Holden Subsidies and Economic Theories - Essay Example

Holden Subsidy Name Institution Date Holden Media Report The man issue presented in the case is the sustainability of a business in the economic business field. This context displays the economic theories that can be applicable in business especially in the Holden subsidy case study. The government reached a point to make the decision of whether to increase tax payments support to companies that were struggling or to reduce the tax support by 50M in order to accommodate the industries. The industry at this moment faced an insecure status, which was shaky and unstable. According to Smith (2013, pg 1), the Australian government automotive intervention in the manufacturing industry became a major national decision that the government had to make in relation to the country’s economic status. The government was looking at a long-term sustainable solution for the country’s international trade automotive environment exportation. Holden therefore, became concerned about the assistance that the Australian government was supposed to give forth. In this regard, the company made it intentions clear in its attempt to leave the manufacturing operations. The government had made intentions to support Holden with an extra $275 million on top of more than $2billion to sustain Holden through to the year 2022. In and out of blameful shift off between the government and the automotive industries, Holden found its way to shutting down considering a great failure from the government and the political sector of the same government. In this, many workers suffered unemployment as the companies resources wasted away. The economic theories There are many economic theories that can be applicable in this scenario in relation to the mode of operation in the external and internal sector of the industry. A number of theories can be used in companies, industries and corporations in running of business sector. The common among the theories are the Consumerism theory, Keynesianism theory, Liberalism theory, Malthusianism theory, and Monetarism theory (Smith, 2013, p.1). A monetary economic theory This theory is one that has unemployment variation and the supply of money cause a shift in the mode of inflation rates in the business according to (Smith, 2013, pg 1). This is so evident in the Holden automotive industry when there was a variation of employment when the government denied the industry extra monetary support that they had requested f or. Malthusianism theory Another theory is the Malthusianism theory. This is the theory that is based on the effect of population. Therefore, this theory features the fact that subsistence can be out spaced by the increase of population. The population rate in this case can be a measurable factor for production and consumption through which the industry can develop or decline. The liberalism theory On the other hand is an economic theory that allows competition and self-regulation in the market field in reference to (Smith, 2013, pg 1). It is a mayor fact that where the completion is high then the economic standards are also highly placed in the economic la growth of both industries and the country at large. A company or operating under such an economic theory is highly liable to emerge at the top of its competitors since standards of operation and services are highly placed in a unique way. In many cases, the market rate of competition keeps the business rate of operation at the level, which is desirable and acceptable. Many industries use this theory to keep up their labels at the top in the market. This is done through the production and manufacturing of unique good that a standard above the average market standard that is expected of. Holden experienced this theory after it subsided in the due to the monetary experienced. The Keynesianism theory The Keynesianism is a theory named after John Maynard Keynes. It was a theory based on the advocacy of government funds and economic programs intended to stimulate commercial activities and increase employment. It is a theory that relies on the leader and the board members of a particular business in connection with the government sector and commissions created to manage national business affairs. Holden experiences this theory when the government refused to grant them the monetary request that they made in support of the industry to the year 2022. The theory features the economic status of the business sector in a country through an analysis of the ongoing business economical programs and the rate of standards of operation in an entire country. The consumerism theory This theory displays the economical benefit through an increase in the consumption of goods. Where the market sales are high and the demand is large then the economical standards of any business sector rises. The rate of product or goods consumption determines the economic status of the business. The production rate of Holden decrease due to the financial standards, the company, community and the entire business sector faced a significant problem (Smith, 2013, pg 1), states. In this case, study the highlighted theory is the monetary theory that dominated through to subsidies Holden industry. The monetary theory emerged from the industries and government financial support that was not adequate to sustain them through the required anticipated period. The financial management of this company must always be at an above average point of view to avoid consistent collapsing of industries and companies. The monetary element of this theory stretches to the values that every currency holds in connection to international and national businesses in Australia. However, the value of monetary indifference can be an instrument that is very key in creating competition among manufactures in the international and national business market. Evident Issues The government was right in its view that they could not grant Holden their monetary request in favor of other industries. This is evident to the fact at that rate of operation then the government is likely to undergo through a financial crisis. Moreover, another evident issue is the fact that, the law must be applicable in every circumstance that business operation. In this case, the law was applicable when the company run out off and applied for financial aid from the government. It is evident that the government boards and commission have rules and their regulation in order in term of offering help for any organization. This applied where the funds that Holden require were too much for the government to hand over and through the request denied to Holden and other industries that made such request. It is evident that the industry did not have a backup plan in case the government strategy did not work in its tax payment scheme plan. The monetary value of Australia and other countries who are major competitors in the car manufacturing business is questionable. GM Holden Lt should have checked out car subsiding and eliminated in its business plans due the money value money difference that is significant. It is evident that, weak manufacturer leave the market because of the competitive factor the other manufacturers bring forth. This act of evacuating the market field leaves the strong manufacturing companies to operate at a good and available market in due respect of creating a better company portfolio. This is because the market and consumers are the same but the industries and manufacturers are multiple in numbers. GM Holders Ltd subsidies and created a great market place for other manufacturer that are still in the course of business. The government is partly liable for the industries event of subsiding. The Australian government should have been more open in its decision to create an amicable decision with the manufacturing company. Suggested proposal It is recommended that the industry should have review the hypothesis testing after the government monetary deal went sour. The industry could have borrowed money from potential shareholders and other sources to sustain the industry to the intended period that was in their plan. Other theories like generalization and deduction theory could have been useful in such circumstances according to (Mukherjee, 2002, p.229). In some cases a commission of enquiry should have been created to handle the manufacturing cases of complain and assist the industries in making decisions that do not affect the economy of the country at large. Although the financial status of any global business either national or international should be managed by very intellectual which can figure alternative ways out of crisis experienced. Conclusion In conclusion, among many theories the major one that seems to be a normal obstacle is the monetarism theories which not only affects the industry but it extends its impact to the market, stakeholders, employees, and consumers. Holden is one of the exemplary industries that declined because of failure of some of the economical theories utilized in the automotive industrial business. Although other theories may be very evident in this case study, the monetary theory seems to take an upper hand. However, it is the duty of the industries management to sustain the industry through all circumstances. A good management company will always try keep the business at a stand if wore does not come to worst. Reference Smith R., C., (2013). Critical Review of the History of Economic Thought and the Present Need for an Alternative Retrieved December 7, 2014 from http://www.heathwoodpress.com/critical-review-of-the-history-of-economic-ideology- and-the-present-need-for-an-alternative/ Mukherjee. S,. (2002). Modern Economic Theory. New York. New Age International, Read More