GLOBAL ECONOMIC ENVIRONMENT

Environment
Environment literally means the surroundings, external objects, influences or circumstances under which someone or something exists.

Economic
Environment which is external to the business unit maybe either economic or non-economic

Economic
Economic environmental factors and forces-like demand, supply, price and costs operate through monetary and fiscal policies.

Non-Economic Forces
Historical heritage, culture, geographical location and physical factors, sociology, politics have a decisive influence on business activity and definite economic implications.

Global Economic Environment

Interaction of GEE and international business

GEE
Economic tendencies Economic system(s) Economic trends

GEE
Economic structure Economic institutions Economic principles and policies

Business Environment
Keith Davis the aggregate of all conditions, events and influences that surround and affect it i.e., business

Business Environment
Business policies of an organisation are influenced by its environment, which is the aggregate of all conditions events and influences that surround and affect it.

Globalisation
The process of globalisation has led the business firms to project themselves as global corporate citizens. Corporate managers need to familiarise themselves with prevailing economic environment

Present Status of GEE

In 1970s, G-7accounted for 50% of world GDP and share remained stable till 1990s, but now it is 35% in 2012-13

Since 2000, the share of BRICs of world GDP rose from20% to 30% in 2012

World exports grew by 7% p.a in 19862007 where as the same was down to 2.7%in 2007-12. Trade elasticity was 2.4 during 1986-2007

US sub-prime and Euro zone crises 2007-08 and 2010-12 and consequent Great Recession led to revival of protectionism in DCs and developing world.