Economics & the Legal Environment of Business Research Paper

Economics & the Legal Environment of Business - Research Paper ExampleMacroeconomic factors The macroeconomic conditions ar very master(prenominal) for business. Conducive macroeconomic conditions dish out a business to earn excellent profit, whereas unfavorable macroeconomic situations may convert the profits into losses. at that place are several macroeconomic factors that can influence the business operation of the union. Some of the vital factors are total production or GDP (gross national product) of the country in which the company is located, unemployment situation, prevailing and expected roll of inflation, and localize of interests. (Culp, 2001) If the country in which the company is located has been suffering from negative growth of GDP, whence it will produce some adverse impacts on the tress industry also as it a part of the entire economic system. For example, if a country is overtaking through recession, then every industrial sector will feel the heat in the form of decreased demand and lower production. On the contrary, if an economy is going through economic expansion with high rate of GDP growth then, purchasing power of the population will increase which might help in creating higher demand in the construction industry. (Culp, 2001) Similarly, unemployment situation is also a vital factor that might influence the business operation. ... (Culp, 2001) Inflation rate is also a quite a vital thing to consider for the growth of a construction company. If the overall consumer damage index for an economy is rising for quite a long time, then industry specific consumer price index will also feel its impact. Thus in the presence of high rate of inflation, consumer price index for the construction industry will also be quite high. This mainly happens because in the presence high rate of inflation in an economy costs of production in almost all the industries increase which is in turn reflected in the prices. Now in the presence of high con sumer price index of construction industry, the construction company will loose many customers as the prices may not fit to the pockets of the customers. On the contrary, during low level of inflation, the company will get more customers and thus it can expand its production. (Culp, 2001) Interest rate is another vital macroeconomic factor in case of construction industry. This is so as most of the potential customers of a construction company very often depend on loans at the time of purchasing a product of this company. no matter whether the buyer is a government or any private agency or any individual, credit lending plays an important role here. Thus, if interest rate becomes higher, then the cost of borrowing becomes higher and consequently, the products of the construction company will look more expensive. This will simply come down potential customers of the business entity. However, in the events of lower interest rate, the company will get more customers without changing i ts prices for its products. (Culp, 2001) Microeconomic factors Microeconomic factors