top of page

Economic forces

inflation rates

Percentage increase in overall prices of goods and services in a period of time; therefore affecting the purchasing power of the currency.Consumer price index (CPI) measure of the percentage price changes relative to a certain periodo. 

 

 

 

 

 

 

 

 

 

 

 

 

.

Inflation may affect our industry because it can reduce the purchasing power of the currency, so that can distort the economy, generating a reduction in consumption.

 

 

 

worker productivity levels

Index that measures the performance and efficiency with which people perform an activity, with spending relationship between work and the amount of goods produced in a given time. 

Gross domestic product (GDP): a measure of the monetary value of goods and services produced in a given period of time. 

 

The productivity of our employees is essential affecting all businesses.If  raising the productivity of labor can reduce the time it takes to perform a certain activity,increasing its efficiency and effectiveness. A low level of productivity in our employees cause bad consequences, because if it takes more time to develop the product or service, efficiency and effectiveness will be lower and total productivity wil decrease.

Income differences by region and consumer groups

Colombia has a very marked inequality, according to a human development report presented by the United Nations Development Programme, Colombia is ranked 12th among the cities with the greatest inequality among 168 countries.  

 

Gini index: measures inequality on a scale from 0 to 100. The closer to 100, the more differences there. Colombia is 53.5, and in recent years has not had a breakthrough. 

 

The differences or gaps in terms of income creates an inequality, where not everyone can access the same services, affecting the whole industry, so inequality generates that many people can not pay for our services, reducing the demand of our product, and also if it increases it reduces our current and potential future markets. 

 

European Economic Community

It was created to made a common market, to integrate economics. Nowadays, it is the european union. 

 

Europe is among the top three countries that import in Colombia. Europe mainly handles import machinery, mechanical appliances and electrical equipment. Colombia signed a free trade treaty with the European Union, which removes barriers to trade, therefore the export and import be made available, which give way to new products arriving on the market that can benefit the industry.

 

INTEREST RATES

A rate which is charged or paid for the use of money or the Price of the money in the financial market. An interest rate is often expressed as an annual percentage of the principal.

When interestrates are high, people will spent less monyor invest less in productsand inflation will decrease, as consumption gets lower. Colombian interest rates have increase in the couple of years, specially on the first part of 2015, going up to a 4.5 from approximatelly a 3.30, and stabilizing its rates untill the present.

 By the end, since interest rates are increasing throughout time it can decrease the consumption of customers and the desire to invest, afecting not only our industry, but also the whole economy.

 

 

 

 

UNEMPLOYMENT TRENDS

The percentage of the total labor force that is unemployed but actively seeking employment and willing to work.

 

 

In what refers to quarter between March and May this year, unemployment stood at 9.1 percent (the lowest in 15 years for that period), a period in which the number of employed rose by 689,000 in Colombia compared to the same months last year. As measured by the Dane , for the past 12 months mobile unemployment is 21 periods in a row with a single digit rates , reaching 9 percent.

(ElTiempo, 2015)

 

The unemployment rate will be lower by the time,generating benefits to all businesses in the industry, because  as labor employed labor forces increase  our market will grow , because not only citizens have more incomes to spent, but also because they will require a cleaning service,since they will not have enough  time to doing it by themselves, increasing the demand and market.

DEMAND SHIFTS FOR THE DIFFERENT CATEGORIES OF GOODS AND SERVICES
 

“The demand curve is a graphical representation of an economic agent's willingness to purchase a given quantity of a good or service at a specific price based on preferences, income, and other prevailing factors at a given point in time. Demand curves in combination with supply curves, which depict the price to quantity relationship of producers, are a representation of the goods and services market. Where the two curves intersect is market equilibrium, the price to quantity relationship where demand and supply are equal."

(Boundless. “Changes in Demand and Shifts in the Demand Curve.”  2014)

 

The consumption of more products and services can bring many advantages for our industry.Indeed , the demand of services is growing significantly,increasing the demand of our service, vitalizing its growth and also it increases our currently markets and potential markets we want to enter in the future.

 

 

Presented as one of  key external environment forces affecting a whole industry, transcendent economic variables such as interest rate, income declines, demand of goods, dollar trends, money inflation, petroleum prices, among others present a direct impact on the potential attractiveness of organization´s strategies within the industry.

Shift to a service economy in the

US (transition towards a service

economy in Colombia)

 

 

 

 

 

 

 

 

 

 

 

Globally the service technology has increased its present and nowadays has a major role in the world economy .According to the CIA world factbook , 56.6% of Colombia´s GDP is composed by the service sector; moreover, it’s the economic sector that presents the biggest employment rate and labor force occupation ( 62%).Service industry has become a solid and important part in Colombia´s economy, it grew 5.5%due to the high demand of services in the country. Therefore, this could generate huge benefits for our industry, because the growing demand of our service will increase and our business might have the potential to grow easily.

 

Value of the dollar in the world market

 

 

The dollar has grown significantly in the last decade, going from $2320 COP in 2005, to $2993.20 COP in the 2015, the difference between both currencies in the exchange rate have become bigger. Indeed, the devaluation of our currency against the dollar is increasing, affecting not only importers but the whole Colombian society as well. As a matter of fact, the idea the dollar is appraising its value in contrast with the Colombian peso, affects all businesses, because Colombian inflation increases as well as de IPC, affecting Colombian citizens because everything gets more expensive and people cannot buy what the normally can, affecting the demand of customers for our service, as well as the acquisition of cleaning tools and machines to provide the service.

 

Price fluctuations

(Price fluctuations) Are the presented differences between the closing price in a specific time of a trading day and the closing price in a specific time of a previous trading day.

Nowadays price fluctuations are normal trends within the currency exchange rate, since many variables affect the economy of states, devaluating or appraising its own currency. Normally markets are surrounded by high amount of complexity, thus currencies exchange rates are extremely volatile and change in a specific amount of time on a trading day. Nevertheless, every currency follows a trend, since the dollar is the most stable currency on the market. According to Bloomberg, despite the fact of price fluctuations on the dollar exchange rate in Colombian pesos, has a spot of exchange rate approximately of $2983- $2988 COP.For every business within the industry, it represents bad consequences, because inflation and IPC increases, lowering the consumption of the whole society of every kind of service.( and product).

 

 

The Organization of Petroleum Exporting Countries (OPEC) policies.

 

 

 

 

 

 

 

 

 

The OPEC is a transcendent organism in the world economy; it represents the majority of petroleum exporting countries around the world, controlling a valuable commodity for every nation, this organism presents a significant role in the world economy, since it affects nation´s economy, prosperity and wealth.

 

The OPEC  establish policies, regulations, taxes and oil basket prices around the world, managing, coordinating and regulating oil market. All its actions have a major impact on the world economy, because oil is a vital commodity for the development and success of nation´s economy, wealth and stability. Therefore, it affects whole industry but its effect might be unpredictable, because based on the OPEC basket prices and its tendency to decrease, it can generate benefits in reducing transportation costs of our equipment and our team members in the development of the service. 

DEMAND SHIFTS FOR THE DIFFERENT CATEGORIES OF GOODS AND SERVICES

“The demand curve is a graphical representation of an economic agent's willingness to purchase a given quantity of a good or service at a specific price based on preferences, income, and other prevailing factors at a given point in time. Demand curves in combination with supply curves, which depict the price to quantity relationship of producers, are a representation of the goods and services market. Where the two curves intersect is market equilibrium, the price to quantity relationship where demand and supply are equal."

(Boundless. “Changes in Demand and Shifts in the Demand Curve.”  2014)

 

This is an important tools for our enterprise, because we can analyze how will be the behavior of the market, when we decide to change the prices.

FOREIGN COUNTRY’S ECONOMIC CONDITIONS

Economic conditions in foreign countries may affect the service industry in different ways. A company can benefit through outsourcing thanks to the investment in another country in low labor price. Investors can find difficult to invest and promote development and employment in a country when the country itself has marked barriers that do not allow a flow of trading.

MONETARY POLICIES

Monetary policies establish that economical stability is guided by the inflation rates, it contributes to improving the welfare of the population by affecting in one way or another, the quality of life, social indicators, investment in the service industry, and the number of employment.

 

LEVEL OF DISPOSABLE INCOME

The income in the Colombian population has increased so there’s more availability to spend money. According to the dynamics of the economy, there are now more jobs, higher incomes and stability. On the other hand, this situation is used by the banks to offer people more credit products, especially credit cards, which create more debts and make the disposable income reduce.

Disposable income is also affected by the higher prices of the family need products. However, according to the World Bank, the income level in Colombia is Upper middle, which means that part of disposable income, will be destined to the services industry as well.

 

GDP Trend

GDP has been rising in recent years, although in this 2015 there has been a slowdown in the economy, Colombia continues to occupy first place in growth among Latin American countries. GDP growth implies that the productivity of products and services has increased and that micro enterprises like ours, can help the growth of it.

 

Availability of Credit

As we can see "Dinero" Magazine reveals that now a days the Republic Bank of Colombia has been this years promoting the availability of credit for companies, this so because Colombia has been trying to increase its economy by this tactic. What they have been doing is decreasing interests tasks for all firms but especially for small one that are still growing in the market and for all those big Companies they have been decreasing the availability of credit. 90% percent of the Financial institutions affirm that that they will keep their interests at its lowest point.

 

 

 

 

 

 

 

 

 

This shows clearly that for us this type of tactic that they have been applying for these years, promote small compañies with the intention of making them grow faster, and for us this could be extremely necessary when it comes to credit and expanding our company.

Also we can see that in our industry, when it comes to services, all financial institutions have are willing to offer credit with almost 100% of certainty.

 

Federal Government Budget Deficit

 

 

 

 

 

 

 

 

 

As we can see Colombia during this last years has been constantly under governmental deficit, this of course including this 2015 year with around 23 Billion COP  which means the goverment will have to start mechanisms to pay this and of course it will start affecting all companies in many ways now that the government owns this much money.

 

For our company this means a lot, like said before the government has to star developing alternatives to pay this deficit and those mechanisms are the increase of taxess for companies and also this could generate inflation for both consumer and companies for goods and services which can have a negative impact on us.

EXPORT OF LABOR AND CAPITAL FROM THE UNITED STATES

 

 

 

 

 

 

 

 

 

As we can see Colombia has acquiring more jobs thanks to the export of labor to Colombia, this helps clearly the country improving the economy and generating more qualificated people which can cause less import of United States labor, improving Colombian labor and Colombia economy.

For our industry is very important because this can lead to a better service,high quality employees and managers of cleaning with local employees even with more knowledge in our industry . There will be no need to import specially labour or capital knowing that here in Colombia we can count with our own products at a cheaper price.

 

 

 

 

 

 

 

 

 

STOCK MARKET TRENDS

The dollar during the year of 2015 has been having a extremely different behaviour having a currency already at 3,000 Pesos per dollar, this of course not only affects imports but also affects the stock  markets. Companies will start making decisions to increase prices generating a devaluation of stocks and prices in the industry affecting specially consumers and stakeholders. Stock Trends now a days are being influenced by the Dollar Behavior leading to a possible changes on prices in big Companies.

 

 

 

 

 

 

 

 

 

 

 

Actual: 377.74

Previous: 380.10

Unit: USD Billion

Frequency: Yearly

FUENTE: BANCO DE LA REPUBLICA

Taken From: http://www.banrep.gov.co/docum/Lectura_finanzas/pdf/escc_jun_2014.pdf 

Taken From: http://www.minhacienda.gov.co/HomeMinhacienda/politicafiscal/GobiernoNacionalCentralGNC 

Taken from: http://www.generoycomercio.org/areas/investigacion/colombia/Col-Contenido_trabajo.pdf

This year till now there has been a drop of 1,63% in the Colombian Stock Market. THis for Colombia has been extremely ‘’scary’’, because the devaluation during this last 12 months has been 29,1%, if we evaluate this percentage in dollars it comes to 35% only in this year and 55% during the last 12 months. It is something Colombia must worry about, this because the lowest point the Stock Market Trends has hit this year can comparable to the the point in the 2009 crisis when we compare it in dollars.

This has a all industries worried because all of this several times leave everyone to an unkwon position when it comes to making decisions for all firms.

A service is an economic activity of producing and providing intangible and personalized goods, in order to satisfy specific customer demands. Resea.rch: Daft book, organization theory and design 12 ed, search on the library

The dollar throughout history has been considered the strongest and the most stable currency in the world, it´s the international exchange currency replacing the gold standard and it´s used in almost every single international transaction worldwide.

The availability of credit depends on the overall bank's exposure to a particular country ( each bank sets a " country limits " ) or basic and net value of the collateral ( assets, inventories ) that can provide product ( promise ) an individual borrower . The proportion of promising assets in which banks provide overdraft services varies but never reach 100 %.

stock market trends, helps investors know what stocks should buy and when, they keep track of upwising and downswings through out the history. It helps identify when to buy or sell stocks.

 

 

 

 

 

 

 

 

 

Propensity of people to spend

39 percent of Colombians do not save and most that do, 37 percent kept saving at home, eg in piggy banks, according to a report from the Development Bank of Latin America (CAF ).

25 percent of respondents take their savings into the financial system, which deposit, among others, accounts or term deposits. (Infographic saving habits of Colombians)

Likewise, CAF inquiry found that 67 percent of respondents whose income does not reach them at least once in the past year.

Overall, the study found that households in the country have knowledge of financial products and key handling money concepts. (ECONOMÍA, 2014)

Acording to this, Colombian people do not save, it affects  our bussines because if people don’t save money they can not pay someone to clean their home, they prefer to do it itself.

 

Fiscal Policies

Fiscal policy refers mainly to the management of income, expenditure and financing of the public sector. Fiscal policy, then, about the strategies that the state implements not only to generate resources, but also to efficiently manage such resources. (gerencie.com, 2010)

All the fiscal polices that the government implement in the Colombian economy affects our business  because every company have to pay taxes also if the economy is bad it affects because no one is going to use the service we provide.  Also if the government don’t   regulate interest rates  banks could raise and our company in case you need some could not access on.

 

Consumption patterns

Colombian consumption with credit cards is increasing. The pace is such that last year 91.3 million pesos per minute or 5.480 million was spent every hour. (M., 2015) This affects our industry, because having more credits and incomes also increases their expenses, reducing their consumption. 

 

(Banco de la Republica, 2015)

(Banco de la Republica, 2015)

The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets. Interest rates are typically noted on an annual basis, known as the annual percentage rate (APR)
 

Economic forces introduction was developed based on Chapter 3, The External Assesment, taken from: 

David, F. (2011). Strategic Management: Concept & Cases (15th ed.pp 65-67). Florence, United States : Pearson

Coallitions of Lesser Developed Countries

This coalitionis basically formed by African countries, like Burundi, Cambodia, Central African Republic, Chad, Democratic Republic of the Congo, Djibouti, Gambia, Guinea, Guinea-Bissau, Haiti, Lao People’s Democratic Republic, among others. Colombia is not is not enlisted as one member of this comision.Therefore as we don´t trade with them, this factor cannot affect our industry currently.

 

 Nevertheless, maybe in a possible future our country and ally with different coalitions trading with them, exporting our goods and  importing theirs having effects on our economy in a possible future.

 

 

Taken from: http://www.tradingeconomics.com/colombia/gdp
19/08/15

FUTENTE: DANE

Contact us if you have any other questions or want to know more about our company:

  • w-facebook
  • Twitter Clean
  • google+

​© Copyright 2023 Compañía de Mudanzas. Creado con Wix.com

¡Tus datos se enviaron con éxito!

bottom of page