Macroeconomic variables refer to the factors and elements that exist
in the external economic environment. Some of the most common
macroeconomic variables are the rate of inflation, rate of
unemployment, Gross Domestic Product (GDP) growth, government
deficit in a nation and volatility in the stock market. Such variables
have the potential to have a direct and significant impact on the
performance of companies that operate in the market, such as
business entities and global financial centers (Karabulut, 2018).
Corporate finance managers need to keep a tab on these variables so
that suitable financial decisions and strategies can be adopted in
place that can help businesses to adapt to the evolving
macroeconomic landscape and make strategically-sound decisions. In
the next five to ten years, it is imperative for corporate finance
managers to take into account vital macroeconomic factors such as
national income, unemployment level, GDP rate and inflation. It has
been identified that factors that exist in the macroeconomic context
of a nation have the potential to influence the financial performance
of companies, banks and other entities (Soliman, 2021).
Managers that function in the area of corporate finance need to keep
track of the variables so that appropriate decisions can be made that
can strengthen the financial viability of businesses. For example,
when the government deficit is high, and there is a limited possibility
of receiving any financial support from it, corporate financial
managers need to make decisions so that the available financial
resources can be optimally utilized by the entity.
In the course, a broad range of concepts has been covered that can
prepare the learners to effectively handle the impact of the identified
macroeconomic variables in their personal or professional life. One of
the main concepts is risk assessment. It can be applied in order to
evaluate the risk pertaining to inflation that the business is likely to
face. Similarly, the concept pertaining to strategies can be adopted so
that effective strategic decisions can be taken to safeguard the profit
margin and financial performance of the business. Some of the key
skills that can be used by learners to effectively handle the
uncertainties that arise as a result of an unpredictable
macroeconomic landscape are critical thinking skills, problem-solving
skills and decision-making skills. Such skills can be applied in the
practical setting in order to assess the external situation at a
comprehensive level and help a corporation make viable financial
decisions. Critical thinking has been identified as a vital decision-
making tool that can be used in the contemporary business landscape
to tackle unpredictable and changing situations and make strategic
decisions and action plans (Turan, 2019). The skills and concepts that
have been learned from the course can also be applied in the personal
setting. For example, while making important investment decisions,
the concept of risk management can be applied to make careful and
safe decisions. Similarly, the skills relating to critical thinking can be
used in the real-life setting to assess the employment landscape and
look for relevant job opportunities.
Reference
A. Soliman, H., Elhalaby, S., & M. Elbolok, R. (2021). The effect of
macroeconomic variables on corporate financial development:
International evidence from the banking sector.
https://doi.org/10.21608/jsec.2021.175877
Karabulut, T., & Sen, G. (2018). Analysis of macroeconomic factors
which affect performance of Global Finance Centers.
Asian Economic
and Financial Review
,
8
(1), 63–70.
https://doi.org/10.18488/journal.aefr.2018.81.63.70
Turan, U., Fidan, Y., & Yıldıran, C. (2019). Critical thinking as a
qualified decision making tool.
Journal of History Culture and Art
Research
,
8
(4), 1. https://doi.org/10.7596/taksad.v8i4.2316
