Good work, but I think there is need to add functional life of components as one of the factors affecting or influencing construction cost estimate. Heres Why Millennials Need to Worry About Autoimmune DiseasesLike Right Now. ADVERTISEMENTS Sales Forecasting Meaning, Factors, Importance and Limitations Meaning Future is uncertain. Man thinks about future. He may be a businessman, a. This video provides an overview of how to perform Critical Path Method CPM to find the Critical Path and Float using a. Seasonal Factors Affecting Business' title='Seasonal Factors Affecting Business' />
External Factors Affecting Business Environment. Economic Forces. The economic environment can have a major impact on businesses by affecting patterns of demand and supply. Companies need to keep a track of relevant economic indicators and monitor them over time. Income. Income indicates a customers ability to spend on the products sold by the marketer. The rise in the number of dual income families in several parts of the world, including urban world, has led to the rise in the incomes for such families. This has resulted in higher demand for lifestyle and luxury products. However, marketers should be wary of making generalizations, as customers propensity to spend depends on cultural factors as well. Such products, such as dishwashers, that are considered in necessities in Western markets, do not even fall into the consideration set of consumers. Inflation. Inflation refers to an increase in prices without a corresponding increase in wages, resulting in lower purchasing power of consumers. When cost of production of products and services is low, they will be sold at lower prices. Inflation rate is higher when costs of producing products or services go up, or when there is too much money chasing too few supplies, prompting suppliers to raise prices and earn higher profits. High inflation rate decreases real wages, i. Inflation will reduce the demand for several products because the customer will ration his income on goods. In inflationary times, customers stock items to save themselves from further increase in prices and abandon their favorite brands to buy more economical brands. When costs of production go up, companies should try to withhold increasing prices for as long as possible. In the long run, companies will have to look for better methods of production and cheaper inputs so that cost of production can be brought down. Recession. Recession is a period of economic activity when income, production, and employment tend to fall. Demand of products and services are reduced. Free Windows 2003 Server R2 Sp2 Iso Programs'>Free Windows 2003 Server R2 Sp2 Iso Programs. During recession, companies should improve existing products and introduce new ones. The idea is to reduce production hours, waste, and the cost of materials so that companies can offer products at lower prices. The most potent way to end a recession cycle is to make it attractive for customers to buy more. In recession, business buyers will postpone the purchase of new equipments and materials because they do not know if there will be demand for their products and services. Sellers should be willing to extend credit to buyers to get over their reluctance to purchase. Sales of replacement parts and other services may become an important source of income. Companies should emphasize their top of the line products and promote product value. Customers with less to spend will look for demonstrated quality, durability, and capability to save time and money. High priced, high value items do well during recession. Companies should understand that though there are specific causes that trigger recession. It is perpetuated because consumers and businesses become uncertain about future and are reluctant and scared to buy. Once consumers start buying, businesses will start buying automatically. Therefore companies selling to consumers should generate confidence in the consumers by offering them high quality products and services at reasonable prices and also extend credit to them. Interest Rate. If interest rate of an economy is high, businesses will borrow capital at a higher rate and they will set up new businesses only when they are convinced that they can earn at a rate higher than the interest rate they are paying on the capital. Even in existing businesses operating costs would go up as their working capital requirements will attract higher interest rates. Therefore companies will be able to produce products and services at higher costs and will perforce sell them at higher prices. There will be inflationary tendencies if interest rates are higher for long periods. Consumers will have strong tendencies to save because of the prospect of earning higher interest rates from their deposits. High interest rates have detrimental effects on the economy. Exchange Rate. Exchange rate becomes a very important driver of performance when a company exports its products and when it imports materials and components for making its products. It is more profitable to export when the currency of the exporting country is weaker than the currency of the importing country. But this advantage is nullified if materials and components are imported from a country whose currency is stronger. A company will run its most profitable operations when it exports its product to a country whose currency is stronger, and imports material and components from a country whose currency is weaker. Technological Factors. New technologies can be used very effectively to counter inflation and recession. New machines can reduce production costs. Advances in information technology have made it possible to plan global supply chains, enabling companies to make better products at lesser cost and distribute them economically. Technologies for Nations. Economies which are well off should concentrate more on basic research because they can remain ahead of other economies only by creating new businesses through inventing new technologies. They should be ready to relinquish businesses they are currently excelling in, because other economies will catch up with them and developed economies will not be able to charge premium prices for their products and services. Technologies for Product and Services. New products and services are possible because of new technologies. These help to increase revenues and profits of companies. At different times in history, technologies have created new businesses like automobile, railways, telephones, computers, etc. Technologies for Business Models. Companies also use new technologies to do business differently and more effectively. For instance, by using the Internet, Dell is able to earn greater profits by serving only the most profitable customers. Companies in fragrance and other business have equipped their customers with design tools so they design their own products and services. Some companies have used the power of the Internet to create virtual design teams. There are a lot of other ways in which technologies like the Internet are impacting businesses. Socio Cultural Factors. Social factors influence the products people buy, the prices they are willing to pay, the effectiveness of specific promotions, and how, where, and when people purchase products. But societies are hardly ever static. They change gradually and some changes will be imperceptible if not watched closely. Social change is the most difficult variable for marketing managers to forecast, influence and integrate into marketing plans. Values. A value is a strongly held and enduring belief. The majority of people living in a society uphold the values of the society. A persons values are key determinants of what is important and not important to him, how he reacts in a particular situation, and how he behaves in social situations. Chinese Learn Audio Download Mp3 Free. Values affect the goods that a customer buys and the ways he buys them. Organizations ore trying hard to become customer oriented. Nowadays, customers do not tolerate ineffective products and sloppy behavior of marketers. Customers have become inquisitive, discriminating, and demanding. Companies should learn to expect tough customers. Time starved Customers.