Analysis of Unstable Economic Environment
Today, organizations operate in a highly unstable and challenging economic environment. It is influenced by several factors such as globalization and economic growth. To survive in this challenging economic environment, organizations need to greatly focus upon improvising their processes and systems to gain competitive advantage. This can be achieved through effective management of supply chain. Moreover, the introduction of internet technology provides a better and enhanced framework to conduct these activities via computer networks.
This leads to better understanding of the present and future market changes, also helps in analyzing the opportunities and threat and providing effective solutions. The E-commerce applications have led to major benefits to gain competitive advantage in today’s highly unstable and competitive environment (Scott and Comer, 1999). Even though, if businesses do not wish to apply these E-commerce applications, they can still gain competitive advantage by making their supply chain more effective and efficient.
Unstable economic environment forces businesses to become more competitive and it sometimes leads to intense rivalry between competitors and hence becoming negative for the society. Therefore, governments should also take their part of regulating business activities to ensure that businesses do not indulge in negative activities. In order to make the economy environment stable, business activities should also be monitored. Key factors that Influence the Economic Environment
These factors lead to critical challenges for the organizations and make it highly difficult for them to compete successfully in the economic environment. Globalization Globalization is the expansion of business markets all over the world and the free trade taking place between countries (Scott and Comer, 1999). It allows major advantages to businesses as well the countries. But this economic environment has brought dramatic changes in the way the business operates today.
It is mainly due to the increased customers expectations and knowledge that forces businesses to develop hoods and services that can meet their demand in terms of quality and prices mainly (Scott and Comer, 1999). Hence, the global market keeps on fluctuating and one country’s economy affects another country’s economy and thus impacting upon all businesses. Therefore, it is very difficult to compete in such challenging economic environment where consumer behavior, expectations, government policies and political issues keeps changing.
Economic Growth The economic growth of a country is the increase in the over all productivity by and Gross Domestic Product. The growth rate of a country’s economy keeps fluctuating due to many reasons that are explained in the Macro economics of a country. Therefore, this increase unstable economic environment for organizations as when there is high inflation prevailing in the country, it will lead to higher costs for the company and hence reduce demand for its goods and services (Scott and Comer, 1999).
Price level Stability Price level stability is to maintain a stable or slowly rising piece levels. This is one of the most important factors that determine a business’s success. Because if prices rises dramatically, it will lead to high costs for the business and expensive final goods and services with low demand and sales. Hence, businesses face these challenges when there are unstable price levels in the economy.