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Economic Factors that Drive Market DemandEconomic Factors that Drive Market DemandBy linking the business planning process to the economic environment, business managers are better equipped to understand whether Strategic Alternatives are creating value. Assessment of the economy involves both examining current conditions and analyzing the future economic outlook based on selected current economic factors. To make more meaningful and complete assumptions, businesses sometimes build forecasting models. Such models can provide a more realistic understanding of possible outcomes and the risks inherent in your business. In order to build a forecasting model, it is important to create and validate a framework for economic (and financial) forecasting. This can involve one or more of the following:
The importance of these specific economic factors in your business is validated through statistical techniques such as regression analysis (discussed in Chapter 9). Here are some prevalent indicators used in analyzing the economy: 728
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