How Can Political Disturbances Influence Product Supply And Demand? (Reaction Paper Sample)
I was provided with posts from two students and requested to write response posts.source..
Response to Post 1
Macroeconomic variables impact businesses and global markets in significant ways. I agree with you that macroeconomic factors can greatly influence demand or even supply of a particular product. As van Staveren (2015) noted, gross domestic product is a macroeconomic variable that is extensively used. For instance, an expanding GDP implies a growth in the product demand. Macroeconomic variables also have significant cost implications because of their ability to influence production cost and product pricing. A company like Procter & Gamble is subject to many macroeconomic variables that influence demand and supply of its product portfolio. I agree that international operations expose the company to changing currency rates taking into account P&G operates in 40 countries globally. The inflation rates and economic growth of the countries that host global subsidiaries of the company influence product demand and supply. As you noted, political and economic risks also have significant impacts. The level of uncertainty increases substantially due to country-specific disruptions and the multiplicity of business environments. I believe that global and regional economic disruptions can pose a huge threat to product demand and supply, as well as the sustainability of business operations. I agree that developing countries have led to increased total revenues. However, macroeconomic variables threaten to cut down the revenues due to relatively higher political and economic uncertainties, changing current exchange rates, and inflation rates. I agree that changing accounting standards and laws can affect business and introduce unanticipated uncertainties. Terrorist acts and natural disasters such as hurricanes can pose a much greater challenge and can even influence the supply of inputs and ingredients that P&G utilizes
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