How macroeconomic effect business

The social science of economics can be divided into two prominent elements -- macroeconomics and microeconomics. Microeconomics centers on lowest-level economic decisions and interactions in a society, or those that occur with individuals and businesses in the marketplace. Microeconomic decisions can significantly affect companies, therefore an understanding of the implications can help you in making decisions for your small business.

How macroeconomic effect business

Leo Sun As a new business manager, the first thing you must be in tune with is the state of microeconomics and macroeconomics. While we are trained to pay attention to the former, the latter can often catch us by surprise and sink our business instantly.

How macroeconomic effect business

Microeconomic factors are company-specific trends. These are the factors in your business that keep it afloat. Revenue, earnings and margin are the How macroeconomic effect business micro factors at your company. The size of your workforce, the production volume of your products and your advertising campaigns are all micro factors as well.

In short, micro factors are parts of your business that can be fine-tuned and changed by the management. Macroeconomic factors are national and global events which are out of your control.

The September 11th terrorist attacks, the financial meltdown of and the European sovereign debt crisis of are prime examples of macro factors. Macro factors are dangerous and unpredictable, and a savvy manager must be agile to sidestep a cascading macroeconomic crisis to keep the company intact. Negative macro factors tend to occur in a cascading chain reaction.

For example, increased unemployment in the United States may lead to lower consumer spending, which in turn leads to reduced imports from China, which also causes the Chinese GDP to decrease. A lowered Chinese GDP then leads to lowered expectations for growth, and leads to a decreased demand for natural resources, such as crude oil, iron or silver.

This causes commodities to plummet globally, which can adversely affect the profits of miners in multiple countries. Positive macro factors occur in the same way.

For example, as crude oil costs drop across the world on lowered demand, the average American consumer starts spending more on retail goods due to cash saved at the pump.

These increasing retail numbers will increase demand for Chinese exports again, causing the Chinese GDP to rise. This in turn leads to a more robust Asian stock market and stronger prospects of industrial expansion.

As a result, commodity prices rise again. Macro trends are largely cyclical, but are impossible to accurately time.

Nature of Microeconomics As the term implies, macroeconomics looks at the overall, big picture scenario of the economy.
BREAKING DOWN 'Macroeconomic Factor' Outside of macroeconomic theory, these topics are also important to all economic agents including workers, consumers, and producers.
What Is the Nature of Microeconomics & Its Effect on Business? | 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.
What Is the Nature of Microeconomics & Its Effect on Business? | KaBoom Post 6 starrynight - I'm glad the bar industry in your city was able to dodge the effects of macroeconomics that time.

Like a captain of a tiny schooner on the open seas, you may be able to watch for warning signs of a brewing storm, but it is impossible to gauge its full impact until you are smack in the middle of it. Negative macro factors tend to uniformly sink all companies across a market, "throwing babies out along with the bathwater" - while positive macro factors uniformly aid all companies across the market, since a "rising tide raises all boats".

Discuss the projected impacts of these macro factors on your business, as well as forward projections to the direction of global markets and industry demand, and if they will cause problems down the road.

Staying in tune to these industry-shaking events will help your company batten down the hatches long before your industry rivals, allowing you to weather the storm. You Also Might Like´╗┐How Macroeconomics affects business Macroeconomics is a branch of economics that explores trends in the national economy as a whole considering the study of the sum of individual economic factors.

Similar studies underscore the effect of macroeconomic variability on business survival. According to the opportunity cost (OC) theory of productivity growth.

As a member, you'll also get unlimited access to over 75, lessons in math, English, science, history, and more. Plus, get practice tests, quizzes, and personalized coaching to help you succeed. A macroeconomic factor is one that is related to the broad economy at the regional or national level and affects a large population rather than a few select individuals.

Macroeconomics, in its most basic sense, is the branch of economics that deals with the structure, performance, behavior and decision-making of the whole, or aggregate, economy, instead of.

Macroeconomic factors not onlyaffect the entire economy but can also affect individuals andbusinesses. Key macroeconomic factors that businesses should pay close attention to include unemployment, inflation, economic output and interest rates.

Microeconomics: Factors Of Business Decision-Making