External Environment

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Examples of economy external impact

- Corona crisis, possible global recession 2022 - Ukraine War, Inflation - Trade war USA vs China - Financial crisis 2009/2010

Legal analysis

- antitrust laws - employment laws - consumer protection law - health and safety laws - education laws

Technology analysis

- automation - level of innovation - internet infrastructure - communication infrastructure - technological awareness

Environmental analysis

- environmental policies - climate change - natural disasters - recycling disasters - air and water pollution

Currency systems

- fixed: Exchange rate between two or more countries does not vary or varies only within narrow limits (China, Bahrain, Cuba, Saudi Arabia) - free floating: Value of one currency in relation to another is free to fluctuate and is determined only by forces of supply and demand (USD, Euro, Yen)

Politic analysis

- government stability/instability - corruption level - competition regulation - bilateral relationships - import/export regulations

Economic analysis

- growth rate - level of disposable income - unemployment trend - stock market trends - customer behavior

Social analysis

- population size and growth rate - per capita income - education level - lifestyles/buying habits - attitude towards traveling

Top 5 countries with highest GDP (2023)

1. U.S. (24,671) 2. China (19,581) 3. Japan (5,908) 4. Germany (4,937) 3. India (4,330)

How many EU members have a Euro currency

19 out of 27

Imbalance of trade

A weaker currency strengthens exports, but Long-term deficit means that goods are bought abroad over a long period of time, affecting skills of domestic companies to produce these products.

GDP real formula

GDP nominal - inflation rate

PRC

Political Risk Components are risk components, weights, and sequence are used to produce a political risk rating

What is a key driver for GDP growths

Technology

Economic cycle

Upward and downward movements of levels of GDP. Refers to periods of expansion and contraction in the level of economic activities

Bretton Woods system

a conference held at New Hampshire, in 1944, this system provided the foundation for postwar economic globalization, including the World Bank and the International Monetary Fund; based on the promotion of free trade, stable currencies, and high levels of capital investment.

Inflation

a general increase in prices and fall in the purchasing value of money.

Capital account

an account used to summarize the owner's equity in a business.

trade deficit

an excess of imports over exports

Political culture

an overall set of values widely shared within a society. Reflects importance of government and legal system, provides a context within the companies relate to the political system

PESTLE analysis

analysis of the external political, economic, social, technological, legal and environmental factors affecting a business

GDP economy

consists of three sides: politics, technology, society

Global currency

currency that is accepted throughout the world for international transactions: US Dollar (61%), Euro, Yen

When the Euro was introduced?

in 1999

Current account

is the balance of payments, records transactions involving the export or import of goods and services

GDP

is the total market value of all final goods and services produced annually in an economy

Currency

money that is generally accepted

Sovereignty

supreme and independent political authority

GDP formula

total consumption + investment + government spending + net exports

Political risk

unexpected drastic changes in a country's business environment that will adversely affect the profit and other goals of a particular business enterprise.

Trade surplus

when a country exports more than it imports


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