Economic, Business, and Competition - Essay Example

LP1 - Econ Environment In today’s economic environment, the main variable that is impacting not only firms but countries around the globe is oil price hike. This price hike is affecting the companies’ supply of raw materials. How? As the oil price increases, the price of acquiring raw materials’ becomes expensive which impacts the costs of the firm. For example, if a construction company needs raw materials like steel, cement and so on to be shipped or transported from other place, then this shipping cost will be high as any vehicle would be running on oil. This is how increase in oil price can affect the firm. LP1 - Monopoly Monopoly is bad for American public. Business monopoly is not a new thing for the people of America. It becomes bad because these monopolies are being backed by the government itself.  Most of the big industrial companies are owned by the government itself. In lieu of public interest they introduce different consumer bargains which are just a gimmick. It is the consumer who is ultimately paying the price. That is the reason monopoly is bad for American public.     LP1 - Outsource Companies outsource their activities because they can get services that are cost-effective, efficiency of other countries workers might be high, and so on. If companies outsource, then they can focus on their core activities. But if outsourcing continues, then in the near future, American people would not have jobs as companies would outsource their work as it would be cheap and they could gain more profits. Therefore, US should impose restrictions, if it wants its own citizens to flourish and get the jobs by the companies. LP2 - Budget Value Budgets are future plans that are prepared in monetary values and quantitative terms. Budgets could be valuable to any workplace. They help in setting future business objectives, goals, targets and selection of best strategy to achieve organizational goals. The value of budgets can be inferred from the fact that budgets establishes the responsibility and accountability system within the organization because actual results are compared with the budgeted target and then the reward and punishment depends on the best performance. Budgets in a workplace are used to estimate sales projections, cost of production and materials, performa income statement and balance sheets. LP2 - Budget Accuracy Budgets indeed are projections. Investors cannot be easily misled because budgets take into account the past data. Although budgets do not hit exactly, but they do provide the direction and information in which the money should be spent. Budgets provide a rough idea as to what the business might achieve in a year or month. Budgets provide the investors a tool for measuring how far they have deviated from the goals and what went wrong and where. Although budgets can be manipulated easily by the businesses but it is still the only tool to forecast the inventory and other costs. LP2 – Summary This article is about the construction work in US and low productivity. The main dilemma is that although jobs are growing but output is weak because of which productivity is low. Economists say that the answer to this lies in the construction industry. Construction companies are gathering labor because they expect that a rebound in housing market will take place. There is also a lot of time gap in construction. Around two third construction jobs are acquired by trade contractors working for small firms. The survey suggests that almost 300,000 people work in construction as part-time for economics reasons. (Guha, K. (June 7, 2007). Construction jobs cloud US productivity. FT.Com. Retrieved August 8, 2008 from http://www.ft.com/cms/s/0/9c11d790-151f-11dc-b48a-000b5df10621.html?nclick_check=1) LP3 - Competition Competition impacts are different for different types of businesses. For my organization, competition from local brands of confectionaries and others in supermarkets are the main concern. The increasing number of small brands and confectionaries in the same locality has given customers a wide variety of choice at a lower price than the rest. Therefore, to stay in the competition, reduce production costs are essential which will lower the sale price and might attract customers. LP3 - Competitive Factors Pepsi and Coke are two companies that have been the rivals since the beginning. Pepsi has always kept Coke on its toes by developing products and increasing its product lines. To stay in the competition, Coke hired different executives to develop its marketing strategies and new products. Although both companies are leading in the world beverages market, in some parts Coke beats Pepsi and vice versa. LP3 - Summary This article is related to American firms competing in a globalized world. Competition for the American firms is increasing rapidly as the EU firms put more competitive policies pressure on them. For example, the prevention of merger between GE and Honeywell was prevented due to EU’s competition policy. Also it is thought by American firms that EU prevents them from competing in their country. EU wants to impose more strong competition policies. If Americans want to do business in other nations, they would have to do it by merging with home country’s firms. In addition, different country’s product markets are now finding their way into America and EU which has greatly affected the business of home country firms such as China made sneakers and so on. Therefore the Americans and EU firms want labor harmonization. Such are the business complexities created by globalized markets. (Stelzer, M.I. (October 24, 2006). One World. The Daily Standard. Retrieved August 7, 2008, from the World Wide Web http://www.weeklystandard.com/Content/Public/Articles/000/000/012/857hptxl.asp?pg=2) LP4 - Foreign Business Business in foreign countries is growing rapidly. This is because of the main economic advantage that what cannot be produced cheap in one’s country can be produced in foreign country. Also, what home country does not have, it can be available in foreign country where its economics would change. Business economics also differ from one country to another depending on how developed the country is. LP4 - Hedging Hedging is a method that is used by investors and businesses to minimize their downside risk. Most people in businesses do not know how to predict variables such as interest rates, exchange rates and commodity prices. Therefore hedging gives them the best option to secure themselves with the risks associated with these variables. For example, Southwest airline has a risk of oil price increases as the cost of oil is highly volatile and very unstable. Therefore, the company will hedge its oil contracts to minimize the risk of an oil price increase. The company utilizes its fuel hedges, on both a short-term and a long-term basis, as a form of insurance against significant increases in fuel prices. The Company believes there is significant risk in not hedging against the possibility of such fuel price increases. (Koenig, D. (July 6, 2008) Airlines try hedging to beat the soaring jet fuel costs/Southwest Air is industrys best at it, saving firm billions. SFGate. Retrieved August 7,2008, from http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/07/05/BU0L11HTLC.DTL). LP4 - Summary This article is related to ExxonMobil operations in Middle East. According to company spokesperson, Middle East has unmatched advantage in energy and chemical. Using resource strategy this country can acquire lots of benefits from the emerging markets in Asia. Middle East in future will become the biggest and important chemical industry investment in the world. This is due to the fact that almost 100% chemicals are dependant on oil and gas. Middle East has opened its doors to international investment and cooperation to promote economic development. According to statistics, total demand for transportation will be 45% higher than it is today in 2030. ExxonMobil estimates that around 60% petrochemical growth will be from Asia and by 2015, this continent will account for 50% of world’s demand for petrochemicals. Top world explorers have come to this region in collaboration with ExxonMobil and other companies in order to use latest technology for exploration in the industry of petrochemicals. Middle East and the rest of Asia is open with new opportunities for expanding industry. (Dolan, J.M. (25 October, 2007). Petrochemicals: the growth business of the Middle East. Exxon Mobil. Retrieved 8 August, 2008 from http://www.exxonmobil.com/corporate/news_speeches_20071025_mjd.aspx) LP5 - Ethics & Economics Ethics plays a vital role. Ethics can develop an organization by doing what is right. It can help in designing organizational honesty or integrity by developing different structures. If right conduct is followed the economics of any organization can be improved a lot. It can help employees in doing their work honestly which can help the company in various ways. LP5 - Culture & Ethical Economics Cultural differences can significantly impact people’s ethics. If one way of doing business is ethical right in one culture it might not be so in some other culture. Each and every person would like to follow their culture and their ethical guidelines. Therefore it is necessary to have skills which can be used to manage cultural differences whether in an organization or whether when doing business. LP5 - Summary This article is related approved business standard of legality and profits and its ethical consequences. According to this, Carr has compared business to poker. As bluffing is part of poker’s game it is not considered to be morally wrong. According to theory of Utilitarianism, the action that produces more happiness is the basis for judging if any action is ethical or unethical. If this theory is applied to bluffing in business the result would either be increase in profits or losing customer trust. Because it is widely accepted that business cannot survive without bluffing about its products, this concept can be universalized. This is even accepted by the customers that what a company promises about its product is not entirely true. Therefore, according to ethical theory given by Kant, it can be assumed that business bluffing in ethical. Keeping in view Kant’s theory, Carr’s claim that business bluffing is ethical is right and the only standard that should be followed is legality and profits. (O, M., Is Business Bluffing Ethical? Planet Papers. Retrieved August 7, 2008, from the World Wide Web: http://www.planetpapers.com/Assets/6249.php) Read More