Global Trends and Strategy within the United States - Research Paper Example

Table of Contents Page Global Trends & Strategy within the United States Abstract 3 Introduction 4 The current economic situation: Where is United States now? 5 Global Trends and Strategies: Adapting to Economic Changes 7 Strategy on Sales and Operations: Planning ways to succeed 8 Technology: in to the economy of the future 10 Tracking the Global Trend: ways to achieve success amidst economic turmoil 11 Conclusion 12 References 14 Appendix 16 Abstract This research paper will present the current economic situation the United States is on from the years that have gone till present. This paper will present comparison of the economic situations coming from records of the years that have gone from the glorious years of being the top economic nation till modern day situation. The researcher will give insights on the markers of economic stability such as increasing unemployment rate, poverty and decreasing annual gross domestic product and the countless possible ways of reversing or sustaining the after effect of economic threats through finding researched trends and strategies. Key words: economy, economic stability, trends, strategies Introduction The ever changing economic arena has been fast evolving. Everyday economic activities are aimed at somehow one particular thing, which is to produce, to provide or to earn. The United States is known worldwide for its dynamic leadership and stability in world economy. It has fought many battles from history to be able to come up and build a structure that would sustain the vast needs of the country. It has lead many nations worldwide in setting foot marks to follow as an example of sturdy economic flow amidst all national issues and concerns. It has provided the American people with stable economic market to hold on to and has lifted the standards of living within its premises for the past 50 years or so. Does the sturdy wall of United States Economy has finally come to its peak and needs a reconstruction or remodeling? What was the weakest link in the economy that the government failed to set support that led to its sudden collapse affecting the entire economic stability? What could the government have done to foresee such changes in the global economy so that further decline would be avoided and future blows of economic changes would no longer affect the stability of the economy? This essay will go over the current trend in the economy and in a way to enhance the economic status of the country by means suggesting effective economic strategies that were backed up with studies that can be used by the government as well in establishing more profitable and recession proof businesses that could sustain the downfall in the economy. Global Trends and Strategy within the United States The current economic situation: Where is United States now? Nothing seemed to be constant about living rather than the changes it continuously incur. Even if the United States have sustained to be in the lead in economic strength for the longest time still the cycles of change puts such leader into no exception. The global economic market has recently experienced an unexpected downfall and the sturdy American State and even other highly developed and leading countries were caught off guard of the unexpected surprise that brought economic storm around the globe. Recession shook the American economy and has led to many dismay—closure of many production and business establishments, prices rising, increasing rate of unemployment, decrease purchasing power of US dollar, decreasing work benefits and increasing rates of low paying jobs converted from previously high paying jobs just to sustain the challenged business. According to a source this has been a tumultuous decade for the United States. During the first 10 years of the 21st Century many unforeseeable events have happened that affected the national economy-- there was a major terrorist attack, a housing meltdown, a severe economic recession, and a significant downturn in the U.S. stock market (Jacobsen & Mather, 2010, p 2). Unemployment rate recently passed the 10 percent mark for the first time since the struggle to maintain it since 1983 and household wealth increased somewhat with the stock market gains during the year, but remains well below prerecession levels (Jacobsen & Mather, 2010, p 2). Household net worth went down by more than $10 trillion during the recession period and it is deemed the largest loss of wealth since the federal government started keeping records of wealth accumulation 50 years ago (Jacobsen & Mather, 2010, p 2). Trends in stock market indicators, household wealth, consumer confidence, and labor force participation are widely reported and used to measure the health of the U.S. economy (Jacobsen & Mather, 2010, p 2). Despite the attention given to economic issues less is known about the ways people are adapting to changing economic conditions that could have been the very reason why the shook of sudden changes took the economy off guard and unprepared due to the lax economic victory that has been in the lead for so many years (Jacobsen & Mather, 2010, p 2). The Bureau of Economic Analysis published its second estimate of the real Gross Domestic Product for the second quarter of 2011 and according to the estimate, the real GDP of the United States increased 0.25 of 1 percent over its level in the first quarter of 2011 but this growth rate is not a remarkable growth to sustain the downtrend (Watkins, 2011). Also according to the report, if this 0.25 of 1 percent quarterly growth rate were to continue for four quarters the increase would be 1 percent growth. This 1 percent rate of quarterly increase for the second quarter of 2011 is in contrast to the 3.2 percent growth rate in the fourth quarter of 2010 and 1.9 percent in real GDP for the first quarter of 2011. It should be noted that the growth rate in the first quarter of 2010 was 3.7 percent and in the preceding quarter, the fourth quarter of 2009, it had been 5.0 percent (Watkins, 2011). Thus increases in the growth rate are not permanent and trends do not necessarily continue. The growth rate of the economy is volatile. And, while any increases in real GDP are welcome they are not sufficient to reduce the pool of unemployed over the years according to statistics (please see table 1 and graph 1) (Watkins, 2011). The growing rate of unemployment have drastically changed the United States labor force and as of October 2009, nearly 16 million people in the United States were unemployed (Jacobsen & Mather, 2010, p. 3). The rate of unemployment does not only pose national budgeting issues but also encompasses social issues as well. High unemployment rate can lead to increase incidence rate of crime and illegal works as well because more people will be vulnerable going for underpaid jobs with no benefits at all as stated in Cooper’s article published in The Fiscal Times saying that factory pay nowadays is below the average and though small business started to arise still they offer little or no benefit at all and wage increase shows no possible sign (Cooper, 2011). Alongside with these national economic issues are increasing poverty rate, decreasing educational illiteracy rate, housing issues and health issues. All these social concerns goes in a cycle one after another if not addressed well and a strong economy is one of the best ways to contain these social problems within controllable harmless limits that would not affect national stability. Global Trends and Strategies: Adapting to Economic Changes The coming of recession to the great American nation paved way for many changes in the economy particularly for the producers and consumers of goods and services. Though many establishments have made changes, from changing business operations to trimming down the number of employees and some unfortunately liquidating assets, it can be told from stories of old businesses that they have gone through a series of business changes just to cope up with the current trend in the economy. Such an example is the business rivalry of Wal-mart and Kmart that since 1962 have struggled to make their way to remain until today (Meredith & Shaffer, 2010, p 4). Businesses such as Wal-mart and Kmart illustrated changes in operations strategies that could result into a more profitable outcome if best decisions were made or on the other side unfortunately decrease in profit if not executed well (Meredith & Shaffer, 2010, p 4). With this example in mind it can be told that business operations strategies play the important role of creating value for every business or organization. Organizational or business operations are concerned with making inputs such as labor into useful outputs such as products according to strategy and these profit earning activities adds value to the organization or business (Meredith & Shaffer, 2010, p 5). Business operations are always directed to two important things-- customer satisfaction and competitiveness for it to be able to make it way through the rough road of business ordeals (Meredith & Shaffer, 2010, p 5). Furthermore, the exciting and competitive world of operations is noted as the heart of every organization that pumps life into the organization and more than anything else determines whether the organization by doing the profit earning activities survives in the international market place or disappears into bankruptcy (Meredith & Shaffer, 2010, p 6). This statement proves that operating strategies plays an integral role in the success of an organization in decision making skills and into manipulating the organization’s way into the success mainstream. Businesses are intended of building efficient and effective supply chains, improving processes and successfully applying the precepts of best management and operations-based programs that are well studied according to the business nature (Meredith & Shaffer, 2010, p 6). Just like in the national government, national decisions or strategies affect the whole nation that is why decisions are made carefully in controlling the overall operations of the nation. With the importance of operation in running an organization regardless of how big and small, the following topics will tackle ways of manipulating organizational operations and adapting to organizational changes that can be adapted by the US government for the organizations and companies within its grasp in saving it from drowning into the economic turmoil. Strategy on Sales and Operations: Planning ways to succeed According to a research published and released by the Aberdeen Group, sales and operations planning is the key integrated process that the supply chain organization can leverage to achieve visibility and transformation across the entire organization and throughout the value chain (Viswanathan, 2010, p. 2). The study they have conducted that included 196 companies in a survey on sales and operations related initiatives provides an in depth and comprehensive look into process, procedure, methodologies and technologies with best practice identification and actionable recommendations (Viswanathan, 2010, p. 2). By finding out the best practice in terms of sales and operations planning strong points can be pointed out for other companies to focus into and to improve weak points as well so that can be avoided thus increasing company revenue and provides less or totally no wastage of time and budget. According to this study the key pressures to improve sales and operating planning are: improve top line revenue, reduce supply chain operating costs, management of increasing demand volatility, customer mandates for faster more accurate and more unique fulfillment, need to utilize manufacturing assets with maximum efficiency (Viswanathan, 2010, p. 2). According to Viswanathan (2010, p. 19), organizations should be able to adopt business goals that are rapidly evolving with the market place and its supply chain should be able to flex itself to adjust to these changing goals. A process playbook approach has to be adopted in order to implement scenarios which stimulate various supply chain tactics that can result in meeting the business goals. This is essential to manage complexity associated with the global nature of today’s supply chains (Viswanathan 2010, p. 19). Take for example the case of Andor Technology that was able to sustain rapid growth despite the slumping global economy by compelling to take steps to secure its supply chain increasing the frequency of standard operating meetings and increase communication with the sales team to get ahead of the spikes in demand (Viswanathan 2010, p. 19) with this tactic adopted by every company a sure profit is at hand and will lead to business expansions that could offer more jobs that could lasts a lifetime. Sales and operation planning serves as a solution to enable companies to achieve supply and demand goals and this victory are made to reality through greater optimization of management, forecasting, meeting customer demands through a customer service and proper financing (Viswanathan, 2010, p. 9). Moreover, integrating the budgeting cycle with sales and operations planning is another way that can yield better accuracy and agility as proved from the case of SIG Combibloc that redesigned a new budgeting process that was capable of coping with change and market fluidity. SIG used sales and operations planning software package to optimize plant utilization, improve workflows and find bottlenecks (Viswanathan, 2010, p. 10). Another adaptation made was to change 18 month budgeting plan cycle to six months rolling forecast cycle to enable the company to adjust shortly to changes in the market. In addition to the strategy are the monthly meetings of top management with representatives from all major parts of the business including sales, production, and marketing that enables the company to control issues and address problems in the manufacturing process and was able to have a more accurate and more agile sales and operations planning process (Viswanathan, 2010, p. 10). Technology: in to the economy of the future With the advent of technology business and other profit yielding establishments have to cope up with the explosion of new technology that have been acquired for better business outcome and better business transactions (Meredith & Shaffer, 2010). Since the technological world never ceases to find better and more advance technology ever released, the future of an advance and highly technological economy is never out of the picture. Innovations in technology continue to have massive effects on business and society (Ernst & Young, 2011, p. 2), with innovations in technology better business outcome can be achieved that can lead to better production and sales and it will continue to prosper as men seeks to find innovations to get things done (Ernst & Young, 2011, p. 2). Tracking the Global Trend: ways to achieve success amidst economic turmoil Amidst the economic chaos experienced globally there is one common belief that recovery is always on the verge as always were. Indeed every downturn precedes an upturn, as enthusiastic people can be despite the massive negative effect of economic down fall due to the global recession (Ernst & Young, 2011, p 1). The global financial system remained fragile, but economies around the world began moving toward recovery and started finding ways to achieve better outcomes despite the current situation (Ernst & Young, 2011, p 1). Like any macro event such as the United States economy is experiencing, nothing comes out of the other side completely the same (Kinaxis Corp., 2009, p.1). The business world must be very versatile to changes. Many businesses hope to survive to survive the storm but the bold and brave are hard at work establishing new and innovative ways to operate to have a more stable function instead of letting go to the turmoil of recession and is deemed for a more prosperous time ahead (Kinaxis Corp., 2009, p.1). On the most optimistic side the Kinaxis Corporation formulated four steps to make to prepare for recovery which includes: (1) getting pertinent data—integrating demand and synchronizing supply (Kinaxis Corp., 2009, p.4), (2) establishing a robust supply chain surveillance system—to not let company off guard from impacts of sudden economic crisis is an accelerated insight or somewhat an early warning device to foresee the impending impact to ensure adequate runway to correct (Kinaxis Corp., 2009, p.5), (3) empowering people to collaborate—thriving in the future will require a greater degree of human involvement and intervention, as what Stephen Haeckel said, “Human skill in recognizing patterns and thinking creatively about unanticipated challenges will continue to mark the difference between successful firms and unsuccessful ones” (Kinaxis Corp., 2009, p.6), and lastly (4) merging supply chain planning and execution—organizations will need to implement a tightly integrated and collaborative sales and operations planning strategy that is well represented by people form sales, marketing, and all supply chain functions (Kinaxis Corp., 2009, p.7). Recessionary times according to Kinaxis Corporation works as a catalyst in conceiving breakthrough innovations. It only proves how dynamically and ever adaptive the human behavior is in terms of changes. Though recessions and such economic turmoil are painful to go through it is never a sign to give up instead it should be taken as a challenge for businesses to go beyond its capabilities and to innovate to adapt to the fast changing environment (Kinaxis Corp, 2009, p.7). In addition, Ernst & Young Corporation (2011, p. 2) on the same context formulated six broad, long-term developments that are shaping the economic world today that are as follows: (1) emerging markets increase their global power, (2) Clean tech becomes a competitive advantage, (3) global banking seeks recovery through transformation, (4) governments enhance ties with the private sector, (5) rapid technology innovation creates a smart, mobile world, and (6) demographic shifts transform the global workforce. According to Ernst & Young Corp. global economies are so tightly interconnected that companies, governments and industries will soon be forced to cooperate in ways we could not have imagined. In fact, Ernst & Young believes the six trends are themselves connected by three underlying drivers that have helped establish each trend and perpetuate it. The Three underlying drivers as described by Ernst & Young are: (1) Demographic shifts-- population growth, increased urbanization, a widening divide and a rapidly growing middle class (Ernst & Young, 2011, p. 2), (2) Reshaped global power structure-- the rise of relationships between the public and private sectors has shifted the balance of global power faster than most could have imagined (Ernst & Young, 2011, p. 2), and (3) disruptive innovation--Innovations in technology continue to have massive effects on business and society (Ernst & Young, 2011, p. 2). Conclusion Currently the economy is eventually growing and coping up but not robustly and there is still notable weakness in the elements of business investment (Watkins, 2011). According to Watkins, the Gross Private Investment still only comprises 79 percent and investment in inventory which was fueling the recovery dropped to a negligible level (Watkins, 2011). On these insights the government must provide ways to stimulate the growth of the economy by actions and policies directed to generating income and investments. One way is to guide still existing and striving companies with the proper ways to cope with the economic dismay discussed in this paper to have better guidance in dealing with business operations. Another way is to fund studies and economic conventions for especially for-profit businesses that would give insights on better business operations and managements. By focusing on these yielding businesses eventual coping will be achieved in a domino effect—more business, more jobs, more income generating activities, less poverty, more provision of education provided, and a more stable economy. References: Cooper J. (2011) Where have all the high-paying jobs gone? The Fiscal Times. Ernst & Young (2011). Tracking global trends: how six key developments are shaping the business world. Ernst & Young Global Limited, pp. 1-28 Jacobsen L. & Mather M. (2010) United States Economic and Social Trends Since 2000. Population Bulletin, 2010, (65)1, p. 1-16. Kinaxis Corp. (2009) Steps to take now to prepare for the recovery: supply chain management strategies to maximize operations performance over the long-term. Kinaxis Corporation. Ottawa, Ontario, Canada. pp. 1-9 Meredith J.R. & Shafer S.M. (2010) Operations Management for MBAs. 4th Ed. John Wiley & Sons. pp. 3-45 Viswanathan N. (2010) Sales and Operations Planning: Strategies for Managing Complexity within Global Supply Chains. Aberdeen Group. Watkins T. (2011) A Statistical Review of Current Economic Conditions in the U.S. San Jose State University Appendix Table 1. Table of unemployment rate since 1980-2010 year Unemployment rate Percentage change 1981 7.617 6.16% 1985 7.192 -4.21% 1990 5.617 6.83% 1995 5.592 -8.33% 2000 3.967 -5.93% 2005 5.083 -8.28% 2010 9.633 3.86% This table shows the rate of unemployment since 1981 till 2010 that shows fluctuation from every 5 years that shows how ever changing the economy is depending on the economic activity. The unemployment rate’s biggest turning point was during 2005 to 2010 as shown in the table having an increase of almost 50% (Source: International Monetary Fund - 2011 World Economic Outlook) Graph 1. This figure shows unemployment rate since 1981 to 2010 presented in a graphical manner for easier visualization of the rate of increase of unemployment and the corresponding percentage rate over the years in every 5 year period % (Source: International Monetary Fund - 2011 World Economic Outlook) Read More