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Economic and market influences

BAR Chapter 9 · Area I · Blueprint I.B.5

No business runs in a vacuum. Prices move with supply and demand, inflation eats into returns, interest and exchange rates shift, rivals push back, and sometimes the best move is to buy another company or sell a division. The Blueprint asks you to measure these forces and judge how they shape strategy. Lumen Solar Lighting, which makes solar lamps from imported batteries and sells them in the US and Europe, feels every one of them.

In this chapter

1. Demand, supply and market price
2. Elasticity and what it means for revenue
3. Inflation: real prices, investments, debt and future costs
4. Interest rates and measuring financial risk
5. Exchange rates and currency exposure
6. Opportunity cost in business decisions
7. Market forces and business strategy
8. Acquisitions and divestitures

This chapter has 8 lessons, 50 practice MCQs with explanations and 10 simulations, plus flashcards and a recall sheet.

What this chapter covers

• Supply, demand and elasticity
• inflation
• measuring interest rate, currency and price risk
• opportunity cost
• acquisitions and divestitures

Chapter 8: Risk management · Chapter 10: Goodwill and indefinite-lived intangibles