Economic Factors Economic factors have a tremendous impact on business firms. Despite the wealth of concrete data, economic forecasting is not an exact science. Some firms, rather than relying on available forecasts, use forecasting models available to the public(such as the Wharton model) or have developed sophisticated econometric models to forecast the impact of different economic factors on the firm. developed such models should Even firms that have not try to determine have the greatest impact those economic factors that can have the greatest impact on them.
Key economic influences include factors such as interest rates. stage of the economic cycle, balance of payments. fiscal policies. and monetary policies. Since these factors are rather broad. individual firms should try to refine them in order to refine them in order to identify the specific forces that will most directly affect the firm
Each of these economic factors can serve either as an opportunity or as a threat. For example, various economic factors sometimes combine to drive down the sales of automobiles. At the same time. however. manufacturers of auto parts may experience increases in sales.