18 p a g e economic environment the economic factors

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case, Coca Cola has no political issues in this matter.
18 | P a g e Economic Environment: The economic factors analyze the potential areas where the firm can grow and expand. It includes the economic growth of the country, interest rates, exchange rates, inflation rates, wage rates and unemployment in the country. Economic environment examines the local, national and world economy impact which is also includes the issue of recession and inflation rates. The non-alcoholic beverage industry like Bangladesh has high sales in countries outside the U.S because here alcohol is prohibited from religious perspective. According to the Standard and Poor's Industry surveys, "For major soft drink companies, there has been economic improvement in many major international markets, such as Japan, Brazil, and Germany." These markets will continue to play a major role in the success and stable growth for a majority of the non-alcoholic beverage industry like Bangladesh. There is a low growth in the market for carbonated drinks, especially in Coca Cola‟s main market. The company first analyzes the economic condition of the country before venturing into that country. When there is an economic growth in the country, the purchasing power among people increases. It gives the company or the marketer a good chance to market the product. Coca-Cola, in the past identified this correctly and rightly started its distribution across the country. Interest rates are the rate which is imposed on the company for the money they have borrowed from government. When there is an increase in the interest rates, it may deter the company in further investment as the cost for borrowing is higher. Coca-Cola uses derivative financial instruments to cope up with the fluctuating interest rates. Inflation and wage rate go hand in hand, when there is an increase in the inflation the employee demand for a higher wage rate to cope up with the cost of living.
19 | P a g e This comes as additional cost for the company which cannot be reflected in the price of the final product as the competition and risk in this segment is higher. This is a threat in the external environment faced by the company. From the above explanation it is clearly seen that the economic factors involves a major impact in the behavior of the company during various economic situations. Inflationary affect: Inflation is one of the main problems that a country have to face in their economy. Rising prices in the food and other products doesn‟t only effect the consumers it also has an adverse effect on a company. The inflation rate for the year 2009 was too high. As prices have gone up in Bangladesh for various products, there has been uncertainty in decision making of almost every company. Coca cola has also been affected by the same; it has been forced to think about their input costs, as they have been rising due to inflation. Their expenditure has been rising, with more costs in salaries, distribution channels and other operating costs. Beverage industry being

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