Business Aspects in Running the Company Effectively - Essay Example

Individual Report Individual Report This paper describes a number of business aspects that I would consider while as a director of a company. Also, paper discuses a microeconomic and a macroeconomic aspect that I would utilize in improving the running of the company. The paper discusses the macroeconomic conditions of the United States and its current economic policy as a country into which I would locate a new branch. Question 1: Business aspects Business environment has factors, micro-environmental and macro-environmental, that requires management’s considerations for effective decisions. One of the business aspects that I would be looking at in order to run the company efficiently is the market. This defines the area in which the company’s products can be sold and is important to the company’s profitability that influences sustainability and availability of resources for management. From the microeconomics perspective, I would consider trends in demand and supply of supplementary and complementary products within the market. I would also consider other factors to demand and supply and use the gained information to establish competitive process for the company’s commodities. Commanding the market through competitive prices would ensure profits that would be reinvested in administrative and other purposes for better management. From the macroeconomic perspective, I would consider trend in the economy’s capacity through factors such as changes in gross domestic product and consumer price index. I would use these concepts to ensure informed decisions for expanding the business towards economies of scale and associated economic benefits that would empower management (Langdana, 2009). Customers and clients are other business aspects that I would consider for efficient running of the company. Customers form the market for the company while clients, such as suppliers and other service providers, facilitate an organization’s potentials into pursuit for objectives. Customers determine demand, which in turn determine supply and price. As a managing director, I would ensure customer utility through quality products and after sales service. I would also ensure effective marketing in order to ensure demand for the company’s products. I would also ensure suppliers utility in order to establish reliable product delivery to the company for effective management and operations. From macroeconomic perspective, I would consider GDP and inflation rates while establishing prices for both customers and clients in order to retain the stakeholders (Mishkin, 2013). Microeconomics aspect and Macroeconomic aspect The market is one of the business aspects that I would use to improve the running of my company. The microeconomic aspect of demand and supply would facilitate this. The United Kingdom’s economy identifies a significant level of competition because of the free nature of the market and existence of many organizations that offer products. Demand and supply forces influence the market and factors such as marketing strategies may tilt demand towards the organization’s products towards competitive advantage. Based on the advantage and secondary benefits, the organization can gain efficiencies and potentials for better management. Neoclassical economic theory would inform my application of demand and supply to improve management of the company. According to the theory, people seek to maximize utility through rational decisions. Decisions are therefore made for commodities that maximizes reward (McCain, 2010). I would therefore strive to ensure that customers derive maximum utility from the company’s products. This would mean quality levels that surpass those of the company’s competitors and competitive prices that allows for good profit margins and at the same time favour customers. This will ensure utility in our products and facilitate market expansion, customer retention, and better total profits. The management will therefore have time to focus on other aspects of the business management than on marketing. Funds that would otherwise be used in marketing will also are diverted to other management aspects for efficiency in management roles. Revenues and profits being essentials, especially in the corporate sector, using the theory to improve demand for the company’s products and profitability would improve confidence among members of the management team and therefore motivate them in their management roles. I would therefore improve management by using demand to create an environment that empowers and motivate management for effective and efficient roles. Aggregate demand has direct effects on gross domestic products and has a potentials for improving the company’s management. Gross domestic product indicates market potentials and ability to expand in an economy. An economy with a declining gross domestic product, for example, means lack of investment potentials and a possibly shrinking market. An expanding economy however indicates expansion potentials. I would therefore use Game theory of economics to understand aggregate demand and strategies that other market players use for to attain competitiveness and sustainability (McCain 2010). According to the theory, strategies that other parties apply are important to decisions towards utility. I would therefore strive to understand approaches that parties use to exploit the aggregate economic potentials and to command demand in the overall economy. The consideration would inform the management of new strategies that it would integrate into its system for better management. Based on the game theory, I would also understand suppliers’ power from the macroeconomic potentials. With the gross domestic product as an indicator of the economy, I would use it to evaluate suppliers’ costs and price variations from across the economy towards informed decisions on orders. Analysis of interactions with suppliers at different times, with respect to change in the gross domestic product, will also improve the management’s precision in forecasts for economic decisions, on placements for supplies orders. Question 3: Business expansion into the United States Macroeconomic conditions in the United States Macroeconomic factors indicate a country’s investments potentials and analysis of factors in the United States economy informs my decision to expand business into the economy. Analysis of economic conditions in the United States shows that the nation has experienced economic growth since the year 2010 and the consistency suggests future growth in the economy. This is part of the reasons I would consider expanding operations into the country because of ability to expand the business in the nation. Another promising aspect of the current economic conditions in the United States is the hope of growing industries and I suppose my line of business in manufacturing would succeed well. Unlike investing in an economy in which industries have matured, the growth stage means ease of penetration and ability to explore new potentials. In 2013, the United States economy grew at a rate of 2.5% and its GDP grew at the rate of 2.6% with projections of increase in 2014. Currently, consumer spending, residential investments, business spending on equipment and software in the United States are increasing and all offer opportunities for the business though innovation of brands in its current line of operation as well as opportunities for venturing into other lines of products (Wang, 2013). Currently, the prices of consumer goods are increasing and this indicate potentials for higher profit margins, assuming that costs are constant. Increasing prices also indicate possible higher relative demand for commodity that supply and this means that the company’s products will be able to attract find market in the economy. Similarly, wages rates and employment rates are increasing and this indicates sustainable demand. Increased wage rates means that people have more money to spend. Similarly higher employment rates mean greater demand through increased number of people with capacity to purchase commodities. Stocks in the United States are going up with time but declines in major stock indices of the country’s foreign markets are affecting this trend. Such declines lead to massive sell-off in items and equity. Incumbent economic conditions are showing that the unemployment rate in the United States is falling but with fluctuations due to some workers leaving the labour force. My company would benefit more is it manufactures health care products, construction materials or food products because these are the industries that have been leading in growth. Individuals aged between 16 and 24 years are leading population of the unemployed, and the unemployed individuals who are 25 years and above have less than high school education (Arnold, 2011). Current economic policy in the United States The current economic policy in the United States is another area that would attract me to expand into the country. The country has adopted unprecedented measures in responding to the financial crisis of the year 2007 and in adapting to the prevailing economic conditions. Some of these measures include raising central bank lending, expanding central bank balance sheets, banking system reserves, and broadening the range of assets purchased. Before the crisis, the central bank conducted monetary policy by regulating the short-term nominal interest rates. The United States Federal government has pulled interbank interest rates to near zero. The ability of members of the public and banks to hold currency limits the ability of the central bank to enforce a nominal interest rate to less than zero (Langdana, 2009). The attractive aspect United States’ economic policy is that as it searches for a real interest rate, it engineers an increase in expected inflation above the rate that the central bank would target. The United States’ government has bolstered interest-sensitive sectors by decreasing interest rates. Another way that the United States uses to influence long-term interest rates is the purchase of long-term assets. An example of a long-term asset that country has bought is the Maturity Extension Program that enabled it to purchase long-term Treasury securities using funds from the sale of short-term Treasury securities. The United States is a good place to invest as the country rises from its fiscal cliff that has left the country struggling with an annual deficit budget of above one trillion dollars (Mishkin, 2013). Such a deficit will make the country to shy away from hike taxes because it would drag the economy. The country’s fiscal cliff debate has driven it to hike the taxes for the rich and to cut payroll taxes. I would be lucky if my company is involved in manufacturing oil products, it would benefit because gas prices have been at an all-time due to the recovery of the global economy. The United States has reported slow growth in its exports especially to Europe because of its trade deficits. As an investor coming from a European country, my company would have a better standing because of the price advantage that most European countries have over the United States (Wang, 2013). Overall, the Federal Reserve is the board that is entrusted with monetary policy in the United States. The actions of the board influence equity and fixed income markets. The Federal government uses the Research Board to regulate the supply of money through selling or buying government bonds in the open market. The government can also make changes in the discount rates but this move invites sharp criticisms from different quarters both within and without the country. Changing discount rates receives criticisms because it determines how much consumers give in order to borrow and how much they earn on their deposits (Arnold, 2011). In conclusion, business organization, management, expansion, and strategy are some of the business aspects that I would consider in running the company effectively. Management is a microeconomic aspect and expansion is a macroeconomic aspect that I could utilize in improving how I run the company. Economic growth and the country’s rate of unemployment are some of the economic conditions that could attract me to expand in the country. Decreased interest rates and the low likelihood of tax hikes are some of United States’ attractive elements about its economic policy. References Langdana, F 2009, Macroeconomic policy: demystifying monetary and fiscal policy, Springer, New York. McCain, R 2010, Game theory: A nontechnical introduction to the analysis of strategy, World Scientific, Hackensack. Mishkin, F 2013, Monetary policy strategy, MIT Press, Cambridge. Wang, P 2013, The economics of foreign exchange and global finance, Springer-Verlag, Berlin. Read More