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Importance Of Economic Environment

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(a) The Economic Environment
The economic environment is perhaps the most important aspect of a remote environment. In fact, economic environment is the potential for the success of the international trade. By economic environment, we mean domestic or national and international or global. There are a number of general and useful indicators that are needed for assessing an economic environment in which MNE operates. The indicators are population, per capita income, income distribution, and type of economy.

1. Population
Market size is primarily a function of population and purchasing power propensity. As a general rule, the larger the population, the better the market. Although it is rational to suggest that there is no correlation between population. Size and sales potential, it is note worthy that population is the primary indicator of the size of any market. This applies to certain product categories such as food, drugs and other basic but essential products that the higher the population the greater the demand. Thus, India is usually considered as an important market because of the size of its population.
Geographical distribution of population should also be taken into account. In most countries urban centres are densely populated compared to their rural …show more content…

However, they may have far reaching consequences for a firm 's activities. This is particularly pertinent for certain product categories, such as frontier military and nuclear technology, and scientific innovations with possible military applications. The export of these Products may either be banned completely or subject to export control by the Home country government. Domestic firms that continue to invest and manufacture abroad ignoring their home, country are often accused of exacerbating domestic unemployment problems. This may bring political pressure from the concerned

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