The macroeconomic factors include the external factors (such as changes in net exports, terms of trade, and exchange rates) and the internal factors (such as consumption level, inflation rate, government policies) that influence the growth opportunities of businesses in a particular economy (Smyth & Woodfield, 2017). The paper has been developed to analyse the micro and macro economic factors and identify the potential growth opportunities and threats for a chosen SME, i.e. Smith & Caughey Ltd. in the New Zealand market.
Objective of the research
The primary objective of the paper is to analyse the macroeconomic factors that influences the business of Smith & Caughey Ltd. in the New Zealand market. Factors leading to the growth and success of Smith & Caughey Ltd. will be analysed to identify the changes that are needed to be made by the company to improve its growth potentials. Furthermore, the macroeconomic policies, issues and indicators such as debt levels, inflation, public financial management and exchange rate movements have been evaluated to observe the impact of New Zealand’s economic condition over the business of Smith & Caughey Ltd. Moreover, synergies between technology and globalisation have been evaluated to present its impact over the performance of the company (Smyth & Woodfield, 2017). Finally, the future implications of the economic condition of New Zealand over the business of Smith & Caughey Ltd. will be discussed with necessary recommendations to make the company survive in the upcoming market challenges (Smith and Caughey's, 2017).
The research questions that have been answered in the study are presented herein below:
- What is the influence of macroeconomic policies, issues and indicators over the performance of Smith & Caughey Ltd.?
- What are the key sources of growth and their trends for Smith & Caughey Ltd.?
- How are the projections for key indicators critical for the performance of Smith & Caughey Ltd.?
- How the synergies between globalisation and technology do affect the performance and possible investments of Smith & Caughey Ltd.?
In order to collect data and information regarding the current events and economic variables that impacts the business of the firm, both primary and secondary data collection methods have been used in the study. For instance, ten customers of the firm have been interviewed regarding the price and promotional events conducted by the firm. Additionally, some of the employees of the firm have also been interviewed to identify the economic variables, which have an impact on the company (Wells, 2016). Furthermore, the study has been conducted using qualitative research analysis method. The outcomes of the research will be presented in a descriptive format using graphs, figures and tables to answer the primary research questions.
Recent economic performance
In terms of growth and business expansion, Smith & Caughey Ltd has introduced revolutionised business techniques and marketing strategy to meet the expectations of the target audience (Wells, 2016). Evidently, recent increasing demand for fashionable items and latest marketing concepts such as social media marketing have set the roadmap for the retail business. Currently, the retail chain business of Smith & Caughey Ltd has concentrated on developing new products and marketing patterns to counter the market rivals creating a significant growth potential as far as sales are concerned (Smith, Hall & Janssen, 2016).
Macroeconomic policies, issues and indicators
The government of New Zealand’s financial management includes sustainable fiscal policy reforms so that debt scenario, aggregate demand, and inflation pressure can be controlled in an effective manner. Evidently, commercialisations of capital investment and reconfiguration in tax system have provided macroeconomic stability. On the other hand, increase in inflation rate by 2.2 percent in the current year has added substantial pressure on the sales of Smith & Caughey Ltd. Also, the strength in the exchange rate can be effectively utilised to import items and materials.
The economic outlook and projections for key indicators
Understandably, the New Zealand economic growth has been estimated to ease to around 3 percent in the financial year of 2017-18. Precisely, investment in the retail business can boost the business framework of Smith & Caughey Ltd. On the other side of the coin, the inflation rate is expected to rise to 3 percent that can reduce the revenue margin of the business, to say the least (Heritage.org, 2017).
Impact of globalisation and technology on company’s performance and possible investments
The contemporary business strategy of Smith & Caughey Ltd has been defined as one of the most important factors deciding the growth of the retail business of the identified company. Precisely, globalisation has made it possible to import products and consumer goods at a reasonable rate. Apart from that, the development in technology will reduce the efforts and cost of business increasing the profit margins for long-term business viability (Peet, 2012). Most importantly, foreign direct investment has helped the retail industry in the New Zealand market to achieve long run business targets and revenue objective.
The entire discussion of the existing macroeconomic events in the target market of New Zealand can be termed as influential for long-term business sustainability of Smith & Caughey Ltd in the retail industry. However, the worry of increased rate of inflation can be a negative factor for the business of Smith & Caughey Ltd. Conclusively, the other growth factors and ongoing demand trend from the target demographics has seemed to be remained intact for Smith & Caughey Ltd.
New Zealand Economy: Population, GDP, Inflation, Business, Trade, FDI, Corruption. (2017). Heritage.org. Retrieved July 2017, from https://www.heritage.org/index/country/newzealand
Peet, J. (2012). Comparative policy analysis: Neoliberalising New Zealand. New Zealand Geographer, 68(3), 151-167.
Smith and Caughey's. (2017). Smith and Caughey's. Retrieved July 2017, from https://www.smithandcaugheys.co.nz/about-us.aspx
Smith, C., Hall, V., & Janssen, J. (2016). New Zealand's macroeconomic imbalances – causes and remedies: Guest editors' introduction. New Zealand Economic Papers, 47(1), 1-7.
Smyth, D., & Woodfield, A. (2017). Inflation, unemployment and macroeconomic policy in New Zealand: A public choice analysis. Public Choice, 75(2), 119-138.
Wells, G. (2016). Economic Reform and Macroeconomic Policy in New Zealand. The Australian Economic Review, 23(4), 45-60.