Modern Business in Comparative Perspective - Literature review Example

Modern Business in Comparative Perspective Introduction Production and operations are two fundamental management functions concerned with controlling, designing and overseeing the production of goods and services in any business organization. The two rely on the type of policies formulated and implemented by both the governments and the internal managements of the organizations. The two functions seek to increase the efficiency and profitability of a commercial organization thereby sustaining the growth of an economy. The cumulative success of the operations of commercial organizations in a country contribute to the growth of the economy a feature that has influenced most governments to formulate friendly management policies in the regulation of various industries. An economy is a self-sustaining system. The financial state of each industry affects the state of the national economy as they contribute to the purchasing power and liquidity of an economy (Kates 65). Developed economies have achieved improved efficiency in their productions and organizational operations owing to the appropriateness of the production and operational policies. Unlike the developing and the undeveloped economies in Africa, the developed countries in Europe and the United States have strong economies and higher purchasing power. Such advancements require effective management in order to perpetuate the growth of the economies a feature that the developing countries cannot attain owing to the myriad challenges they face. Such validate the need for effective, realistic and different policies that as the state of such economies have proven are more efficient than the policies employed by the developing economies (Brent 33). Production and operations as discussed above are essential aspects of a commercial organization. The two are systems comprising of various technological and human behavioral elements that rely on each other in order to realize profitability (Hovenkamp 71). The same applies to the management of an economy, which as discussed above is a system comprising of different elements in the form of industries. Legal factors such as policies affecting the operations and profitability of an industry affects the stability and growth of the entire economy. Systems theory postulates that organizations are systems comprising of several elements often existing in the form of departments including production and operations departments (Saroj and Joseph 33). The success and profitability of the entire organization relies on the efficiency of the each of the departments. The same scenario applies for national economies, which are an accumulation of several industries, each existing alongside the other. The economic advancement in the developed economies depicts the effectiveness of the economic policies such economies formulate and implement. The effectiveness of a production and operational policy relies on the prevailing market factors that affect the growth of an economy (De, George 66). Such economic factors vary from an economy to another owing to the state and internal economic challenges such economies face. In formulating and implementing a policy, most people consider the existing management theories. The theories include systems theory, contingency theory and theory X and theory Y among many others. Each of the above theory is applicable in different circumstances. The economic status of an economy portrays the difference of the economic factors prevailing in such countries thereby validating the need for an appropriate management theory in order to achieve the desired result. Systems theory vies both the economy and an organization as a system comprising of myriad elements that rely on each other for the efficient and seamless operation of the entire system (Rondo and Larry 22). Governments therefore make policies to govern a particular industry while aware of the effects of such policies on other industries and the entire economy by extrapolation. As stated earlier, developed economies formulate different policies owing to their economic priorities, which are different from the priorities in the developing and undeveloped economies. Key among the policies that developed economies formulate includes the regulation of the minimum wage and the need to create more employment opportunities. Such is the approach of systems theory, creating more employment opportunity or by increasing the minimum wage in an economy; the government increases the purchasing power of the populace thereby resulting an economic growth. To create more employment opportunities in a country, the government formulates effective economic policies that attract more investors in the country. An influx of both local and foreign investors in the country will not only create more employment opportunities in the economy but will also earn the country more revenue through different tax regimes thereby facilitating the economic growth (Sims 23). The above example typifies the types of economic policies that developed countries create in their countries. Most of such governments for example reduce the cost of such resources as electricity thereby enticing more investors owing to the resultant lower costs of production. The influx of investors in a country as explained creates more employment opportunities. This differs with the policies that undeveloped countries make. Most of such countries require more revenue a feature that compel the governments to impose punitive taxes even on such resources as electricity that is also never efficient. Such discourage both local and foreign investments a feature that sustains the impoverished sate of the economies. Systems theory provides the policy makers with an exclusive view of the entire economy. This way, the processes of making such policies consider the future of both the companies and the economy. Futuristic approaches in operations and production management cushions the economy from various economic crises that may stagnate the economic growth. The management of every commercial organization tries to safeguard the longevity and progressive growth of the organization. The same is applicable for economies as stakeholders formulate and implement policies that safeguard the growth of an economy. As a company increases in size owing to sustained profitability, it develops new branches and makes new franchises. This results in economic growth as the companies employ more people thereby increasing the country’s gross domestic product and purchasing power. The system theory as a tool of management therefor provides policy makers with an unparalleled view of the features of both the organization and the economies (Kotler and Kevin 33). They observe the relationship of the different features of the two and evaluate the ripple effects of the policies they make on subsequent features of the economy. This ensures that they make realistic policies that safeguard the longevity and growth of both the companies and the economies (Becker 32). Contingency theory is yet another management theory that influences the operations and production in commercial organizations. The theory posits that every situation in the organization requires appropriate management policies owing to the fact that each situation is different from the previous. The theory is realistic and provides an organization with realistic policies that safeguards the present and the future. The current state of affairs affects the future of the organization. The policies implemented in the organization at present must therefore reflect the forecasted future of the organization thereby providing solutions realistic to the current problems facing the organization. The state and patterns of the developed economies depicts effective application of the contingency theory in a bid to improve the state of such economies (Peter 55). Just with any other economy, the developed economies also face myriad challenges and crises including the global financial crisis of 2007. However, the management of such crises in the developed countries differs with the strategies the developing economies use in the management of the strategies in their countries a feature that does not only validate the economic difference but also the perpetuation of the difference between the two economic blocs. Following the effectiveness of the economic policies the developed economies formulate and implement, the economies have accumulated revenue over the years thereby developing strong reserves to cushion the country from the economic crises (Kelliher and Anderson 111). The United States has often had economic crises with some of the great companies in the country nearing their collapse. However, as a contingency strategy the governments offer such companies bailouts thereby cushioning the economy from the collapse of some of the greatest companies in the country. The collapse of such as company as the Fidelity Bank or AON may have severe ripple effects, as more people will lose their jobs. The provision of bailouts is a major contingency policy that has safeguarded both the longevity of the companies and the growth of the economies. This differs with the approach in most of the developing countries. The developing countries lack strong financial reserves. Furthermore, such governments do not enjoy a correlation with the private sector. The governments of the developing economies formulate stringent policies to govern the operations of the private companies most of which they tax in a bid to increase their revenue collection (Fass 44). In case of financial crises, the government simply watches as the companies employ massive job cuts and close down. The economies therefore suffer great setbacks as the gross domestic product plummets and the purchasing power of the populace declines (Price 44). The collapse of a big company in an economy has several ripple effects that result in the spread out of the negative effects to several industries in the economy. The poor priorities in taxation policies and the policies governing the existence and operations of the private sector widen the gap between developed economies and the developing world. The developed economies care for the private sectors who constitute a major percentage of such economies, the developing economies on the other hand neglect their private sectors. In case of a crisis, the developing countries therefore suffer greater loses some resulting in the closure of some of the largest companies in the countries (Greenwood and Richard 44). Theory X and theory Y are two great theories that govern the management of operations and production in any organization. Operations and product rely greatly on the attitudes of the human resource employed in such sectors. The mindset off the employees in organization influences the growth of both the companies and the economy. The two theories therefore major on the management of the human resource who constitute the populace in an economy. The productivity of the populace influences the growth of the economy. Employees in the developed world are more motivated and more productive than the workforce in the developing worlds are. The attitudinal aspect results in the faster pace of economic development in the developed worlds while remaining responsible for the stagnation in the undeveloped economies. In fact, most of the workforces in the developing countries prefer working in the developed world thereby resulting in brain drain a feature that perpetuates the economic stagnation. The analysis below portrays the results of ineffective policies in the governance of an economy (ODonnell 91). Haiti is arguably the poorest economy in the Americas. With two fifth of her entire population relying on subsistence farming, a bigger percentage of the country’s economy remains susceptible to various economic factors such corruption, lack of quality education and various natural calamities among many others. The country has an annual gross domestic product growth of 1.3% with 80% of her population living below the poverty line. Poverty line is an economic management tool deduced by the United Nations to monitor the economies of various nation (Kates 55). The line defines absolute poverty by categorizing everyone that survives on less than a dollar a day as living below the line. An economy is a self-sustaining cycle that requires the effective management of various social and economic factors and sectors in order to achieve a harmonized economic growth as the discussion below, which is an analysis of the Haitian economy, reveals. The Haitian economy experiences a slow economic growth owing to the implications of widespread poverty in the country. The country has low labor costs a feature that affects investment in the country. This arises from the fact that education levels in the country are equally low thus affecting the level of professionalism of the country’s work force. This does not only affect the investment level in the country but also curtails effective management of natural resources. The unemployment rate in Haiti is 40% a feature that further deters the pace of economic growth, as the purchasing power of the population remains low (Losyk 44). Additionally, the country is vulnerable to various natural calamities most of which have claimed millions of lives in the country besides the evident destruction of various resources thus deploring the already poor country. However, Haiti was not naturally poor. Before its independence from the French in 1804, the country was the richest and most productive of all the French’s colonies. The rapid deterioration of the country’s economy to become the modern day world’s poorest nation is a result of the combination of various economic and political factors that resulted in the depletion of the country’s resources. Among the key contributors to the dire economic state of Haiti was her isolation on the international stage soon after her independence. The country suffered lack of international diplomatic recognition by such global economic powerhouses such as the United States and the European countries. The trend stagnated the young country’s economic growth as the isolation discouraged foreign investments thus leaving the country to survive on her natural resources. Without foreign influence, the economy stagnated as the country could not trade with others on the international stage. The other factor that hindered the Haitian economy from taking off was a large debt the early government had to service. The country had to repay France 150 million francs, the debt drained the isolated country most of her capital stock (Fass 44). Furthermore, the country experienced a political anarchy following the dictatorial regime that lasted more than a decade. In the period, preceding the 1980 experienced a dictatorial government that further hindered any productive economic activity in the country. As explained earlier, an economy relies on various features key among which is politics and governance. The government makes all the fundamental economic decision through the formulation and implementation of policies. Haiti has suffered from poor governance and weak political systems characterized by coups. The economy for example still suffers from the coup in 1991. Prior to the coup, the country had begun making international friends had begun participating on the international stage by attracting foreign investors, exporting and importing products to different countries (Greenwood and Richard 121). However, after the coup in 1991, the United States imposed sanctions on Haiti with the view of returning constitutionalism to the country. In retrospect, the state of an economy is a result of the management policies governing the economy. The difference between the developed and the developing economies arise from the difference in the economic policies they make. Effective employment of such theories as systems theory and contingency theory in the productions and operations of companies should sustain the profitability of the organization thereby perpetuating the growth of the economies as typified by the developed economies. Works cited Becker, Gary S. Economic Theory. New Brunswick: Aldine Transaction, 2007. Internet resource. Brent, Kendall. 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