Question 1

Business Economics is a useful toolbox for understanding the business environment and making better decisions. The different aspects of the business, from an economics perspective, in order to run the company efficiently have to be studied (Khnachi). The different aspects that are studied under business economics are as follows

• Demand Analysis and Forecasting: Identify factors that influence the product demand and thus provide guidelines for manipulating demand

The above discussion clearly provides the different aspects of the business economics. The above factors constitute of both microeconomic and macroeconomic factors and thus have all round view of the understanding of the business environment (Khnachi). Thus better decisions with respect to the business can be taken by carefully analysing the different aspects mentioned above.

Question 2

Various macroeconomic and microeconomics factors have been mentioned above that can influence the business operations. The microeconomic factor that will be discussed is the demand analysis and forecasting and the capital management will be studied as macroeconomic factor for improving the running of the company.

Question 3

In order to support the expansion plans of the company opening a new manufacturing facility in a non-EU country is being considered. The new branch may be opened up in India owing to the recent growth pattern of the country. The macroeconomic conditions and current economic policies of the country have been discussed below.

Macroeconomic Conditions in India

The improvement in global financial markets after the global financial crisis has improved the situation in the country. Further the outlook of the financial markets is quite positive and the occurrence of failures is bleak. This will certainly benefit the macroeconomic condition in India. The performance of the yield on government securities has remained firm in the third quarter of the current fiscal year. One of the key factors that favour the view of international players in investing in the country is the launch of the inflation indexed bonds. The inflation index bonds provide inflation protection to principal as well as coupon. Overall the investments in the country, in the form of equity, have improved supported by the FII. Thus there is funds flow in the economy and with the increased investments the revenue for the government in the form of taxes etc. would improve and thus leading to improved macroeconomic conditions (De, 2012). There are certain factors that have to be considered as there is uncertainty of the growth pattern as the political environment in the country is changing. But with the passing of time if the conditions remain stable, the macroeconomic conditions will remain supportive.

Current Economic Policies in India

References

Review of Current Macroeconomic Conditions in India, (2013), Available At: http://indiaopines.com/review-of-current-macro-economic-conditions-in-india/

De S., (2012), Fiscal Policy in India: Trends and Trajectory, Available At: http://finmin.nic.in/workingpaper/FPI_trends_Trajectory.pdf

G. Murdick, “Manager’s Guide to Forecasting,” Harvard Business Review, January–February 1986, pp.110–120; and Donald S. Tull and Del I. Hawkins, Marketing Research: Measurement and Method, 6th ed. (New York: Macmillan, 1990), Chapter 21. For a listing of common forecasting problems, see John B.Mahaffie, “Why Forecasts Fail,” American Demographics, March 1995, pp. 34–40

Auerbach A. J., (2005), Taxation and Capital Spending, Available At: http://elsa.berkeley.edu/~auerbach/capitalspending.pdf