Macro Economy Elements
1.0 MACRO ENVIRONMENT ELEMENTS
There are many factors in the macro-environment that will effect the decisions of the managers of any organization. Tax changes, new laws, trade barriers, demographic change and government policy changes are all examples of macro change.
1.1 Political and Legislation Factors
The political-legal dimension of the general environment also affects business activity. The philosophy of the political parties in power influences business practices. The legal environment serves to define what organizations can and cannot do at a particular point in time. Figures 1.1 shows the political and legislative segment of macro environment.
Figures 1.1: The political and legislative segment of macro environment
There are many political and legislative differences between one country and another. The global issues entrepreneurs should be aware of are trade barriers, tariff and political risks, as well as bilateral and multilateral relationships. All these issues are interrelated.
a) Trade Barriers and Tariffs
Trade barriers and tariff are imposed on goods and services that are traded internationally. They hinder the free flow of resources from other countries as a protection for the home country’s industries. Examples include trade barriers that are imposed on the automobile industry in Malaysia.
b) Political Risks
This refers to the potential for instability, corruption and violence in a country or region where business takes place. In regions where political risks are high, it is difficult and costly for entrepreneurs to buy, protect and dispose of resources. Other risks include political and physical violence, extortion and corruption which involve bribes and other forms of unethical payments. These will add to the new ventures.
c) Trade Agreement
There is a trend of increasing trade agreement between countries, for example, the ASEAN Free Trade Agreement (AFTA) that Malaysian entrepreneurs should consider when making
There are many factors in the macro-environment that will effect the decisions of the managers of any organization. Tax changes, new laws, trade barriers, demographic change and government policy changes are all examples of macro change.
1.1 Political and Legislation Factors
The political-legal dimension of the general environment also affects business activity. The philosophy of the political parties in power influences business practices. The legal environment serves to define what organizations can and cannot do at a particular point in time. Figures 1.1 shows the political and legislative segment of macro environment.
Figures 1.1: The political and legislative segment of macro environment
There are many political and legislative differences between one country and another. The global issues entrepreneurs should be aware of are trade barriers, tariff and political risks, as well as bilateral and multilateral relationships. All these issues are interrelated.
a) Trade Barriers and Tariffs
Trade barriers and tariff are imposed on goods and services that are traded internationally. They hinder the free flow of resources from other countries as a protection for the home country’s industries. Examples include trade barriers that are imposed on the automobile industry in Malaysia.
b) Political Risks
This refers to the potential for instability, corruption and violence in a country or region where business takes place. In regions where political risks are high, it is difficult and costly for entrepreneurs to buy, protect and dispose of resources. Other risks include political and physical violence, extortion and corruption which involve bribes and other forms of unethical payments. These will add to the new ventures.
c) Trade Agreement
There is a trend of increasing trade agreement between countries, for example, the ASEAN Free Trade Agreement (AFTA) that Malaysian entrepreneurs should consider when making