For general strategic planning, the economic environment is the external economic environment and how it affects the operations of the firm. Included in this segment would be inflation rates, interest rates, trade budget/surpluses, personal saving rates, business saving ratesr and gross domestic product. For project management strategies, the economic environment will include:
• Cost of capital: How much will it cost us to borrow money for new product development or on an interim basis to account for cash flow deficits?
• Forward pricing rates: Based upon current knowledge, what will our costs look like over the next several years?
• Quality of cost estimates: How accurate are our cost estimates, and are there lessons learned?
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