Macroeconomics is similar to business because the latter is affected by the factors that make up the overall economy. It is worth noting that macroeconomics is a branch of economics that deals with issues related to factors that affect the economy of a country as a whole.
These factors include areas such as the unemployment rate, inflation, business cycles, and gross domestic product. Entrepreneurs and others associated with the business must consider these factors as part of the market analysis.
The role of macroeconomics in business can be seen in the light of the impact of the economy on individual businesses. For example, during a recession, the behavior of customers and consumers of goods and services changes to reflect the change in the economy.
These changes can be seen in how the demand for goods and services decreases and how this decrease affects the balance sheets of different firms.
Examples of the role of macroeconomics in business include; How a decrease or increase in the demand for a product affects the decisions of firms to expand or reduce their rate of production.
For example, a booming economy may increase the demand for goods, and as a result, companies increase production, hire more employees, and expand businesses, all to meet the increase in demand.
Microeconomics Effect
The effect of microeconomics on business can be seen in the way companies plan their sales and marketing strategies based on the influence of macroeconomic factors, such as inflation, trade booms, and recessions.
When there is a recession and low demand for products, companies usually change their marketing strategies to reflect the low demand for products and services.
In this case, the marketing strategy may be based on aspects such as lowering prices and offering cheaper alternatives that will appeal more to customers trying to conserve funds during a recession.
An important effect of macroeconomics on business is the effect of government policies on businesses. These government policies may include aspects such as taxation, strict rules and regulations, tax reduction, and other aspects such as import quotas.
For example, a cigarette company may find that government regulations regarding tobacco companies are too stringent, with specific requirements regarding labeling, packaging, and paying a lot of taxes.
Therefore, companies must evaluate these macroeconomic effects in business to know how they can affect the success of their business.
MoreThe definition of business strategy is usually a document that clearly states the business’s direction and the steps it will take to achieve those goals.
In a unified business plan, business strategy results from the identified goals are present to support the company’s stated mission, and a typical business strategy is developed in three steps: analysis, integration, and implementation.
In the analysis step of developing business strategies, one of several methods is used to analyze the company’s market, resources, obstacles to success, and specific advantages.
The goal of strategic analysis is to identify what the business needs to achieve the desired achievement, the strengths that can be brought in to influence the achievement of the goal, and the weaknesses that must be addressed before integration and implementation.
Strategy evaluation methodologies can include evaluating the business environment, different gaming, and competitive scenarios, determining what market forces are at work, evaluating competitors, and more.
Incorporating a business strategy is usually one of many steps in a large business planning process. The action plan begins with a comprehensive vision.
From this vision, a mission statement is created for the business, the shorter and more precise the statement the better, the mission leads to specific goals that the business will achieve to accomplish its mission, which in turn leads to a strategy for achieving the goals.
Specific tactics are usually developed to support a business strategy.
This process usually begins with senior managers who then communicate the strategy to the respective teams. Each team is made to understand how the strategy affects their day-to-day activities.
Taking business strategies to the lowest company level can help integrate strategy throughout the company, and business strategy can be applied to small businesses as well.
The implementation of business strategies is usually followed by evaluation and integration. Individual teams in the company, understand their respective roles in achieving strategy to pass and implement the specific tactics developed to support the strategy.
In the implementation phase, individual business units or teams often have a subsection of the business strategy they focus on.
Business strategies usually include an element of measurement as well.
The measurement component of the strategy is derived from the overall objectives defined for the accomplishment of the business mission. Objectives are broken down, usually by both the business unit and the estimated time to complete them.
The business strategy includes an element that periodically compares current progress against goals. Based on how successful the business strategy is in achieving the objectives, the process of strategic analysis is repeated to adjust the strategy as appropriate.
Although it is easy to define, forming and executing it sets a business apart. A business strategy refers to all the company’s decisions to achieve the larger vision. Knowing business strategy and implementing it correctly can help companies to become market leaders. A business strategy is the backbone of every business, and any shortcomings could mean the business goals get lost midway.
Back to the definition of business strategy, here are the seven essential components of a business strategy
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What is the target market, and how do companies reach it?
Business axes of import and export companies
MoreAn operating budget is one of the carefully crafted budgets that focuses on managing current expenses.
This differs from other types of budgeting strategies that may include provisions for future transactions or create additional expenses outside the scope of the basic budget.
The focus of the operating budget is to ensure that there are funds to keep the business operating and that these funds are distributed in the most cost-effective manner.
Almost all types of organizations depend on the operating budget.
Businesses of all sizes require this type of budget as a way of understanding how much income they need to continue operating at current levels.
Nonprofits must also work with an annual budget that reflects the number of projected donations and other revenue sources that will eventually be used to cover expenses necessary to the entity’s function.
Even families benefit from formulating a reasonable budget of this type because the process makes it easy to identify expenses and settle them when they become due each month.
MoreInvestment assets in financial markets are securities designed to generate profits. They are grouped into classes known as asset classes and can be broken down into stocks, bonds, commodities, and currencies.
Each asset class tends to react differently to the same economic news, thus by combining multiple investment assets into one portfolio, which is a group of held investments, the investor mitigates exposure to risk.
In addition to grouping them through broad financial components, investment assets can be classified based on detailed characteristics, including stocks that trade in a similar industry such as energy.
types of investment assets
There are different types of investment asset classes, but all are used to enhance an investment portfolio. Stocks that trade in the financial markets are included in the stocks group, while bonds are classified as fixed-income investments.
Real estate is a type of hard asset because it is a tangible component, although some real estate trades as a value in an index known as a real estate investment trust in the stock market. Commodities represent a comprehensive class of assets under which you trade various investment assets, including oil, gas, and agricultural products.
By combining unrelated asset classes in a portfolio, an investor diversifies his exposure to the markets. Uncorrelated assets tend not to trade in sync with each other. For example, if stocks fall sharply, commodities do not necessarily follow suit, which may be able to prevent the portfolio from more severe losses.
Different asset classes tend to react differently to the same news or economic development, and by diversifying across multiple asset classes, an investor mitigates risk.
MoreThe ongoing COVID-19 pandemic is causing an increase in the number of entrepreneurs and companies in various industries. As more people are starting their own small businesses but they may need more information regarding financial management. Here are some financial management tips that entrepreneurs should keep in mind this year.
Set clear financial goals
Entrepreneurs need to set clear financial goals to improve their operations and help them reach the bottom line. The more specific the goal, the easier it is to take practical steps to reach it.
For example, you may want to improve your profit margin, build cash reserves for expansion, or save enough money to purchase an important piece of equipment for your business. You may also want to have better control over cash flow management, increase compensation packages for your employees, and gain an overall sense of financial stability.
Learn about rational spending
While this advice may sound obvious, learning to spend responsibly and wisely can help increase your profits and keep you in balance. Even taking small steps like using a reusable water bottle or coffee mug instead of plastic cups in the office can make a big difference over time.
Setting a budget can help you spend more rationally. Before making any major purchases, consider the benefits you can expect from the purchase. Will this propel your business forward? Will this program help increase employee productivity? Can renting instead of buying make sense? These are all questions you should ask yourself before spending on business tools.
Study business technology before investing in it
Many business owners hear from experts in their industry that new business technologies must be taken advantage of for various reasons.
MoreManaging the flow of physical materials between people and places is known as logistics management.
Such an operation ist prevalent in large organizations, especially those interacting with other companies to purchase their supplies.
Any company that requires the movement or movement of materials to complete a business task uses such management processes.
Many areas deal with logistics management, and these include the areas of retail, manufacturing, and general warehousing.
The logistics manager is responsible for coordinating the movement of physical goods from one location to another; this usually requires managing people and processes to deliver products in an efficient manner.
The movement of military forces is an example of a logistics management process, as it requires extensive coordination between physical goods and the forces themselves.
Military logistics is one of the most complex administrative problems because it usually requires the movement of physical goods by land, air and sea.
Humanitarian relief organizations work continuously with Logistics Management Operations. These non-profit organizations receive goods and financial aid from shareholders.
These charitable funds are turned into foods and supplies to help the dependent nations.
Most humanitarian aid organizations distribute medicine and foods in foreign countries; this is a significant process, as it requires logistic control, which is unique to each country.
Once the products arrive in the recipient country, they must be directed to specific areas of greatest need and distributed to the people there; this also requires management of the Health and Human Services teams that can provide medical support, which requires detailed logistics management.
Post office operations are a good example of a logistics management process.
When a letter is mailed, it must be picked up, sorted and transported to the postal destination; this requires efficient process management of people, materials and transportation vehicles.
The post office has several processes that facilitate the delivery of mail packages.
Most retail stores use logistics management to purchase and sell merchandise, as these businesses work with wholesale manufacturers to purchase large quantities of products.
Once the products arrive in the store, they must be organized and distributed in the appropriate area.
Retail stores also manage warehouse inventories with logistics management software.
These inventories are combined with sales software to track the company’s supply depletion, and when stock levels reach a specified percentage, automatic orders are sent to the supplier to replenish merchandise.
What are the export management companies? purchasing your products from the manufacturer , marketing your products, and export laws.. Learn about them through our article
An export management company is a company that facilitates the distribution of other companies’ goods to foreign markets, and usually an export management company exports goods on behalf of several other companies.
To prevent conflicts of interest, export management companies do not work with companies that compete with their existing customers.
Some export management companies have internal export teams that promote the company’s products in foreign markets and arrange the goods to be shipped abroad.
Many companies rely on export management companies because small companies lack resources to fund an in-house export team, while large companies reduce operational expenses by outsourcing this function, and this is where the export management company comes in.
In some cases, export companies receive a commission from the sales they make to the companies they deal with, and some export companies purchase large quantities of goods from factories and sell them at a higher price to foreign purchasers and earn profits.
It is notworthy that an export contract or agreement may last for several months or years, and the exporting company usually enjoys exclusive rights to market the manufacturer’s products for the duration of the contract.
Purchase from the manufacturer
If the export company exports the goods directly from the manufacturer,its commercial agents are responsible for promoting these products in overseas countries.
The company must take the necessary measures to transport goods to the foreign countries, and this entails concluding mediation deals with shipping companies and airlines.
When the goods reach the destination country, the local workers of the export company must take the necessary measures to either transport the goods directly to customers or store and sell them through retailers.
The goods are usually sold at a price set during negotiations between the export company and the manufacturer.
Export regulation laws
There are laws in some countries that require exporting companies to pay customs taxes or duties on certain types of imported goods
Export management companies must pay any applicable taxes and include these costs in pricing negotiations. In addition, rules in some countries prevent companies from importing certain types of products.
In all these cases, the export company shall bear all liabilities – rather than the manufacturer – to ensure that exports do not violate local laws in other countries.
Product Marketing
Many export management companies also facilitate the sales process and do not purchase goods from the manufacutrer, and these companies try to negotiate deals with retailers and distribution companies in foreign countries to market and sell the products.
The export company is also usually responsible for arranging for the goods to be transported from the factory or warehouses to storage facilities used by foreign customers. In this case, the costs associated with each phase of transportation must be calculated and added to the price of the shipped goods.
MoreWhat is institutional advertising?
Corporate advertising is marketing designed to promote a company rather than a specific good or service.
It can be designed to make the public more aware of the company or to improve the reputation and image of the existing company.
Depending on the company, this could be a form of brand advertising.
Many forms of advertising are about product promotion, this can include promoting a new product so that the audience becomes aware of its existence, or trying to persuade the audience to buy more of the existing products,
Instead, institutional advertising promotes the company itself.
One example is a chain of groceries that runs ads that emphasize general quality or lower prices for their food, rather than providing details for specific running offers.
Some forms of corporate advertising are geared towards promoting a positive image, and effectively discourage product sales to some extent.
For example, smoke companies may run commercials warning of the health problems associated with smoking.
These commercials usually designed to improve the company’s image, making it appear more trustworthy or reliable.
In some cases, corporate advertising is the same as advertising for brand awareness, where ads promote a specific brand rather than the product itself.
For example, a banking group might run promotions for one of its banks as dynamic and stimulus while promoting its sister bank as particularly beneficial to customers.
In either case, this is different from promoting a particular service, for example by advertising a low rate on loans to new customers.
It is also possible for corporate advertising to promote an industry rather than a specific company, usually by an industry association; this happens most often in industries where many companies are small businesses without the budgets to carry out major advertisements, particularly in the national media.
As a hypothetical example, most wills prepared by attorneys done by small law firms have only a few offices.
A trade organization for inheritance attorneys could execute this type of advertisement by putting together a television ad promoting the importance of having a will, and then listing a website that would refer viewers to attorneys in their area.
Corporate advertising can cause problems for marketing analysis. When an advertisement is commercial for a particular product, marketers can track how it affects sales and see how effective the advertising is.
With corporate advertising, the link between advertising and its business impact is more vulnerable, and it may take longer to show any effects.
MoreCustomer satisfaction is the level of satisfication of purchaser with a product or service provided by a company, or with the company itself.
When talking about the key objectives of customer satisfaction, these objectives can be divided into three main groups.
The first group is purchase satisfaction, which includes how well the product or service itself is, and whether the product or service meets customers’ expectations and perceptions of it.
The second group is satisfaction with the process itself, and this group includes things like ease of procurement, customer service, and ensure interactions after purchase.
The third set of key customer satisfaction objectives is the degree to which satisfaction levels influence future actions, such as recommending a product, suggesting it to friends and family, or buying again from the same company.
It is noteworthy that companies pay great attention to acertain the satisfication of the customer with the performance of the product or the quality of the service it provides- with the latter affecting future purchasing decisions.
In fact, quality may be the most important among the main objectives of customer satisfaction because it is virtually impossible to overcome the consequences of a poorly performing service or a bad product.
Companies often conduct extensive market research and product testing to ensure that the product or service meets the customer’s needs and expectations as much as possible.
Whether the product purchased is a tangible item or an intangible item, quality is important, and if the customer feels that the product is not working as expected, or that the product is unsafe, difficult to use, or not worth the price, they will not be satisfied with it. Here we would like to point out that misleading advertisements that raise customer expectations beyond the product capacity can also lead to customer dissatisfaction.
Satisfaction with the process itself is also important in setting key customer satisfaction objectives. When a customer is dissatisfied with the purchasing process may go to a competitor next time, even if he is satisfied with the performance of the product itself.
The purchasing process includes all procedures involved in researching and purchasing the product and solving post-purchase issues.
It is also important for buyers to feel that the buying process is easy, which is why online and phone ordering systems must be available and user friendly.
Likewise, the retail locations must be well qualified to deal with the customer, and this includes the polite satff behavior with the customer and the full readiness to help as needed.
Discussing key customer satisfaction objectives should also include the influence on future behavior. A customer, who found comfort during and after the purchase process, and who found high quality in the product or service will come over later to make future purchases and may recommend the product or service to others.
All of this works to grow the company’s customer base and contributes to building long-term relationships with them.
