Economic Environment (Macro)

Fundamental Learning Objectives

Identify the macroeconomic factors that affect business performance

Explain how market prices are determined Explain how the government influences

economic conditions

Economic GrowthThe change in the general level of economic activity

Inflationthe increase in the general level of prices of products and

services over a specified period of time

Measured by the

Cost-Push Inflation

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Demand-Pull Inflation

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Interest Ratesthe cost of borrowing money

Affect a firm’s Expenses:

Affect a firm’s Revenue:

Demand and SupplyWhat is demanded by customers or supplied by producers

based on PRICE

• Demand:

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• Supply:

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• CHANGE in S or D Determination of MARKET PRICE:

Market Price Influences

Government Influence: Monetary Policy

What is Monetary Policy?

Interest Rates

Interest Rates

Government Influence: Fiscal Policy

What is Fiscal Policy?

Economic Environment

Macroeconomic factors that affect business performance include:

Market prices are determined by:

The government influences economic conditions through:

Industry Environment (Micro)

Identify the industry characteristics that influence business performance

Explain why some firms are more exposed to industry conditions

Explain how a firm can compete within its industry

Business Performance is dependent upon industry characteristics

Industry Exposure

Reducing Exposure -

Competing Within an Industry

Industry Environment (Micro)

Industry characteristics that influence business performance include:

Some firms are more exposed to industry conditions because of their:

Firms can compete within their industry by:

Global Environment (Global)

Explain why US firms engage in international business

Describe how firms conduct international business Explain how foreign characteristics can influence a

firm’s international business Explain how exchange rate movements can affect a

firm’s performance

Why Engage in Int’l Business?

Conducting International Business

Foreign Characteristics that Influence International Business

Exchange Rate Movements Affect Business Performance

Global Environment (Global)

US firms may engage in international business to:

Firms conduct international business through:

Global Environment (Global)

Foreign characteristics that can influence a firm’s international business include:

Exchange rate movements can affect performance

Forms of Business Ownership

New business owners choose from the following general forms of business ownership:

Existing businesses can be owned by:

Business Performance is measured by:

Planning a Business

The Primary Stakeholders are:

Planning a Business

The Key Functions of a Business include:

To Develop a Business Plan include: