The Environment - A Macro Perspective (u2s2, p9)

Today I have been...

Reading about the Macro Environmental Perspective

Why?

Required Reading.

So What?

Definitions First:-

• Business Environment:- the prevailing economic conditions or the totality of conditions in which you operate. 
• STEP analysis - socialogical, technological, economic and political factors.
• Macro-economy - the economy as a whole, aggregate of all economic activity across individuals, orgs and government (p11). Unit 2 focuses on the national economy.

Fahey and Narayanan point out that the different factors interact, so that one factor could also drive change in others. Examples in education include Economic factors driving political change (attempts to cut the deficit through changes in educational funding policy).

STEP:-
Demand for goods/services is a function of income levels. Not only the total demand but also the products in demand.

Economic & Social policies affect eg the availability & cost of labour.

Milton Friedman's monetarism demonstrated the control of inflation through interest rate policies.

Classical Economists view markets as self-correcting and recommend a "leave it alone" stance.

John Maynard Keynes argued that during downturns governments should intervene.

 In the 1970s double digit interest rates and high unemployment existed... monetarist policies failed in the 1980s, the argument being that interest rates work only if they are high enough for long enough to effect output and jobs. (p14)

In education, an increase in interest rates would have the effect of reducing the spending power of consumers who want to purchase the service (just as in any other industry). It could also raise the value of local currency making exports more expensive, reducing demand.

And that is the end of a 15 page primer on macro-economics! :o)

How will I use it?

Kept in mind during future study.