability of the
buyers to purchase a particular product or service. The supply is the ability
of the suppliers to meet the demand of the buyers. Income, taste, ability to
purchase, will, price of related products or services demanded, expectations,
numbers of buyers, costs of raw materials, technology, numbers of sellers are
some common business affecting factors of demand and supply.
Marginal and total utility factor
Utility is the
quantity of pleasure that is derived through buyers through ingestion of goods.
This thus takes place after continuous and successive consumption of the same
items. Some firms launch another brand before the fall in utility and thus sale
is increased. Business people have to analyze the market and determine whether
utility of any demand is falling or not. The launch of new brand makes it sure
that the revenue tendency of the business is not diminishing. Diminishing
utility is among the external factors affecting business.
Banking and money factor
Banking simplifies
monetary and financial plans which affect business along with the customers with
the business. Money in circulation commands the particular power to pay or
somewhat the actual need with the buyers and the banking facility determines
the particular borrowing capacity of individuals and the business.
Economic Growing and Improvement
Financial growing determines
the amount of monetary resource the society is actually earning as well as improvement
signifies the amount of money that is being placed into transmission regarding
long-term up-gradation. Among all of the financial aspects influencing business
atmosphere, improvement is the most crucial point because the business has to
provide in accordance with the demand of a dynamic society.
Employment and income
The per capita income
and density of employment indicates the degree of demand and purchasing power
of the people. As stated earlier income is a common factor influencing the
business decision.
Pricing of product or service
Another very
essential aspect of the economy, which affects the business, will be the common
prices of the products. Because pricing of commodities affects the sales of the
business concerned. Costs of raw materials, purchasing power of people, costs
of manufacturing and finally costs of transportation are the crucial parts those
influence the pricing level of the products or services and balancing the
demand and supply.
These factors are of some reasons why business people
analyze market, economy and business trends affecting business.
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