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There are some factors that affect or influence a firm or industry. The influence may be either positive or negative. One of the factors that can influence an industry is the consumer behavior. This is how individuals, groups, organizations select, secure, use and dispose products and services. Consumers often make choices when making decisions about purchase of things. Companies need to conduct a research to know what consumers want at a given place. If the firm does not do a research it risks getting losses investing on products that members of a certain area would not buy (Krugman et al, 2006).

Another economic factor that may influence a firm or industry is the quality and sustainability of the products that it produces. The quality of goods that a firm produces should not be poor. The products should be of a good quality and sustainable. The price of the product must reflect the qualities of the product. If the price of the good is high and the quality is poor, the firm risks loosing customers. The future of the firm will be endangered if the consumer base will not be there (Krugman et al, 2006).

The economic laws of a country or place that the firm is in will also influence the growth of a firm. There are certain laws that limit firms from expanding for instance to other countries. Such laws pose a threat to a firm’s vision to expand and become multi national firms. Thus a company must carry out the economic laws that are set out in a certain place before carrying out establishments (Schiller, 2008).

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Economic environment is also an important factor. This includes the disposable income and expenditure patterns, industrial and technological development, channels of distribution and general economic growth. These factors determine whether a company has the potential to develop in a certain region (Schiller, 2008).

Companies must therefore look at the above factors before investing economically in a certain region if they want to have a prosperous future.

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