Business Environment: What Kind of factors that Influence the Business Performance

Business Environment: What Kind of factors that Influence the Business Performance ImageOne of the business value is the business environment. It is essential for us to understand the business environment that can lead of to do the best in business performance. This article provides some information on some factors that can influence the business performance. The understanding of the economic conditions in some major countries is important to analyze the business environment around the world. This reflects to the level of production and consumption for a specific country. There are two main types of economic conditions ; macroeconomic conditions and microeconomic conditions.

Macroeconomic conditions mean the overall economic states of a country, whereas the macroeconomic conditions focus on the conditions in a particular business or industry. So, therefore, the economic conditions that affect the performance of our business is the macroeconomic conditions. Well actually the business performance of most company depends on 3 macroeconomic factors: economic growth, inflation and interest rates.

First is the economic growth. As we all know the changing of economic growth for many countries can changes in the general level of economic activity. For example, if the changes of general level of economic condition is higher than normal, the total income level of all U.S. workers is relatively high, and then there will be a higher volume of expenditure on products and services, and ultimately the companies that sell products and services should get a high income. These conditions can be different if the general level of economic activity is negative or lower than normal.

Next is inflation. It is increase the general price level over specific time. This can influence the company’s operating costs and corporate profits.

The last is the interest rate. This represent the cost of borrowing money that can make the company gain high profit. For  example is the company perhaps postpone the expansion and other projects when interest rates are too high. Beside that  interest rates may also affect corporate profits.

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