8. assessing economic and global conditions
TRANSCRIPT
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Assessing Economic and Global
Conditions
Jef Madura, 4th Edition, Introductionto Business. South Western
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Impact of Economic Growth on BusinessPerformance
Econo ic gro!th re"resents the change in the generalle#el o$ econo ic acti#it%.When the econo ic gro!th is stronger than nor al, thetotal inco e le#el o$ all !or&ers is relati#el% high, sothere is a higher #olu e o$ s"ending on "roducts and
ser#ices.Since the de and $or "roducts and ser#ices is high,'r s that sell "roducts and ser#ices should generatehigher re#enue.(ood Econo % )igher Inco es )igher *e ands$or Products+Ser#ices More Pro'ts $or o "anies Increase Production a"acities More Jobs reated -ational Econo % (ro!s More E "orts+I "orts/cti#ities (lobal Econo % (ro!s
Jef Madura, 4th Edition, Introductionto Business. South Western
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Consider the Alternative…
Whereas strong econo ic gro!th enhances a'r s re#enue, slo! econo ic gro!th results inlo! de and $or "roducts and ser#ices, !hich canreduce a 'r s re#enue.E#en 'r s that "ro#ide basic "roducts or ser#icesare ad#ersel% afected b% a !ea& econo %because custo ers tend to reduce their de and.(ross *o estic Product 1(*P is the total ar&et#alue o$ all 'nal "roducts and ser#ices "roducedb% do estic and $oreign 'r s in a countr%./n alternati#e indicator o$ econo ic gro!th is theune "lo% ent le#el.
Jef Madura, 4th Edition, Introductionto Business. South Western
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How Market Prices are Determined
3he "er$or ance o$ 'r s is afected b% changesin the "rices the% charge $or "roducts 1!hichin uence their re#enue and the "rices the% "a%$or su""lies and aterials 1!hich in uence theiro"erating e "enses .
3he ar&et "rice o$ a "roduct is in uenced b%the total de and $or that "roduct b% allcusto ers.
It is also afected b% the su""l% o$ that "roduct"roduced b% 'r s. 3he interaction bet!een de and and su""l%deter ines the "rice.
Jef Madura, 4th Edition, Introductionto Business. South Western
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Interaction between Supply and Demand
Jef Madura, 4th Edition, Introductionto Business. South Western
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The Effect of hi
Jef Madura, 4th Edition, Introductionto Business. South Western
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The Effect of hi
Jef Madura, 4th Edition, Introductionto Business. South Western
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Factors t hat Inuence Market Prices
onsu er Inco eonsu er Pre$erencesProduction E "enses
Jef Madura, 4th Edition, Introductionto Business. South Western
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Motives for Going International
Motivesonducting
Barriersharacteristic
sE change5ate
Foreign Demand
Technology
Resources
Diversifcation
Combination o Motives
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Importing & Exporting
Moti#esConductingBarriers
haracteristicsE change5ate
Exporting
Importing
Tari
!uota
Internet
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Balance of Trade
Moti#esConductingBarriers
haracteristicsE change5ate
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Reasons for Direct Foreign Investment
Moti#esConductingBarriers
haracteristicsE change5ate
6o!er osts
3echnolog%Barriers
3rans"ortation
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Strategic Alliances
Moti#esConductingBarriers
haracteristicsE change5ate
"trategic #lliances $shared resources%
&oint 'enture $pro(ect based%
International)icensing $ oreignproducer%
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*rotection
Trade Barrie
Moti#esonducting
+arriersharacteristic
sE change5ate
*unishment
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Foreign Characteristics
Moti#esonducting
BarriersCharacteristicsE change5ate
Culture
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Economic Systems
Moti#esonducting
BarriersCharacteristicsE change5ate
Capitalism$private o,nership%
Communism$public o,nership%
"ocialism
$mix both%
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Value of
Moti#esonducting
Barriersharacteristic
sExchangeRate
"tronger#ppreciate
-ea.erDepreciate