Micro-Economic Indicators Economic Indicators Are Statistics About

Micro-Economic Indicators

Economic indicators are statistics about the economy that can be used for the analysis of economic performance as well as predicting future performances. These economic indicators affect various organizations in one way or another, this paper will therefore look at various macro-economic indicators of performance and how recent changes in these indicators have on the performance of Electronics Arts as an organization.

One macro-economic indicator is Gross Domestic Product which can be termed as the godfather of indicators in the world. A low GDP affects Electronic Arts negatively; if the GDP In a country goes down it means that the people's living standard is low. This means that a low GDP is an indication that people within the country can no longer afford some of the things that they used to before. Therefore as a distributor of video games Electronic Arts will suffer when GDP goes down since video games are not essential or basic needs and hence people will forge them in a bid to ensure that they acquire basic necessities. With low living standards from a low GDP then people will not have room for purchasing the video game hence the developing, marketing and publication of new video games will go down as the willing buyers reduce in number (Markets.com, 2012)

Consumer price index is another macro-economic indicator; if the consumer price index goes down it will adversely affect Electronic Arts since as an organization it will be required that they also reduce their prices on the video games that they develop. This means that the organization will no longer make profits as the prices might go low and hence their profit margins. The consumer price index can also be used as an indication of inflation and therefore it means that wages and salaries of people are down and therefore they cannot afford the purchase of video games. This is a negative effect on Electronic Arts since less people will be bale to afford the video games and hence their sales will go down (Markets.com, 2012)

Retail sales are another macro-economic indicator which affects the operations of Electronic Arts. For instance when retail sales go down it means that the merchandize sales have gone down and hence the sales of Electronic Arts will also be affected. This means that their sales will go down drastically and hence they will register losses as most of their merchandize will just lie around in the retail stores. This means that in the long run there will be a slag in the development and publishing of new video games since if they develop, publish and market new video games since there is no ready retail market to buy these video games. Current as well as new investors to Electronic Arts can be swayed by data from retail sales as they might be forced to rethink of their investments in Electronic Arts when retail sales go down since they will lack a surety of their return on their stock incase they invest and they would not like to invest in an organization that does not guarantee them to get profits on their shares (Markets.com, 2012)