Financial Analysis for American Apparel

Economic Environment

Davina Lamlli

Southern New Hampshire University

                    06/02/2019

Abstract

The prupose of this journal is to describe the factors that affect the business environment in today’s world, and how they affect the success of it. Also, this study was a review of resources to explain the importance of considering all those factors when a company is planning to make some overall strategy changes. Finally, the results shown that those factors are essential on decision making for reaching a better outcome and adapt with the economic environment.

Business is an organized effort of individuals to produce and sell the goods and services that satisfy needs of society for a profit (Pride, Hughes, Kapoor 2017). In today’s business world there are some factors that affect business environment that entrepreneurs and managers should keep abreast with latest economic developments and changes in a market, and use this information to analyze and correlate with the economic environment in which businesses function to be able to make informed decisions that will enable the organization to progress despite obstacles ( Fernando, 2011). Companies should consider those factors:

1. The competitive environment
2. The global environment
3. The technology environment
4. The economic environment
5. Market forces

The competition factor has affected the business the most in these last years. Organizations are always looking for innovations in the business environment, for new products and services, and companies that produce similar product or offer similar services are trying to differentiate from others and to increase their business.

The global environment has increased the competition, and the ambitions of businesses. Companies are expending and taking risks, they are selling goods and services to customers around the world. The demand for products has increased and companies are making more profit.

The technology has given the business another dimension and it brought the need of changing the business practices and strategies.  The advancement in technology led the companies in the global market by using social media.  However, the technology factor has been the most challenges for all organizations because of the demands and adapting to the new technology. In addition, multinational corporation must stay with the current trends and events in various country where they operate (Fernando, 2011). Moreover, they should spend more financial resources on training their employees because of the everyday innovations in technology and the ways of doing business.

The economic factor is very essential when making business decision and strategy changing. The economic environment of e business is the microeconomy and macroeconomy. Microeconomy affects business decision making of individuals and consumers. Macroeconomy effects the entire economy of the country and everyone business such as; interest rate, unemployment rate, government policies, inflation, taxes, recension, depression, consumer conflict level, currency exchange rate (Macroeconomics: Crash Course Economics) https://www.youtube.com/channel/UCX6b17PVsYBQ0ip5gyeme-Q . During the recension the unemployment increases and eventually consumer will purchase less goods and services, because of that this is not a good time to launch a product in a market or open a business. The knowledge of the economic environment will help as understand if is the right time to make business decision and what strategies should follow to ensure the success of the organization.