My class performed a make believe market test on the \"beat the market\" simulat

Question

My class performed a make believe market test on the "beat the market" simulator. I know this may a little broad, but I need help writing an essay on how econoimic factors improve the performance of a company. The question is given below. Any feed back is good feedback. Economics is not my strong suit.

How would you improve your performance in a company? In hindsight, what economic theories and data analysis could be applied to make better decisions for your company? Give examples of how you would apply these principles and any data analysis that you would recommend.

Explanation / Answer

Economic Factors Affecting Businesses
by Gregory Hamel
Entrepreneurship tends to focus on identifying and fulfilling consumer needs in specific niche markets, but all businesses can be affected by large-scale economic trends. Accounting for trends in the overall economy can help business managers make better decisions. Economic factors that commonly affect businesses include consumer confidence, employment, interest rates and inflation.
Consumer Confidence
Consumer confidence is an economic indicator that measures overall consumer optimism about the state of the economy. Confident consumers tend to be more willing to spend money than consumers with low confidence, which means businesses are more likely to prosper when consumer confidence is high. Periods of high consumer confidence can present opportunities for new businesses to enter the market, while period of low confidence may force companies to cut costs to maintain profits.
Employment
The economy tends to follow a business cycle of economic booms followed by periods of stagnation or decline. During boom periods, jobs tend to be plentiful, since companies need workers to keep up with demand. When unemployment is low, consumer spending tends to be high because most people have income to spend, which is good for businesses and helps drive growth. When unemployment is high, consumer spending tends to be low because unemployed people don't have excess income to spend.
Interest Rates
An interest rate is the amount that a lender charges an individual or business to borrow money. Some small businesses rely on loans from banks or other financial institutions as a source of financing. Higher interest rates result in higher total business expenses for companies with debt. High interest rates can also reduce consumer spending, because high rates make it more expensive for consumers to take out loans to buy things like cars and homes.
Inflation
Inflation is the rate at which prices in the economy are increasing. Inflation causes increases in business expenses such as rent, utilities, and cost of materials used in production. Rising costs are likely to force businesses to raise prices on their own products and services to keep pace with inflation and maintain profits. Inflation can reduce the purchasing power of consumers unless employers increase wages based on the level of inflation.

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