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  • Nurul Ajlaa Ridzuan

    January 30, 2022 at 6:22 pm

    As the impact of macroeconomics variables do affect individual decisions, they undeniable will affect business decision making as well. Since macroeconomic variables may lead to a decrease or increase in demand for product, this will be reflected to decisions by company managers to expand or reduce productions. For example, an economic boom could lead to increase in demand for goods thus business managers may want to increase production, which in line will stimulate the business decision of hiring more employees, and thus will encourage business expansion based on the decisions made. Another important macroeconomics variable that may impact businesses is the influence of government policy which may have manifestations such as imposing heavy or lower taxes, strict rules, and regulations. Considering this, affected businesses’ management may decide to close production or exit the market if government regulations too strict or may want to expand production if the imposed taxes are lowered and government incentives are given. The variables in term of macroeconomic parameters within different country could also have different significant impacts on the business entities operating in their specific country.

    Thus, accurate perception and adequate assessment of macroeconomic risks by managers should be done effectively to enable business managers to make effective decisions for companies. Companies need to evaluate these macroeconomic effects on their operations to find out how they affect business success. Due to these, macroeconomics variables in my opinion should not be an indicator to business performances, but instead should be utilized as a tool or resources for business decision-making process in order to attain their desired performance.