The Economic Environment is one of the major factors that affect the Industry and the company of a certain place. When a certain industry engages into Global aspect especially into trade and export, this economic environment must be studied well since it will surely affect the flow of the trade. First we must know the economic system the company is within and the company’s plan on exporting to (Other Countries). There is several Economic systems a country adapts and we need to ask this several questions first before we plan to export something globally. These are the major aspects of the Economic environment that largely affects the industry.
The type of Economy: We must try to know whether a certain nation is advance or not? Is it growing, industrial, developing, high tech or a transition economy?
The Government: It is very important to know what type of government a country is under since each type of government has their own rules and regulations that can affect the system and the company’s work environment. We may try to ask whether the nation is under monarchy or is the government under the state of terrorist? We must able to identify those countries that are free from terrorist and certain factors that gives high risk on the company. The status of the government within the county counts a lot.
Trade and Capital Flows: Since we are engaging into trade and investment it is logical to know what trade blocs the country is in. We must know if there is a currency board or exchange controls? Or is the government dominating the trades? These factors must be well observed if you don’t want to be in a trade situation that is risking your company’s future.
The Commanding Heights: being able to distinguish the type of transportation, communication and energy sectors used by the country helps a lot to boost and hasten trade exportation. These factors are highly significant since most companies are getting rid of high transportation cost and are implementing strategies to minimize cost on these certain type of factors. We may be able to ask ourselves, is these sectors state owned? Or are all of these factors privately owned or are the prices controlled?
Services provided by the state and funded through taxes: Since benefits and compensations are very crucial to the employees working in the industry then we also look at the services rendered by the government on a certain countries so we may arrive questions like, are pensions, healthcare and education provided?
Institution: Provided that all of the factors above are good but we also need to look at the system of government or the nation has. The industry will always be on the verge of challenges and problems so we may ask if the nation is characterized by transparency, standards and etc. because without this your company may be compromised.
So when you have already asses the criteria that largely affects the industry under the economic environment, lets push further and talk about the economic systems that counter fits the criteria given above. Each Economic systems has its own benefit and disadvantages that your company may encounter thus proper identification is needed in order to fit in and generate strategies that comes from the root culture of the company and industry itself.
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