A company does not operate in isolation as world economics are all about dynamism and in this age of technology a company cannot afford to ignore the macro factors which have the huge effect on the performance of the company. Macroeconomic factors refers to those factors which have bearing on the whole economy of the country and also they are beyond the control of the company, given below is the list of macroeconomic factors –
List of Macroeconomic Factors
Politics
The current government or politics of the country is the major macroeconomic factor which has a major impact on the company. So for example if the current government is pro-business than it will roll out policies which are conducive to doing business which in turn will help the company and if the government is pro-poor and against capitalism than it will roll out such policies which will benefit the poor in the form of subsidies and harm the companies in the form of aggressive taxation.
Economic Environment
The current economic environment of the country and future expectations about the GDP is another major macroeconomic factor having an impact on the company because if economy is booming and expected growth is also good than the company can invest funds for expansion of their business as good growth in GDP of the country implies good demand from all sectors leading to good demand for company’s products as well while an economy which is in recession can lead to lower demand for everything and in that environment it is not advisable to invest money for future expansion as economic environment is of shrinking demand and there is no use of locking funds for expansion of business.
Technology
In this age where technology plays a key role one cannot ignore this macroeconomic factor because if the company does not alter itself according to technology than it is likely that the company may face extinction. So, for example, those retailers who ignored the online shopping trend and didn’t alter themselves are having lower sales than those who have changed according to the requirement of technology and are selling their products online also.
Interest rate
Interest rate prevailing in the economy is another major macroeconomic factor because an environment where interest rate is rising is not good for those companies which are dependent on debt and company should look to reduce its debt in the balance sheet whereas an environment where interest rate is falling is good for those companies which have taken debt as they can use that debt to take leverage and make handsome profits.
Consumer taste
Another major macroeconomic factor impacting the company is the change in consumer taste because consumer taste and preference never remain same and if the company does not change according to consumer taste than it will lead to loss of customers to the company. So for example when consumer preference changed from normal television to LCD and LED and if the companies like Samsung and LG had kept producing normal television and didn’t change their strategy than they would have lost considerable market share which in turn would have resulted in the loss for the company.
As one can see from the above that macroeconomic factors are of paramount importance and any company cannot just on the basis of microeconomic factors implement strategies or plans because macroeconomic factors play the key role in the success or failure of the company.