Business Economics : An Important Effect On Business

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In recent years, the globalization has faced with a multitude of economic, social and environmental crises which these situations have had profound impact on business by threatening the well-being of present and future business economics. For example, business economics are an important effect to enterprises or companies’ strategies especially the factors which influence on their decisions, there are considering the acquisitions of productive materials and the transformation of these materials into products and services for satisfying customer needs and wants. On the other hand, business economics are considered with the processes of production and consumption which consist of profits, incomes and costs. However, business decision making…show more content…
This essay will focus on how macroeconomic environment impacts on textile industry in Japan, Indonesia and Chile from case studies. The next section of this essay will analyse the relationships between macroeconomic environment and textile industry and products.
According to Delong & Olney (2006), macroeconomics are studied six key economic indicators such as gross domestic product (GDP), the unemployment rate, the inflation rate, the exchange rate and international trade policies. GDP and the unemployment rate are the most important which directly and immediately affect business strategies. For example, GDP is one of measurements of long-term economic growth which can imply that how well the firms in that country produce goods and services. GDP may have a direct effect on company’s sales and income because these two measurements could explain a company’s current performance and plan the cash flow to the company’s continued survival. When economic growth increases, company tends to increase more investment, stockholding and employment. Worthington, Britton & Rees (2005) identify that a high rate of unemployment could imply many labours available for companies seeking workers, and then failing to match employees who willing and can to work with companies could use their skills and labour power to produce useful goods and services. On the other hand, the high level of unemployment could decline overall goods and services demand due to the reduction of
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