PESTEL Analysis of the Macro-environment

benefit from lower costs; these emerging markets are also providing enormous markets for firms
to aim their products at. With a population of over 1 billion, for example, the Chinese market is not
one you would want to ignore; at the same time Chinese producers should not be ignored either.
However, the relative importance of economic factors compared to other factors will depend on the
particular position of a business. Exchange rate fluctuations may be critically important to a
multinational but less significant to a local window cleaner. Rapid economic growth or economic
decline may be very significant to a construction business that depends heavily on the level of
income in the economy but may be slightly less significant to a milk producer whose product is less
sensitive to income. So whilst the economy is important to all firms on both the supply side (e.g.
unemployment levels affect the ease of recruitment) and demand side (e.g. income tax affects
spending power) the relative importance of specific economic factors and the relative importance
of the economy compared to, say, regulation or social trends will vary. Whilst we hope this book
provides a good insight into the economy and the possible effects of economic change on a
business these must be considered in the light of other macro and micro factors that influence a
firms' decisions and success.
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