Dynamic Economic and Business Environment PDF

Dynamic Economic and Business Environment An introduction Who analyses the business environment? Economists, political scientists, sociologists, and anthropologists Government and policy makers Firms – Multinationals & Domestic Investors International lenders Business Environment Analysis Microeco...

Dynamic Economic and Business Environment An introduction Who analyses the business environment? Economists, political scientists, sociologists, and anthropologists Government and policy makers Firms – Multinationals & Domestic Investors International lenders Business Environment Analysis Microeconomic policy Market competition Regulation  Public interest theory  Public choice theory  Theory of regulatory capture  Tollbooth view  Macroeconomic policy Controlling inflation Maintaining a stable and competitive exchange rate Exercising fiscal prudence Stable financial markets What is economics? Scarcity – a basic human dilemma Limited resources vs. unlimited wants The human condition requires making choices Definitions of Economics Mankiw’s definition Economics is the study of how society manages its scarce resources Hirshleifer’s definition Economics concerns decisions – choices among actions Alternative definitions Economics is how society chooses to allocate its scarce resources among competing demands to improve human welfare What is economics? microeconomics Branch of economics that deals with the behavior of individual economic units— consumers, firms, workers, and investors—as well as the markets that these units comprise. macroeconomics Branch of economics that deals with aggregate economic variables, such as the level and growth rate of national output, interest rates, unemployment, and inflation. Themes of economics Prices and Markets Microeconomics describes how prices are determined. In a centrally planned economy, prices are set by the government. In a market economy, prices are determined by the interactions of consumers, workers, and firms. These interactions occur in markets— collections of buyers and sellers that together determine the price of a good. What is a market? Market A market is an institutional arrangement under which buyers and sellers can voluntarily exchange some quantity of a good or service at a mutually agreeable price. It can, but need not be a specific place or location where buyers and sellers actually come face to face for the purpose of transacting their business – e.g. market for professors has no Law of location physical one price Arbitrage Practice of buying at a low price at one location and selling at a higher price in another. What is a market? Market Definition—The Extent of a Market extent of a market Boundaries of a market, both geographical and in terms of range of products produced and sold within it. Market definition is important for two reasons: A company must understand who its actual and potential competitors are for the various products that it sells or might sell in the future. Market definition can be important for public policy decisions. Why managers to study business environment? Corporate Decision Making: Before launching ETIOS in Indian Market The design and efficient production of ETIOS involved not only some impressive engineering, but also understanding of the following; First, Toyota had to think carefully about how the public would react to the design and performance of its new products. Second, Who are the existing players in the segment? Next, Toyota had to be concerned with the cost of manufacturing these cars – choice of production locations Finally, Toyota had to think about its relationship to the government and the effects of regulatory policies as Automobile Emission Standards Questions