Factors Determining the Peaceful Rise of China

Sample Essay on the Factors Affecting Business

Factors Affecting Business

There are different business niches across the globe. The aim of each business is to maximize on its profits. However, every business faces a number of challenges from time to time. Some of the factors that affect almost every establishment include


Inflation is one of the leading factors affecting business across the globe. It occurs when there is a lot of money in circulation and is not supported by the output of different products and services. When there is a lot of money in circulation, the prices of different goods skyrocket in order to maintain the business. As result, the cost of raw materials also increases.

Inflation leads to low buying capacity because the income of consumers is bound to remain constant.

Trading cycles

Trading cycles vary from one country to the other. Even so, a trade cycle plays a crucial role in the fluctuating prices of different commodities. This means that recession, depression, prosperity and recovery of a business will depend on the cycle. With a good trade cycle, general price level of different goods will be kept up. This enhances productivity and profitability of a business.

Money and banking policies

Fiscal and monetary policies affect a business. It has been proven that the amount of money in circulation often determines the buying power of consumers.  It is also good to note that banking facility can determine the borrowing power of consumers. Even though monetary policies vary from one country to the other, Monetary Policy Transmission Mechanism affects economic activities and can easily lead to inflation.

Demand and supply

Demand and supply affects all businesses. These are two major principle factors that affect business models negatively and positively. With an increased demand of specific products, the prices also go up. For example, mobile companies have been competing and incorporating latest technologies in their gadgets. New sophisticated models are widely sought after by consumers and as a result, manufacturing companies place a higher price tag on the products.

Employment rate and income

Income and employment are important in any economy. They affect business operations bearing in mind that, per capita income and employment density affect demand and supply of products. They also determine purchasing power of clients. For example during an economic upturn, employment opportunities generate more income. It therefore enables people to have a stronger purchasing power.

On the other hand, if income rate goes down, the purchasing power of consumers also goes down especially in an economic recession period.

Interest rate

Interest rate also affects a business. It is one of the factors that have a direct impact on businesses. If a business opts for a loan to propel its growth, it has to work with the prevailing interest rates. Lower interest rates make it easier for business to borrow money. It also offers an opportunity for people to spend more. This creates increased demand for the products and services thus enhancing economic growth. However, businesses find it hard to get loans when interest rates are high.

Government regulations regulate business operations for safety of its citizens, animals and the environment. Such regulations affect productivity and profitability of a business because they discourage uncontrolled growth.


At www.assignmentwritinghelp.net, you can find the best essay samples and other academic papers. We write custom essays for our clients round the clock. Our team is efficient and this is a factor that enables us to deliver your papers on time.

Posted by:


Related articles

list of articles



  • Sample Essay on SWOT Analysis of The Home Depot January 20, 2016
    SWOT Analysis of The Home Depot SWOT analysis of The Home Depot is among the best tools used by the home improvement retailer to gauge its ability to stay afloat and profitable in the market. Although it is considered the largest home improvement retail chain in the world with an estimated revenue base on more […]


Latest News From Blog

Check out Our Blog's assignment samples and tips on how to Write Assigments
Essay sample on the Effects of Cold War on Soviet Union..

Effects of Cold War on Soviet Union The Soviet Union was one of the main participants in the Cold War. It was engaged in the war with the USA and - See more

Essay sample on Effects of Cold War on Asia

Effects of Cold War on Asia Tensions of the Cold War began shifting from Europe to Asia in 1949 when Mao Zeodong proclaimed the birth of the ...Read More

Sample Essay on United Kingdom Healthcare System

United Kingdom Healthcare System United Kingdom healthcare system, also known as the National Health Service was established...Read More

Back to Top