Describe a small business in less than 50 words. Enlist and discuss the microeconomic and macroeconomic factor that may affect this business positively or negatively in the year 2018.
Small business is an independently owned business either by an indicindiv or a group of people. Investment in this business is low , employees in the business are less and total revenue generated is less when compared with corporate business.
Ex: Grocery stores , restaurant etc
Micro economic factors:
competitorsmay effect the business positive and negative as sometimes competitor stratergy will be beneficial to business sometimes it will be a loss for the business.
Demand and supply of the product will play a major role as when there high demand for the product the supply of the pridpro will also increases. Thus it will have a positive effect on the company if the demand is high.
Government price regulation schemes also have effect on the business. If the price ceiling is below the equllibrium price the business will not be able to gain profit which is a loss of revenue for the firm.
Market price also play a major role in business as if the firm is charging more than market price people may shift to substitute good or service.
Macro economic factors:
Economic growth: If the economy is booming than the firm will earn more revenue as people are spending more which inturn make the company to earn profits.
Interest rate : If the interest rates are low business can take loans and invest in business which will expand the business and make the company to enter new industries which is a positive sign for a small business.
Inflation: The higher the inflation rate the lower will be the profit that firm earn as the rate of return on the investment decrease even sometimes it may lead to loss.
Describe a small business in less than 50 words. Enlist and discuss the microeconomic and macroeconomic...
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