How Recent Economic Trends Influence Business

1494 words - 6 pages

How recent economic trends are influencing the business
A firm and its management are affected by many factors present in its environment and this because a business can not operate in vacuum. The factors existing in a business’ environment are beyond control by a firm and the factors affects how a business operates and performs in the market (Li, 2008). Other macro environmental factors besides economic that affect business performance include political factors, social, demographic or ecological, and technology. The economy is an important factor affecting businesses since it determines level of profitability a business can receive from operations. In recent period the economy can has been characterized by recession and increasing inflation levels. These two issues have had significant effect on businesses in terms of strategies, costs and profits.
The recession has had significant impact within the country and across the world and has had mainly negative effect on businesses. In order for businesses to make profits their must exist demand for their products but the recession affected the demand for products thus business had to change their business processes. One trend exhibited by businesses to recent economic condition is price wars. The prevailing economic conditions have led to consumers spending and demanding fewer products which in turn results in reduced sales for businesses (Li, 2008). Businesses are involved in price wars in an attempt to attract customers and maintain their sales levels. Since the economy has resulted in reduced demand for products it means that Apple will have reduced sales. Other effect of recession on business includes increased risks and also businesses looking into new methods to cut down on cost.
In the current economic conditions consumers are spending less especially of luxury goods such as updating their computer or purchasing a new iPhone and this will greatly influence Apple and more so in its retail business segment. Rogers (2008) provides that Apple experiences reduced demand for PCs and the company has had to lower its prices in a bid to maintain high demand for its products and maintain sales revenue for the business.
When there was an economic trend characterized by strengthening of the United States dollar, the company had to increase prices of products sold in foreign countries and this influenced demand for Apple products. Other economic trends that influence Apple include increase in fuel and energy costs and this influences the company in terms of demand for products and also cost of operating. A consumer has higher infinity or need to purchase fuel thus increase in fuel prices means consumers have less money to dedicate to other products translating to reduced demand for company products. The company also incurs increased expenses due to increased fuel costs thus the company experiences increased cost in producing and distributing its products. Increased expenses mean the company has...

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