IMPACT OF ECONOMIC INDICES ON BUSINESS DECISION IN NIGERIA

CHAPTER ONE

1.1      BACKGROUND OF THE STUDY

The good of most national economies of the world is to attain a level of full utilization of factors of production to reach full production capacity, reduce unemployment to its bearest minimum and amongst other stability in the economy.

In economics and finance, an index is a statistical measure of changes in a representative group to individual data points. These data may be derived from any number of sources, including company performance, price, productivity and employment. Economic indices allow analysis of economic performance and prediction of future performance.

Economic indices (index phrasal) track economic health from different perspectives economic performance can be evatiated with thee index and conclusion reached which would affect the economy at large. Business firms have heirachy and levels of management, which Ewurum and Unamka gave two broad categories. Administrative and Executive, they also went ahead to divide them into Top Management, Middle management and Operational management. These levels of management are vested with different levels of decision making ranging from policy formulation, planning, organizing, staffing, leading, directing, communicating and controlling of activities in the organization including the employees.

These levels of management make decision which affects business as well as the economy as a whole. The decisions therefore, are stimulated by data information from economic indicators. Management hence makes decision that will affect both their organization and the economy at large. These economic indices includes: stock market index, consumer price index, producer price index, GDP deflator, labour market index. Other measurement of economic performance may include, unemployment level, inflation rate, level of industrialization among others.

Economic indicators therefore is simply any economic statistic such as inflation, unemployment rate, GDP etc which indicates how well the economy is doing and how the economy is going to do in the future. It is this information at the disposal of the managers decision makers of organization that aid in decision making process in Nigerian business environment.

To this end, all regulatory bodies should ensure that appropriate information are passed across and that such information about these economic indices are timely for decision making purposes which will in turn help in stabilizing the economy and aid sustainable growth of the Nigerian economy. This background information is the basis for analyzing the impact of economic indices on business decisions in Nigeria.

1.2   STATEMENT OF THE PROBLEM

The recent occurrence in economic activities in Nigeria and the global economic meltdown has rendered many companies hopeless to the next move or decision to take concerning the production distribution and consumption of economic commodities. Managers therefore, depend on the economic indices for decision making resulting in the selection of a course of action among several alternatives. In as much these indices help business decision, it has also aided fraudsters in siphoning off profits from business into their personal bank account.

Now, could the impact of economic indices on business decision in Nigeria be considered really positive in the fact of it’s few negatives side? It is very necessary that the positive aspect of economic indices is harnessed properly to ensure effectiveness and efficiency in the Nigeria business decision process and also to minimize the efforts of it’s negative side. How often do Nigeria business and organization update her knowledge of current economic indices? Have these businesses fully maximize the advantages deriable from decision making with the knowledge of movement of the country’s economic indices. Some organizations are yet to incorporate economic indices into their information system for decision purpose. This has led to inefficiency, therefore are the numerous advantages economic indices has brought to the Nigeria business environment.What is the role of government in ensuring that proper indies are made available and that they are not misleading to the economy? Are the regulatory bodies in Nigerian business environment vigilant enough to detect these fraudsters and ensure a healthy business environment?

Most small business are not concerned about economic indices and it’s effect on the economy, what are the numerous advantages of economic indices on business decision? And how can the awareness of it’s need be increased? It is important to note that fraud and other inconsistent economic practices and also the cost of ignorance in this age and century cannot be over emphasized.

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