“A business enterprise is a part of economy and changes in environment influence its functioning and performance” Analyze the impact of macro-economic business environment on business decision making citing real life examples from recent past.
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The economic environment of a business is the external microeconomic and macroeconomic factors that can affect it. Let's take a closer look.
Macroeconomic factors are large scale economic factors that affect all participants in an economy and include such things as unemployment, inflation, interest rates and tax rates. Since Emmanuelle wants to start a real estate investment company, the current macroeconomic environment is very important.
For example, if the unemployment rate is too high, many people will not be able to afford to purchase homes or even pay rent. If interest rates are high, then it will be much more expensive for Emmanuelle to finance the purchases of her investment properties. An increase in taxes can cut into her profits. In fact, property taxes may make a difference between a profit and a loss on rental property. Of course, if taxes, interest rates and inflation are low, the business environment is safer for a new business.
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