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Several factors affect the global economy. Although these are macro and micro factors, they all form a whole and affect the global economy positively or negatively. Professional economists are always aware of these variables and their constant fluctuations, in order to anticipate any sudden change in them. Therefore, it is necessary that professionals from different areas, such as marketing and finance, take part in this work.

Economic environment

The term economic environment refers to the set of all external economic factors that influence the buying habits of consumers and the market and thus affect a company’s performance. These factors are often beyond a company’s control and can be both large-scale, the so-called macro factors, and small-scale, the micro factors.

In addition to these two groups, there is a third one that deserves to be considered separately because of its relevance: the technological factor which, in the current era, is a source of constant opportunities and challenges for companies in all sectors.

Global economy

The global economy is a concept of special relevance in recent decades, which at a basic level understands the world economic system as globalized and free of barriers or state borders. The creation of large economic unions, such as the European Union, for example, and the development of trade agreements and treaties of different types between a large number of countries in the world, has undoubtedly helped to lower the legal and economic barriers to economic activities in other places in recent years.

Characteristics of the global economy

The characteristics of the global economy are:

  • Companies operate in different territories throughout the world, acting in a legal and controlled manner not only in their country of origin.
  • Growth of trade around the world.
  • Existence of large multinational companies in many different economic fields.
  • The use of the Internet in connecting communications around the world at high speed.
  • The global economy involves the movement of people, considered as human resources, as well as goods, which are what have made collectivities into communities of goods and services.
  • Globalization of production. Especially in countries with cheaper labor.
  • Interdependence. A state in which two or more locations are mutually dependent and connected. So, if something happens, a failure or a crisis, everyone is affected by some kind of direct or indirect relationship.

Advantages of the global economy

  • In economics:
    • Free trade of goods and services worldwide.
    • Decrease in production costs.
    • Increased business competitiveness and product quality.
    • Technological development that favors production levels and speed.
    • Increased job opportunities in developing countries, as multinational companies strategically locate there because raw materials and labor are cheaper.
  • Policy:
    • Changes in national and international legislation to encourage trade, cooperation plans, legal security, market security and new public policies.
  • In culture:
    • Increased cultural exchange through various communication channels.
    • Tourism Incentive.
    • A set of universal values is created.
  • Social:
    • Increased human relations.
    • Greater accessibility to exchange and access information of national and international interest.

Disadvantages of the global economy

  • In economics:
    • Economic imbalance, as developed countries with large economies have imposed themselves over developing countries with smaller economies.
    • Increased unemployment in developed countries because multinational companies are opening headquarters in developing countries, where labor and raw materials are cheaper.
    • Economic inequality among the citizens of a country, since large companies have greater profits and financial capacity than those of smaller size and power.
    • Weakening of natural resources and raw materials in production processes.
  • Policy:
    • In some cases, greater social, cultural and economic inequality has been generated.
  • In culture:
    • Developed countries are able to superimpose their cultures on developing countries through commercial and media pushes, causing them to lose their national identity.
    • Minority languages can be blurred.
    • Some of the autochthonous traditions are being modified to incorporate new customs from other countries.
  • Social:
    • Social inequality has limited the access and use of different resources such as educational, technological and economic resources in many poor social groups.
    • More conflicts between social groups seeking to reclaim their social, religious and cultural values in the face of those that have been implanted through globalization.

Company globalization

Macro factors in a company’s economic environment

Macro factors of the economic environment are usually beyond the company’s control, although their influence on results is significant. This group includes the following:

  • Employment/unemployment.
  • Income.
  • Inflation.
  • Interest rates.
  • Tax rates.
  • Currency exchange rate.
  • Savings rates.
  • Consumer confidence levels.
  • Recessions.

Micro factors in the economic environment of a company

The company can act on the micro factors of its economic environment and, unlike the macro factors, it has the possibility of driving change. This group includes, among others, the following factors:

  • Demand.
  • Competition.
  • Availability and quality of suppliers.
  • Reliability of the company’s supply chain.

International markets and their environment

Companies must be aware of the local peculiarities of the international markets in which they may be present. This will make it possible to perfect marketing strategies and make commercial actions as profitable as possible. Many companies have failed, despite having very good products, because they did not know how to understand the markets in which they were immersed.

The cause is due to the difference in scenarios between local and foreign markets. In the latter, the environment becomes hostile due to unfamiliarity and lack of familiarity with local customs, norms, methods and other factors. Understanding the new scenarios, and knowing the factors that influence them, becomes key to the success of the international mission.

The professional in the economy

There are several careers that work directly with the global economy. These professionals must take into account all existing variables in order to anticipate the various economic fluctuations that may occur. They usually prepare a series of strategies carefully designed by teams made up of marketing and finance professionals.

TECH Technological University offers a broad educational portfolio where these areas are taken into account. The School of Business is where professionals focused on this area are trained. Clear examples are the specializations such as the, Master’s Degree in International Taxation, Foreign Trade and Customs and the Master’s Degree in strategic Business Management.

In addition, TECH designed a specific program, very close to the economic and marketing themes working together. This is the Master’s Degree in Digital Business, where these two areas come together, in order to specialize the professional in just one year.

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