The Impact of Businesses on Multiple Countries

Like it? Share it!

Whether a business does well or not during the year can have a huge impact on the country in which that business resides. Of course, the larger the company, the bigger the impact. For one thing, it can change the GDP significantly, changing how much money comes into the economy as a whole, which then has a trickle-down effect on the rest of the smaller companies in that same country.

For instance, if a large corporation does poorly and does not bring in as much money as anticipated, it often has to let workers go. Those who are paid on commission also make less money. Both of these things, the higher unemployment and the lower influx of capital, mean that there is less money to go around. Rather than spending, people will be forced to save. Even if they do spend, it will be on things that they need, not luxury items or things that they simply want. This means that the other companies that were counting on that spending are not going to get it, so they are going to make less than they planned. Some of them may even fail.

The opposite can also be true. If the large corporations do well and bring in as much money as was anticipated, or even more than they thought they would, jobs are created. More workers are needed to make products or to sell them. Some workers earn more than they thought that they would. This leads to more spending, which allows other companies to grow as well, which combats unemployment. While large corporations are not the only factors in how this all plays out, it can be seen that they play a significant role.

One interesting way that this has changed in recent times is that economic success is no longer limited to just one country. The way that a specific country does can impact others that are connected to it through the web that the modern economy has become. This is the reason that top people in the industry always meet to discuss trends and predict what will happen in the future. For instance, a quick glance at the John Ferraro Ernst & Young profile shows that he goes to the World Economic Forum, which takes place in Switzerland, every single year. At this forum, economic minds meet to look at the way that things are playing out.

There are many reasons why the various economies are all connected, but a lot of it has to do with the fact that different stages in the process are completed at different places in the world. A company may be based out of a home country like the United States, where most of the sales take place. However, a design team may be located in the UK. On top of that, the manufacturing may be done in China or Japan.

In a scenario like that, the trends impact all three countries. If the company sells less, that impacts the American economy first. However, the design team may not get work if the units that were made are not selling, which means less money goes into the UK. Furthermore, demand drops, so manufacturing in China is also impacted with lower revenue. A small change in one region can move through the others.

Like it? Share it!

, , ,

No comments yet.

Leave a Reply

Powered by WordPress. Designed by Woo Themes