Any business organization has one goal, to maximize profit. The process of maximizing profit is simple. Analyze demand of consumers, and provide appropriate supply, in good quality and quantity. There are however many factors that affect this simple operation. These factors are often classified as macro and micro, internal and external, technical and non-technical. All the same, the sales, production and procurement of the business organizations, directly or indirectly depends on these factors. Hence, you will find that businessmen, closely analyze and ponder upon the economic factors affecting business firms.
Economic Factors Affecting Business
The following article is a small elaboration of the major economic factors affecting business organizations. Internal environment, operational environment and external environment are 3 major classes of such factors. The following list is however a comprehensive and integrated list of all possible economic factors that affect the working of business organizations.
Demand and Supply
The demand and supply are two principal factors that affect the working of any business model. The demand is the will and ability of consumers to purchase a particular commodity and the supply is the ability of the business to provide for the demand of consumers. It must be noted that all the factors that are included in this list are inter-connected. You may also read demand and supply analysis.
Marginal and Total Utility
Utility is the amount of satisfaction, that is derived by consumers from consumption of goods. It so happens that after continuous and successive consumption of units of the same goods, the satisfaction that is experienced by consumer starts decreasing. This often results into short term or long term fall of sales. Some organizations prepare for the launch of another brand before the fall in utility and sales is experienced. The launch of new brand, ensures that the revenue trend of the business does not fall....
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