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Factors that impact business and consumer confidence

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Factors that Impact Business and Consumer ConfidenceWith policymakers in the major economics working hard to restore and maintainconfidence levels and shifts in sentiment indicators playing a key role in riskassessments of investors, it is worthwhile to consider the various influences on thisqualitative economic measure.Several common factors that have the potential to cause marked shifts in sentimentincludes the following:1.Changes in interest rates and/ or exchange rates, particularly if they arerapid, large and unexpected;2.Swings in the business cycle and associated movements in employment/unemployment levels and business investment intentions;3.Shifts in the relative prices of nondiscretionary goods and services, notablypetrol, healthcare, education and utilities prices;4.Announced policy shifts in the stance of government fiscal policy includinglarge structural spending cuts or increases/ decreases in taxation rates.Selecting the Right SuppliersIt is important to select suppliers carefully as suppliers can affect the businesses theyprovide goods to. If a supplier provides a poor quality product to a firm, it may affectthe firm’s reputation as the firm will need to use the goods or sell them onto theircustomers. Similarly, if a supplier provides a slow or poor service, this may slow downthe service the business provides to its customers.1.Supplier History and Reputation2.Quality of the Product/Service provided by the Supplier3.Price Charged by the Supplier and how does this impact on the quality of theproduct/service provided by the supplier4.Financial Strength.Example: Does it have good cash flow and strong balance sheet?5.Size of the Supplier and its other Customers.Example: Does it normally deal with businesses of your size?6.Capacity of the SupplierExample: How much can the supplier comfortably provide and what is itsmaximum?7.Reliability of the Service8.Flexibility of the Service9.Turnaround Times10.Payment TermsExample: How quickly does the supplier expect payment and method of payment?11.Problem Resolution Process
Determinants of SpendingThe level of spending is determined by a number of factors, including:1.The current level of National IncomeSome extra spending is induced by changes in the current level of national income. Asincome rise, customers tend to increase their spending on higher income elastic goodsand services, such as luxuries, holidays and leisure goods. When income fallshouseholds may postpone spending on these luxuries until income rise again.2.The Level of SavingsSupplier ManagementAfter agreeing a contract with a supplier it is important to monitor the supplier’sperformance to ensure that they are providing the service that was agreed with them.

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Term
Spring
Professor
NoProfessor
Tags
Economics, Socioeconomics

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