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Macroeconomic Challenges Which Stop Companies Persisting in Their Businesses

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The first macroeconomic challenge which will stop many companies persisting in their businesses is an insufficient financial source, even if they have good management. They are several firms which have knowledgeable employees and qualified employers with innovative visions and international goals, but because of lack or slight funding, they face difficulties to transfer their dreams and ideas to reality, especially during the economic crisis. For instance, as a result of the considerable economic crises in 2009, the international commerce decreased by approximately 11%, whereas the overseas direct investment declined to around 7%. Therefore, there were many renowned and entrepreneurial companies which either lost their businesses completely or lowered the size of their commercial activities because what happened was unexpected and uncontrollable.

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As an example of a vast company is Lehman Brother, which was a global financial company, announced its bankruptcy in 2008 after a tremendous loss in the stock market and credit agencies. In spite of long experience this organization had in managing global works in finance, it fell to stand against the funding issue which eventually collapsed Lehman’s business in October, 2009 with nearly $620 billion in debt, a financial writer on Investpodia.com. On the other hand, for the entrepreneurial side, the number of establishing new businesses dropped from about 94,000 in 2008 to roughly 76,000 in the following year owing to the global financial crisis. Hence, good management is a vital tool to create and achieve an innovative business, yet when a sudden accident in the world’s economy happens, it will change the route of these businesses because it has major consequences which can probably reduce or end their commercial activities.

A set of government regulations is the second obstacle which various companies will encounter during their businesses. As a consequence of a deflation, a national budget deficit, or going to debate, some governments institute decisions and rules for companies which work for private sectors in order to fix their neglects in the budgets or progress. Indeed, in some situations, governments increase the taxes rates so as to improve their economies and cover their yearly expenditures. These regulations will possibly prevent some firms to continue practicing their activities because they cannot follow this restrict order nor pay the high tax. For example, fast-food restaurants are predicted to be taxed expensive amounts in order to make people reduce eating this type of meals. Even if the purpose of this order is positive, it has some negative results on fast-food companies which will rethink or postpone a lot before they extend their business overseas.

In addition, companies which plan to enlarge their innovative activities globally by using social media websites, such as to sell or advertise their products or services can also face some rules which are created by governments. In fact, there is a sort of countries as it is known, such as Eritrea, Iran, and North Korea, which prohibit using major social media networks, like Facebook. As a result, companies will not be able to reach the target group in these regions nor will they be able to gain additional fame and profits. Accordingly, there are several firms which have good management, creative products, and huge dream to boost their brand and products, but due to government policies, these businesses usually need to reconsider their steps for the future plans.

The third macroeconomic issue some companies will probably face is natural disasters. In these unexpected circumstances, good management will not enough help the companies because it happens surprisingly, particularly if these events take place in some countries or regions which have unusual experiences with these unpleasant situations, such as North and South America and Central Asia. Even though most news and societies heavily focus on the human cost of these natural disasters, they cause massive monetary cost, too. Floods, for instance, were the frequent natural disasters with approximately 40% of the whole natural disasters. In 2010, the global economy lost around $47 billion as a consequence of floods only, excluding, of course, the human loss. Hence, if companies have international businesses with innovative and high-quality services or products, they will unlikely achieve the expected profits or planned goals because these natural accidents impact the economy worldwide as well as the people who are affected by these disasters.

Moreover, natural disasters can bring some physiological problems for employers and employees whose families are impacted by these disasters, for example losing a family member or a house. This issue will likely cause delays on the progress of the work because either the owners and the workers think about their personal circumstances, and are unable to concentrate on their jobs which will generate financial losses for the businesses and their activities until the recovery of this is ready. As a result, while the importance of good management cannot be disregarded in the global business field, companies encounter unforeseen financial and personal loss once natural disasters happen which force the companies to stop or postpone their potential projects.

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