Macro and Micro-Economic Factors Affecting the Performance of Aon Corporation Shares - Essay Example

Macro and Micro Economic Factors Affecting the Performance of Aon Corporation shares Microeconomic analysis Aon Corporation is the global leader in provision of services such as reinsurance brokerage, risk management services, consulting and outsourcing of human resources. It has more than 59,000 sub-branches globally that helps it deliver innovative and effective services to its clientele in terms of risk management and productive workforce solutions. Aon participates in the stock exchange market by trading its shares as its main product. This paper will seek to analyze macro and microeconomic factors of this company affecting its daily performance in thte sale of its shares in the stock exchange market. Although the company has been receiving different awards in different categories in its services provision arena, there are other factors influencing its performance of its major product, shares, in the stock exchange market. Aon has relevant demand and supply factors that influence its sales of shares and the volume of accrued profits at the end of its fiscal year. For instance, there are global factors that affect its reinsurance brokerage supply chain such as record reinsurer capital. Documented evidence shows that, due to reinsurance supply of reinsurer capital, the level of reinsurer capital increased by 17 percent, during the first nine months of 2010, surpassing its peak capital level of 2007. Surprisingly, reinsurer capital of Aon is still in excess of demand for capacity up to date and because of this demand, the level of traded shares increased drastically. According to Aon Benfield, the demand for its shares has been a fundamental and overwhelming factor for the majority of its services. This is because; insurers are facing downward pricing pressure forcing them to release more of their redundancies hence increasing their demand for reinsurance (Baumol & Blinder, 2008:84). This is practically vital for Aon Corporation since increased demand for reinsurance means more profits as stock exchange market participation rises in order to raise adequate funds for the extra demand and supply. The market structure of Aon Corporation with response to trading of shares in the stock exchange market is a wide one, figured to deliver the best and effective services to its active stock exchange market share buyers and sellers worldwide through sub branches, online, or phone (eTrade) (Wapler, 2003:46). Due to its need to have a structured market globally, it established Global Business Units that help to integrate its corporate culture of work within as well as across borders. What connects all these units is the Company’s shared purpose and vision, which has uniform standards together with a state of the art technology. This global network of companies provides the most effective structure of market suitable for its share trading and active participation in the stock exchange market. There are few things that Aon Corporation should do in order to, either continue making profits in this market structure or move towards more profit generating market structure. To begin with, Aon has an organic market structure that depends primarily on its existing demand for risks, need for insurance, human resource consulting services and hugely on share trading. Secondly, its structural market also targets corporations, government arms, insurance companies and so many other organizations with potent ability to actively-participate in the stock exchange market. With such a broad market structure, the company continues to record a great deal of profits from its sell of shares. Despite accruing profits from sell of its shares at this structural market, the company experiences cyclical economic swings owing to stock exchange market fluctuations that impose more pressure on the active participation in the stock exchange market of the company. As a result, there is need for maintenance and creation of a more reputable market structure that can provide more attractive pricing on its trading shares. In order to achieve a sustainable market structure, Aon should increase its core offerings via acquisitions, improved eTrade and extensive valuation of its shares. It should also focus on improving traded share margins as opposed to increased growth of organic sales. Furthermore, Aon should maintain its level of share pricing instead of engaging in more price-sensitive businesses. Consequently, this will witness the company reap maximum benefits in the stock exchange market since the company shares will be easily accessed and selling at a relative price. As a result, the company will be in a position to sale as many shares as possible. With reference to Aon, there are different elasticity concepts that can influence the pricing strategies of its shares at the stock exchange market. For example, Aon should use elasticity concepts such as market profile, customer segments, positioning strategy, and value proposition that provide strategic measures that can hugely influence immense sales of shares (Thomas, 2003:73). The size or stage of growth of Aon Corporation shares (market profile), can positively influence the pricing of its shares in the stock exchange market hence making the firm realize more profits, and sustained growth. In addition, this company can use its competitive analysis that looks into things like, the company’s strength of shares sales, available opportunities for selling shares, and competitors’ weaknesses in order to attain a sustainable competitive market hence influence pricing and huge sales volume of shares in its favor. Owing to its increased number of shareholders, Aon Corporation is efficiently-and-adequately using its resources for the benefit of both the company and its clientele. Apparently, Aon limited achieved CEMARS certification in 2007 that enabled the company to engage actively in environmental matters with regard to giving back to the society as that is where most of its shareholders cite. According to Gregory Lowe, the senior manager sustainability, Aon Limited, acquiring this certification demonstrated the company’s commitment towards a greater impact in environmental conservation. As a matter of course, Aon established an environmental working group whose aim is to actively participate in the carbon management and reduction scheme with a view of attaining 15 percent reduction of emissions within the next three years. This shows that, Aon Corporation is using its resources for the benefit of all. Macroeconomic Analysis Aon Corporation is a large company providing variety of products and services with its major product being share trading. Therefore, stock exchange market fluctuations and economic growth are some of the factors influencing its well-being. With high rate of stock exchange market growth and economic growth, Aon has been able to accumulate profits from the sale of its shares due to the current available insurance capacity that is providing an increase in insurance premiums thus increasing buying and selling of shares by its market players (Mathis & Jackson, 2010:380). Increased volume of sales of shares is giving the company an opportunity to rebuild its balance sheets as well as striving to uphold the legacy of the company, which tend to become fragile in cases regarding stock exchange market trends. In case of economic decline, Aon’s shares face interruptions that eventually lead to reduction in pricing of the company’s share selling price. This in turn hardens the stock exchange market making a huge impact on lowering the company’s amount of shares sold that impounds its success. Most worrisome is the idea of unemployment in all courses. The most worst-case scenario is when there is economic recession. Most companies retrench their employees owing to the hard economic times. This results to low turn out of stock exchange market participants, which in turn results to low volume of shares sold hence low gains. Consequently, this scenario amounts to pressure and unsustainable stock exchange market burden that might deprive the company of its accrued profits since resources have to be stretched in order to sustain unemployment crisis. Further, if unemployment occurs internally, the amount of sales sold in a day declines drastically since the number attendants does not conform to the number of share buyers or sellers. Any opportunity to make a purchase or a sale that surpasses the company has intensive results in the accounts of the company’s stock exchange department. Not surprisingly, findings show that rate of inflation has had a heavy toll on Aon Corporation’s participation in the stock exchange market. This is because, Aon, as most other companies are, is facing baffles in the stock exchange market due to the current inflation. However, not all people understand what this may have on their savings. Generally, when there is inflation, the cost of living hikes (Graham, 2008:17). As a result, most people have to reconfigure their budget thus the level of shares sold declines. On the other side, when there is no inflation, the company’s volumes of sales of shares increases since most people are able to purchase or sell shares. This in turn fosters the company’s financial capability to endure or cope up with the prevailing economic trends. Balance of payments deals with all the accounting records involving all monetary transactions between a single nation and the rest of the other countries it does business with in the world. With reference to Aon, if the balance of payments balances, it means that, the company’s share sales accounts in both sides of its bookkeeping records matches or are equal. Thus, the company is accountable and succeeding on the other end by making profits out of sales of shares. Nevertheless, if there is any imbalance between the two sides of bookkeeping it indicates there might be possible losses incurred. In conclusion, Aon’s success of share sales undergoes series of fluctuations as regards business cycle. There are some months of the year when economies of scale favor this company’s success in the stock exchange market whereas other times there crops up economic factors that cripples the sales of shares of this firm. These changes influencing growth and sustainability of this company arise due to business cycle hence they affect the company’s stock exchange market trading. Nonetheless, Aon Corporation is a multi-national company with established clientele and a profound market success. Therefore, it has the ability to withstand a tone of challenges since it has been in existence for quite a long time. Bibliography Baumol, W.J. & Blinder, A. S., 2008. Microeconomics: Principles and Policy. Ohio:Cengage Learning. Graham, B., 2008. Security Analysis: Sixth Edition, Foreword by Warren Buffett. New York:McGraw-Hill Professional. Mathis, R. L. & Jackson, J. H., 2010. Human Resource Management. Ohio:Cengage Learning. Thomas, C. D., 2003. Readings and cases in international management: a cross-cultural perspective. Texas:SAGE. Wapler, R., 2003. Unemployment, market structure and growth. New York: Springer. Read More