Working in PR, we aim to form favorable connections between organizations and their publics. The formation of this relationships often results in expenditure from both parties, which is typically of great importance to organizations. A basic understanding of the influencing factors and reporting practices of this economic process can allow us to analyze our organizations more deeply and interpret the motivation of those in management positions. Two basic business concepts that can advance the work of those in communications are economic indicators and financial statements.
Economic indicators are figures off which organizations make financial decisions. They reflect the health of the economy and can have a significant effect on companies. Two common economic indicators are Gross Domestic Product (GDP) and Consumer Price Index (CPI). The Gross Domestic Product is the sum of the value of all the goods and services produced in a country within a specific time period. It is used to determine and rank the economic performance of a region and used as a point of comparison. Consumer Price Index takes samples of commonly purchased consumer goods and determines their average price. It is used to measure the change in price of these goods and also represents the condition of the country’s economy (Ragas and Culp, 2014). Business leaders use these indicators, among many others, to ensure they are making informed decisions, and practicing that habit can enhance our work too.
Financial statements, a product of accounting, record and organize the financial activities of a company or organization. Two fundamental financial statements are income statements and balance sheets. Simply put, income statements track the profits and losses of an organization over a period of time. When this document is compared to past income statements, one can determine if the economic performance of an organization is improving or declining. Balance sheets show what the company owns that is valuable (assets) and their liabilities, which is the amount they owe to others. There is also a section for stockholder’s equity, which represents the amount that would be left over for shareholders if the organization sold its assets and paid its liabilities. If a company is financially healthy, these factors should balance as such: Assets = Liabilities + Stockholder’s Equity (Ragas and Culp, 2014).
Karen Bloom says, “There’s been an evolution in the way communication pros are viewed. They’re expected to be thought leaders and contribute to the process.” Taking part in the economically-oriented discussions of an organization is certainly a way to achieve this. The coverage of business essentials in this blog are extremely brief, but there are many resources one can use to further their knowledge. I recommend Business Essentials for Strategic Communicators as an comprehendible and informative source.
Ragas, Matthew W., & Culp, Ron (2014). Business Essentials for Strategic Communicators. New York, New York: Palgrave Macmillan.
Post By: Alex Goodreau