Economic Segment

• The economic environment refers to the nature and direction of the economy in which a firm competes or may compete.
• firms seek to compete in relatively stable economies with strong growth

  potential
• Because nations are interconnected as a result of the global economy, firms must scan, monitor, forecast, and assess the health of their host nation as well as the health of the economies outside it.
• First reason why predicting economic trends are difficult:

  the global recession of 2008 and 2009 created numerous problems for companies throughout the world, including problems of reduced consumer demand, increases in firms’ inventory levels, development of additional governmental regulations, and a tightening of access to financial resources.
• Second reason why predicting economic trends are difficult:

  the global recovery from the economic shock in 2008 and 2009 continues to be persistently slow and relatively weak compared to previous recoveries.
• Firms have to adjust not only to the economic shock and try to recover from it, they have to respond to what appears to be an unpredictable recovery.
• Higher economic uncertainty means slower growth.
• When facing economic uncertainty, firms want to be certain to study the economic environment in multiple regions and countries throughout the world.