Evaluation of business macro environment: case of economic slowdown

Abstract

Nowadays due to growing importance of competitiveness measurement (9) a lot of resources are invested in the issue-related researches. One of the major components of measuring competitiveness is evaluation of business macro environment (BME). Three approaches are mainly used to evaluate the BME: Analysis of key indicators (usually by segregating business environment in parts (4, 9), for instance, PESTEL analysis);

Business surveys (for instance, IFO Business Climate Index in Germany, Economic Sentiment Index in Latvia, etc.). However, this approach does not give a clear explanation of how entrepreneurs carry out the BME evaluation and what information they use.

More advanced (and rear) approach that combines results of the first two approaches and explains the gap between the evaluation results.

In the economic slowdown conditions the analysis of key indicators is still appropriate to employ (with some exceptions though), but reasonable changes take place in the BME evaluation undertaken by the entrepreneurs for the reason that general economic indicators become less important.

The most important information for the entrepreneurs to evaluate the BME in 2005-2006 was the average wages level in the country, but in the end of 2007 (in the beginning of the slowdown) - the overall employment situation.