Identifying Impacts on Financial Relationships

A severe drought decreases agricultural (farm) output.

• Long-term: Farmers need feed for their animals

• Short-term: Farmers begin to look at selling up and leaving their farms

• Direct: Farmers reduce their expenses on animal feed

• Indirect: higher food prices as the supply of agricultural products becomes limited

A new law increases the minimum wage

• Long-term: After school jobs increase

• Short-term: Immediate changes in wage costs.

• Direct: can lead to higher employee morale and potentially improved productivity.

• Short-term:

  Immediate loss of goods.

A factory fire destroys inventory.

• Indirect: Cost of repairing the fire damage

• Short-term: Immediate changes in wage costs.

• Direct: Directly affects the business’s payroll.

• Short-term: Immediate loss of goods.

A new tax is introduced on luxury goods

• Short-term: Delayed increase in demand for luxury goods due to the tax creating a sense of urgency to buy before prices rise.

• Direct: Directly impacts the company’s employee benefits and compensation packages.

• Short-term: Immediate increase in the cost of luxury goods for consumers due to the new tax.

• Long-term: Immediately reduction in overall luxury goods sales as consumers shift to more affordable alternatives over time.

A major city experiences a long (prolonged) power outage

• Long-term: Immediate increase in solar power conversions

• Short-term: Immediate changes in wage costs.

• Direct: Directly affects the business’s payroll.

• Short-term: Immediate loss of goods.

A natural disaster leads to road (infrastructure) repairs

• Short-term: Increased economic growth and job creation as a result of ongoing infrastructure improvements over several years.

• Direct: Directly affects the company’s employee training programs and professional development.

• Short-term: Immediate increase in expenses for repairing damaged infrastructure and restoring services.

• Short-term: Immediate reduction in consumer spending due to increased costs of infrastructure repairs.

A recession lowers consumer confidence and spending.

• Direct: Immediate drop in consumer spending and sales.

• Long-term: Lower sales due to reduced demand

• Short-term: Prolonged economic slowdown affecting job growth.

• Indirect: Immediate decrease in retail sales and revenue.

A rise in oil prices increases transportation costs

• Long-term: Increased oil prices lead to long-term impacts on the company’s marketing strategies.

• Short-term: Immediate increase in transportation costs due to higher oil prices.

• Short-term: Immediate changes in wage costs due to increased oil prices.

• Direct: Directly affects the business’s ability to expand into new markets.

A successful marketing campaign boosts sales immediately

• Long-term: The campaign leads to sustained improvements in employee morale and productivity over several months.

• Short-term: Immediate increase in sales due to a successful marketing campaign.

• Direct: Directly affects the company’s long-term strategic planning and future market positioning.

• Short-term: Immediate increase in operational costs due to increased promotional expenses.

A change in interest rates affects borrowing costs.

• • Long-term: A change in interest rates leads to shifts in market trends over several years.

• Short-term: Immediate changes in borrowing costs due to fluctuations in interest rates.

• Direct: Directly affects the company's advertising budget and promotional strategies.

• Short-term: Immediate increase in employee benefits due to changes in interest rates.