im assignment 1 shubham

8/4/2019 IM Assignment 1 Shubham

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The macro and micro economic forces which affect the global environment are as

following.

1. Population- This is the first factor which plays a vital role in the globalenvironment. The consumption pattern of any country is based on the

population of the country. With the data of population companies targets

their market, population helps in segmentation of the market. Mainly

developing and underdeveloped countries have the great number of

population, which are the huge market to target, and it is still not

saturated. The main factors of the population are given below.

a. Male- female ratiob. Average age of the citizenc. Life expectancy of the citizend. Percentage of literacye. Percentage of poverty

The data of population can provide the data of these factors. By analyzing

these factors you can take important business decisions.

2. Gross domestic product (GDP) - gross domestic product of any countryrepresents the aggregate output of the economy as a whole. It helps to

measure the growth of the economy. Various sectors of the economy

contribute in calculation of the gross domestic product. To calculate the

gross domestic product of the world, we combined the GDP of the all

countries of the world.


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3. Inflation- continuous hike in a price of a commodity is called inflation. Alittle inflation is the sign of a healthy economy. It is the factor which directly

affects the economy. There are mainly two types of inflation that are given

below.

a. WPI (wholesale price index) - it consists of a basket which consists ofaround 400 commodities in which most of the commodities are related

to agriculture.

b. CPI (consumer price index) - consumer price index is the measurementof the inflation which is based on the price of goods and service that

consumer pays. The US economy uses CPI parameter to measure its

inflation.

4. Per capita income- it is often used as measure of the total wealth of apopulation of a nation. It is does not signifies the distribution of wealth.

Figures of the per capita income help the companies to understand the

business opportunities in the country.

5. Interest rates- to maintain liquidity in the economy interest rates plays avital role. The central bank of the country regulates the interest rates. It is

the factor which also affects the inflation of the economy. When there is

excess of liquidity in the economy, the central bank increase the interest

rates, and to increase the supply of liquidity, central bank decreases the

rates.


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6. Employment rate- employment rate is the rate which helps to understandthe wealth of the country. There is no fixed parameter to calculate the

employment rate. Employment rate helps to understand the consumption

pattern of the country. Like the growth of the company employment rate is

also changes every time.

Impact of economic forces on India after liberalization- 1991 was one of

the toughest years for India. We were having double digit inflation, our

prime minister was assassinated by LTTE and we were on the verge of loan

defaulters. Our foreign reserves were nearly emptied. at that time with

help of finance minister Mr. Manmohan singh, Prime minister overnight

changed the economic, financial and foreign policies.

Before liberalization all the businesses were run by government and private

sector were highly regulated. But after liberalization Indian economy

transformed. With its great number of population, this at the time of 70s

was considered as the burden, but after liberalization considered as

demographic dividend. With the great number of educated youth, India

became hub of IT companies. Its population attracted the tremendous

foreign investment. In the last three years Indian economy registered a

growth of average 8 percent, just because of its soaring service industries.

Although inflation is the factor which is persistently bothering the

government, but a little inflation is a sign of a healthy economy.


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The latest unemployment rate of India is 10.7% as per the figure we got

from internet. Low employment rate represents the prosperity of the

country up to some extent, but in case of India, it also includes the people

who are below poverty line, who earn less than 20 rs in a day. With the

liberalization the employment opportunities in India increased drastically,

for skilled as well as the unskilled people. But liberalization created a huge

income gap between the classes of the society, means rich are getting

richer, and the condition of the poor gets worsen.

As far as per capita income is concerned the latest figure is 46,492 rs. There

are predications that this figure would reach to 10,000$ by 2039.

This implies that the people are getting richer with the time. But it is not

necessary; the rising income gap between the rich and the poor could be

the probable reason behind this rise in per capita income.

im assignment 1 shubham

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