Significance and Elements Of Economic
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Economic means “pertaining to the production and use of income”. The Factors which have their affect on the working of a Enterprise are collectively known as “Economic Environment”. It includes System, Policies and Nature of an economy, Trade cycles, Economic resources, Level of Income, Distribution of income and wealth etc. The Economic Environment represents the Economic conditions in the country where the international organization operates. Economic environment is very dynamic and complex in nature. It does not remain the same. It keeps on changing from time to time with the changes in an economy with the changes in Govt. policies, political situations. It is concerned with the nature and direction of economy in which the organizations operate. Important elements that affect the Economic Environment are : Economic systems.
Regional Economic groups.
1. Economic Systems: Determines the scope of private and public sector ownership of the factors of production and market forces. The Different types of Economic Systems are:
Market Economy (or) Capitalistic Economy :- Business units or factors of production are privately owned and governed Command Economy (or) Socialistic Economy :- Government controls most of the factors of production decisions Mixed Economy :- Combination of both Capitalistic and Socialistic economy. 2. Economic policies: Business activities and operations are directly influenced by the economic policies framed by the government from time to time. Some of the important economic policies are: Industrial policy.
Foreign investment policy.
3. Economic conditions: Economic conditions such as standard of living, purchasing power of public, demand and supply, distribution of income etc., largely affects the size of the market. 4. Regional Economic Groups: They promote cooperation and free trade among members by removing tariff and other restrictions. Examples are: SAARC, ASIAN, EU.
Our assumptions, made on the basis of evaluating completed questionnaires that have been returned reflect our impressions. During the survey, businesses considered developments in the business environment as definitely favourable. In addition to reporting increasing uncertainty, they deemed Hungary’s political climate in the last years, domestic markets and social changes as having marked effects. After Hungary’s accession to the European Union, small and medium sized enterprises (SMEs) cannot perceive major impacts of accession, or blame the prevailing political situation for all changes. Small businesses do not capitalize on the opportunities offered by the European Union, do not make efforts to apply for EU grants and funds, or do not attempt to penetrate new markets. In our opinion, the companies participating in our survey are not aware of the opportunities available to them. Among the economic policy factors, a reliable monetary policy has the most benevolent impact on the operation of businesses. A survey of micro economic factors shows the most important areas to develop.
Keywords: competitiveness research environment; economic policy factors; effects of EU enlargement; environmental factors and responses; micro economic factors. ANALYSIS:
This article gives a clear view about the affect of Economic Environment on a new Business Enterprise directly and indirectly. For a Business Enterprise to be started, first it should be given designations about the Nature, Economic system, Conditions and Policies it should follow. It should be decided whether the Enterprise is to be controlled under Private or Public ownership depending upon the legal heirs of capital amount, partnerships etc., Here the Enterprises of Hungary gone through various problems given by Economic Environment. The small and medium Enterprises are not got capitalised by EU grants and funds. The Enterprises are not aware of various policies available to them. Only Monetary policy has great impact on the business. The political, market, social changes of Hungary had affected the small and medium Enterprises. Thus the Setup, Functioning and making profits of an Enterprise is affected by the Elements of Economic Environment. ARTICLE 2:-
This paper examines the impact of external business environment on organisational performance in the food and beverage industry in Nigeria. The minor objective of the paper is to investigate the influence of economic and political environment on organisational performance. A questionnaire was developed to collect information from the respondents based on a sample of 3 companies with 150 sample size. Data collected were analysed using multiple regression analysis. The findings of the analysis shows that the external business environment (political, economic, socio-cultural, technological, e.t.c.) have impact on organisational performance (effectiveness, efficiency, increase in sales, achievement of corporate goals e.t.c.).Thus, organisations should pay more attentions to their environment by doing periodic scanning.
Keywords: External Business Environment, Economic Environment, Political Environment, Organisational Performance, Food and Beverage Industry, Nigeria. ANALYSIS:
The main aim of this paper was to examine the impact of external business environment on organisational performance in the food and beverage industry in Nigeria. Thus, the findings of the study reflect that Economic Environment has an impact on organisational performance. For a company that wants to succeed must develop a clear understanding of the trend of Economic Environment and forces that shape competition. The understanding will enable an organisation to choose the appropriate strategy or strategies that fit the trend in the external business environment. First, the sample used was rather small; if we consider that the study covers other sectors of the economy. Second, the generalisation of the results was rather limited due to the fact that the sample covers only the food and beverage industry in Nigeria. Thirdly, there might be element of biasness in the information given by the respondents. It is important that organisations maintain their performance measurement system so that remains appropriate and provides information that is relevant to the issues that are of current importance and market situations. Hence, the frontier of this study could be expanded by using other environmental variables and combining other sectors of the economy.
Accounting provides useful information to decision makers, thus as the business environment has changed so have the accounting standards that govern the presentation and disclosure of information. International Accounting Standards are central to this concept. International standards were first developed in the late 1960’s but they have reached their zenith of importance in today’s economic and business environment. It is also evident that governments and policymakers recognize this change. This point was made publicly when the European Council of Ministers passed a resolution requiring all EU companies listed on a regulated market to prepare accounts in accordance with International Accounting Standards for accounting periods beginning on or after 1 January 2005. This decisive change was met with great furor in the accounting profession as well as in corporate boardrooms. The International Accounting Standards Board welcomed the resolution; pleased that the EU was among the first major “nation-states” to take the initiative and embrace international accounting standards. The EU recognized the many benefits of requiring the implementation of international accounting and auditing standards.
Moreover, the Securities Exchange Commission (SEC) recently voted on a roadmap that requires U.S. public companies to use International Financial Reporting Standards by 2014. In light of the interests and activities of companies and users of financial information becoming global, the SEC released a statement declaring its involvement and support to develop a globally accepted, high quality financial reporting framework. The benefits of international accounting standards can be financial, economic and political. Preliminary evidence suggests that companies, lenders, and investors would prefer a convergence of domestic accounting standards with international accounting standards to create a quality financial reporting framework. Although there are significant benefits to implementing international accounting standards and it is increasing in importance there are still many challenges to further development and authoritative implementation.
To best understand these challenges one must look at the factors that influence the development of accounting regulations. Such factors can include, social and cultural values; political and legal systems; business activities and economic conditions; standard setting processes; capital markets and forms of ownership; and finally cooperative efforts by nations. These factors if properly understood can mitigate or even eliminate the challenges to international accounting standards. International accounting standards are important today and will most certainly become more important for the future as they are further developed.
This article refers to the adoption of global or international accounting standards is an idea that has patiently waited in the wings for decades. The increasingly global nature of the business environment coupled with the complexity of financial dealings propelled global accounting standards into the limelight. The EU nations and many other nations have adopted IFRS; at the same time others are working towards such a goal. Yet this climate of progress and camaraderie does not mean opposition in nonexistent. The control on the Firm is not distributed among the lower sections. Strategies are to be implemented in view of the policies followed. Instability of the firm reflects its profits to decrease. Stability in the firm should be brought in the lower sections of the firm following any Economic system. Economic conditions also affects the stability factor as the conditions decide the economic growth in a country. To best understand these challenges one must look at the factors that influence the development of accounting regulations. Such factors can include, social and cultural values; political and legal systems; business activities and economic conditions; standard setting processes; capital markets and forms of ownership; and finally cooperative efforts by nations which are the Elements Economic Environment. Thus by adopting appropriate Economic System, Strategies and Policies growth of a firm can be achieved.
Elements of Economic Environment helps to estimate the market trends and government policies that influence on the performance of the company or Enterprise. Economic environment directly influences citizen, managers, companies, policy makers , institutions etc. Economic Environment helps a firm to Identify opportunities and getting the first more advantage instead of loosing them to competitors. Identify threats and early warning signals so that firm can meet the threat by adopting and improving the quality of the product, reducing cost of the production. Coping with rapid changes that is regarding policies and Market conditions. Thus Elements of Economic Environment affects the functioning of an Business Enterprise in various aspects. For a Enterprise to run in profits, the strategies, policies are to be taken considering the Market conditions and Economic Conditions. Economic Environment thus has its own impact on any Business Enterprise.