Global Business Context - Essay Example

Global Business Context INTRODUCTION MACROECONOMICS(Slavin, 1989) deals with the worldwide inflow and outflow of basic goods and services. It is involves many macroeconomic variables like inflation(Samuelson, 1973), increase or decrease in wages, the continuous onslaught of the inflation rates on the basic goods and services as well. Definitely, gross domestic products are a major international economic factor in the government's decision making. The following paragraphs explain how these major macroeconomic variables change over the course of a business life. BODY How do the principal macroeconomic variables change over the course of a business cycle Principal macroeconomic variables(Chrisholm, 1981) and government policy instruments change in response to external factors over the course of a business. And, gross national products exported should be increased in order to fill the export markets' needs. Also, most wages increase when business profits and prices of basic necessities like food, clothing and shelter increase. Furthermore, Increases in foreign currency exchange rates favor the exporter in times of increase but favor the buyer when prices of goods and commodities decrease. Furthermore, inflation increases every year forcing business to increase the prices of its products. The unemployment rate decreases when there is an increase in company profits. Principal macroeconomic variables and government policy instruments change in response to external factors over the course of a business. For example to curve the influx of imported items that will cut a big portion of the local industries' customer base, the government can increase taxes of imports of certain types of imports. To combat inflation, the government can order the banks to release plenty of money into the economy. In order to make the factory workers happy, the state pass a law ordering all companies to increase the basic salary. And, gross national product(Parkin, 1998) exported should be increased in order to fill the export markets' needs. Northern Ireland accounts for 2.3 percent of the United Kingdom Gross Domestic Product with varying its sales volume much. The Gross Domestic Product, the inflation rate and the unemployment rate are the three major, widely cited and watched macroeconomic variables of economic activity. And, gross domestic products will take into account all the production inside a country, independent of who, domestic or foreign, owns the production site. What is important is that the production takes place inside the territorial boundaries of the U.S. Also, most wages increase when business profits and prices of basic necessities like food, clothing and shelter increase. Shifts in labor market that can create unemployment or the reverse which is increased employment in some sectors of industry. Also, a few of these shifts are attributable changes in GDP are caused by changes in aggregate demand or aggregate supply, or both. Additionally, the shifts in public policies affecting labor demand (such as minimum wage, worker safety, and even foreign trade legislation) can create shifts in the unemployment rate. Further, increases in foreign currency exchange rates favor the exporter in times of increase but favor the buyer when prices of goods and commodities decrease. The unemployment rate decreases when there is an increase in company profits. Unemployment rate had decreased to its lowest term from 17.2 percent in 1986. This according to the Northern Ireland Yearbook, 2005. Furthermore, inflation increases every year forcing business to increase the priceof its products. Inflation in an economy can be the result of an increase in aggregate demand that is not accompanied by an increase in aggregate supply. Clearly, this is known as demand-pull inflation. Further, a rise in any component of aggregate demand can produce demand-pull inflation. One reason for a sudden, unanticipated rise in aggregate demand can be an the unexpected rise in the supply of money. For clarity, the increase in prices of goods and commodities in inflation can also result from a lowering in the aggregate supply that occurs when businesses find that production raw materials have risen in price. Therefore, inflation happens when labor costs and the price of raw materials such as crude oil increases. Decreases in productivity (the ratio of GDP to inputs) can also have a negative impact on aggregate supply and, therefore, cause a rise in prices. This type of inflation is known as cost-push inflation. How might governments attempt to control these fluctuations. The government can attempt to control the fluctuations in inflation by increasing the money supply in the market. The increase in the prices of basic goods and commodities results to an increase demand for paper money to pay for the goods. Also the government can make laws that will set a cap to prices of basic goods and services. Although this runs counter to free enterprise, The poor citizens of the state needs government intervention to control an uncontrollable situation. Furthermore, the government can increase the minimum wage of the workers within the United Kingdom or other European Countries. Happily, the increase in the minimum wage will increase the purchasing power of the workers. On the other hand, the increase in the basic salary may force companies that are on the brink of bankruptcy to finally decide to close shop forever. This scenario will result to an increase in the United Kingdom's unemployment ratio. Furthermore, to increase gross domestic products, government can put a cap on the maximum selling prices of industry raw materials. Also, the government can allow tax incentives for industries that are on the brink of bankruptcy. Also, the government can give tax incentives to a sector of export based companies to entice new companies to sprout within the United Kingdom. Lastly, the government can help lessen the effect of currency exchange rates. Although the United Kingdom pound has the highest currency exchange rate, it is still affected by fluctuations in the United Kingdom's pound fluctuation. The currency exchange rate can be improved when the government makes policies that will increase the inflow of United States dollars. This can be a reality when the government sets up a viable business environment for private companies to set up shop to export their products outside the United Kingdom. Exports increase inflows of United States dollars while imports decrease United States dollars. CONCLUSION Principal macroeconomic variables and government policy instruments definitely will change in or to lessen the impact of external factors to the United Kingdom business environment over the course of the United Kingdom business life. And, It is a must to increase gross national product exports in order to fill the export markets' needs. Also, the workers' wages can increase when business profits while the and prices of basic necessities like food, clothing and shelter decrease. Furthermore, It is therefore true that increases in foreign currency exchange rates favor the exporter in times of increase but favor the buyer when prices of goods and commodities decrease. Furthermore, the government must act to decrease the effects of inflation increases that occur every year thereby forcing business to increase the prices of its products. The unemployment rate decreases when there is an increase in company profits. This can be done if the government of the United Kingdom will infuse laws and policies to create a business environment that will be conducive for new export oriented companies to sprout. The government can easily try to control the fluctuations in inflation by increasing the money supply in the market. Further, the increase in the prices of basic goods and commodities will result to an increase demand for paper money to pay for the goods. Also the government can make laws that will set the maximum selling prices of basic goods and services. Although this runs counter to free enterprise, It is therefore true that the poor citizens of the state needs government intervention to control an uncontrollable situation. Finally, the United Kingdom government should increase in certain industries the minimum wage of the workers within the United Kingdom or other European Countries. This will in turn increase the money supply of the workers. The increase in money supply will increase their purchases of basic goods and services. This in turn will keep the business of the companies manufacturing and selling the worker's goods and commodities. The companies will in turn hire more workers to manufacture the increase in the demand for their goods and services. Sadly, the increase in the basic salary may force companies that are on the brink of bankruptcy to finally decide to close shop forever. This scenario will indeed produce an increase in the United Kingdom's unemployment ratio. Furthermore, to effect an increase gross domestic products, government can put a ceiling on the maximum selling prices of industry raw materials. Also, the government can allow tax incentives for industries that are on the brink of bankruptcy. Also, the government should give tax incentives to a few sectors such as export based companies to entice new companies to sprout within the United Kingdom. Lastly, the government should help to lessen the effect of currency exchange rates. Although the United Kingdom pound has the highest currency exchange rate, it is still affected by fluctuations in the United Kingdom's pound fluctuation. The currency exchange rate should be improved when the government makes policies that will increase the inflow of United States dollars. In conclusion, the United Kingdom government should set up a viable business environment for private business and other companies to set up shop to export their products outside the United Kingdom. More new companies will then increase their exports and bring back home to the United Kingdom inflows of United States dollars. REFERENCES: Slavin S., Economics, Irwin, London, 1989 Samuelson, P., Economics, McGraw-Hill, London, 1973 Parkin, M., Microeconomics, Addison Wesley, England, 1998 Chisholm, R., McCarty, M., Principles of Economics, Scott, Foresman & Co., London, 1981 Read More