Business activities are influenced by many factors, including economic, social, political, and social. However, economic factors are the most influential because they largely determine the demand and supply of goods and services in an economy or a market. Currently, businesses are facing a lot of economic uncertainties, as well as opportunities, due to globalization and rapid technological advancement. Entrepreneurs and investors, therefore, must understand economic factors to enhance their success. Fashion clothing is one of the sectors that are positively being impacted by changing economic environment. The demand for fashion clothes is rapidly growing, especially in developed and emerging countries ( Golley, 2016) . Emerging economies are experiencing a surge in the number of middle-income earners, resulting in the increasing demand for fashion clothes in the industry. Therefore, it is important to understand the economic impact on fashion clothing products.
Currently, there are two main economic systems across the globe, and they include socialism and capitalism. Capitalism is the most common type of economic system in many countries, especially in Western countries like the USA and Europe. Traditionally, an ideal capitalist economy was characterized by a two-class system that comprised of the owners of means of production and workers ( Golley, 2016) . Nonetheless, I believe that the current ideal capitalist economy is characterized by a situation where businesses only exist to make profits. In an ideal capitalist economy, the sole motives of firms or companies are to maximize profits without paying much attention to satisfying the needs of customers or addressing the interests of the larger society. Also, there is limited government intervention in an ideal capitalist economy, especially concerning business activities. Businesses operate without the intervention of the government.
Delegate your assignment to our experts and they will do the rest.
Even though the main objective of businesses in an ideal capitalist economy is to maximize profits, firms are not likely to maximize profits and sustainability. Modern consumers are not the only price conscious, but they are also concerned about the health and the status of the physical environment ( Asemah, Okpanachi & Edegoh, 2013) . Ecologically conscious consumers only buy products and services that help in protecting the environment. At the same time, consumers and the society at large are expecting companies to be socially responsible, implementing corporate social responsibility (CSR) inevitable in the current business environment ( Asemah, Okpanachi & Edegoh, 2013) . Thus, the ideal capitalist economy conditions do not maximize the profitability and sustainability of my business. The business can only be sustainable when it addresses the needs of consumers and society. The long-term success of a business depends on how it addresses the specific needs of customers and the interest of society.
Many indicators can be used to measure goods and services. However, quality is the leading indicator that I would use to measure good and services. One of the major systems of indicator that I would use to measure the quality of my product is a partial indicator system that focuses on the valuable characteristics of products. For instance, in the case of fashion clothes, the quality of the fabric is essential to customers. Also, the design of fashion clothes indicates their quality. On the contrary, specific indicators to measure services would include responsiveness and reliability. Quality is now one of the main factors that determine the success of any business across sectors or industries ( Golley, 2016) . As a result, I quality should be used as the main indicator of goods and services.
Demand is one of the major market forces that determine the prices of goods and services. An increase in demand is likely to result in a surge in the prices of products and services in the market. Businesses always increase the price of their products and services when the demand increases. Conversely, a decrease in demand leads to a decline in prices due to the increased competition and the need to maintain sales volume to make profits. Hence, the increasing demand for fashion clothes would mean that the business would be making profits ( Ramirez-Hurtado et al., 2018) . The fashion industry is expected to experience positive growth due to the increasing demand, primarily in developed and emerging economies like China, India, and Brazil. Specifically, the industry is expected to grow by between 3.5% and 4.5% in 2019 (Gilliland, 2019). An increase in demand is beneficial to businesses.
Unlike an ideal capitalist economy where the main objective of businesses is to make profits, a socialist economy is characterized by equitable distribution of resources, which is facilitated by the national or central government ( Golley, 2016) . Therefore, under a socialist economy, there is collective ownership of factors of production with the primary objective of reducing class distinction. Besides, the government plays an essential role in a socialist economy, especially concerning the planning and distribution of resources ( Golley, 2016) . Consequently, it is the government that sets the output and price levels and not businesses as in the case of a capitalist economy. The government in a socialist economy is concerned with the interests and welfare of consumers, resulting in strict regulation or control of economic activities.
Like ideal capitalism, I believe that a socialist economy would not result in maximum sustainability and profitability of my business. The principles and practices in a socialist economy system adversely affect market liberalization, which every firm needs to make a profit and enjoy long-term success and sustainability ( Golley, 2016) . At the same time, the government would interfere with market forces, which may affect the performance of businesses. Importantly, socialism would reduce competition in the market. Besides, a lot of inefficiencies and bureaucracies occur in a socialist economy that may hinder the profitability and sustainability of businesses. Therefore, ideal capitalist and socialist economic systems do not enhance profitability and sustainability in the business sector. Governments should embrace a mixed economic system to improve business profitability and sustainability.
Fashion clothes will mainly be produced for artist, celebrities, and people with medium and high income. Fashion clothes are more expensive compared to ordinary clothes, primarily based on their design and quality. As a result, the majority of people who purchase such products are middle-income and high-income earners ( Ramirez-Hurtado et al., 2018) . Consequently, the growth in the fashion industry is mainly experienced in developed and emerging economies. Thus, I will expect to sell the most to high-income earners who have enough income to purchase fashion clothes. Celebrities always go for elegant and luxurious clothes, which are extremely expensive. Also, the number of high-income earners is higher than celebrities. The main target market should be high-income earners.
Therefore, the main aspect of the economy that may impact my business activities the most is economic growth, which determines the level of individual disposable income. Disposable income is likely to increase in an economy that is experiencing positive economic growth. For instance, the demand for fashion clothes is increasing in Asian-pacific economies due to the rapid economic growth that is experienced in countries like China and India (Gilliland, 2019). As a result, an increase in economic growth will result in a significant increase in the demand for my products, leading to increases profitability. Economic growth increases the number of high-income earners in an economy.
The quantity demand by consumers reduces when price flooring is in effect. The price floor increases the market price above the equilibrium. Consumers, therefore, will not be willing to buy the large number of products due to a surge in price ( Ramirez-Hurtado et al., 2018) . As a result, the sales volume and revenue of the business is likely to reduce when price flooring is in effect. At the same time, price flooring may impact the labor market by reducing either the number of employees or wages and salaries, as the business will not be making a lot of profits. Price flooring impacts various aspects of business activities, especially sales volume and labor market.
In conclusion, the success of a business is based on the stability of an economy. Businesses thrive in stable economies that are experiencing rapid economic growth and development. Businesses in the fashion sector, therefore, continue to grow, even though they face many challenges and uncertainties. The government should ensure that firms are subjected to a favorable business environment, which can enhance their profitability and sustainability. Also, the economic system that is embraced by the government largely determines the success of firms in an economy. Ideal capitalist and socialist economic systems may hinder the success of business across sectors. The government should embrace a mixed economic system to encourage economic growth and development.
References
Asemah, E. S., Okpanachi, R. A., & Edegoh, L. O. (2013). Business advantages of corporate social responsibility practice: A critical review. New Media and Mass Communication , 18 (3), 45-52.
Gilliland, N. (2019, April 9). Four factors fuelling the growth of fast fashion retailers. E-consultancy . Retrieved from https://econsultancy.com/four-factors-fuelling-the-growth-of-fast-fashion-retailers/
Golley, J. (2016). A ‘socialist' economy in a capitalist world. Journal of Chinese Economic and Business Studies , 14 (1), 9-24.
Ramirez-Hurtado, J. M., Berbel-Pineda, J. M., & Palacios-Florencio, B. (2018). Study of the influence of socio-economic factors in the international expansion of Spanish franchisors to Latin American countries. PloS one , 13 (1).
