Learn how business activity creates economic value
McKinsey Global Institute is known for its in-depth studies and analysis of important business and economic issues. They released a paper in 2021 that is very much worth reviewing again as we close out 2022. This study focuses on the impact of business activity on society, especially from companies with over $1B in revenue. To accomplish this they attempted to map out all the dollars that are flowing out from these companies and how they reach households to create economic value at societal levels.
This study focused on companies across the 37 OECD countries.
FP&A teams conduct the essence of this study at the company level on a continuous basis. Attempting to map the flow and pathways of money within the enterprise ecosystem is exactly what this finance team tries to capture and predict. It is interesting to see the results of a magnified analysis to include all large companies across 37 countries and to map the flow of funds beyond where the FP&A team stops tracking it.
What happens when these funds reach households?