StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

Economics of Strategy - Essay Example

Cite this document
Summary
Subprime debacle is an important happening that needs analysis to avoid it in future or to minimize the adverse affects of it on financial companies and organizations. However, the organizations that faced losses in subprime debacle are coming out with fresh investments, as the customers are 'bloodied but not unbowed' according to James C…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER94.3% of users find it useful
Economics of Strategy
Read Text Preview

Extract of sample "Economics of Strategy"

Download file to see previous pages

As the service producing industries in US account for 81 percent of all private sector payrolls, economic growth in the sector can be a boost for the investments in credit. However, as the extent of the credit market impact is not clear, the investments in credit business may result in attracting higher interests for home loan customers or credits being tightened. The overall consumer spending that will be a result of steady gains in jobs and incomes can neutralize the impact of subprime debacle.

However, the tight credit may not affect the household sector also as long as labor markets are strong. As service sector companies are adding new workers, the gains in payrolls are a suggestion for the expanding of the operations that supports the household spending. 1 The economy and profitability of economic organizations depend on the transaction costs. In that aspect, the subprime lending is a good opportunity for economic organizations, but the debacle has led the organizations to face the losses.

The internal structure, working nature and policy of the economic organizations decide the cost and nature of transactions. As a result, transaction cost economics by Coase decides the structure of the organization and working relations between departments in an economic organization. . The afore-mentioned costs depend on the organization of transactions. The efficiency of organization and profitability increases by decreasing the transaction costs and increasing the returns. The first type of costs are the costs coupled with markets that are result of bargaining of independent agents.

However, the afore-mentioned have least affect on sub-prime market as they charge higher interest rates from comparatively lower income class. The significant problem in this market is about risk involved in repayment of the loan advanced to the customers. The afore-mentioned problem arises from the second type of costs that incur due to the decisions of the individuals in the company manage to influence decisions for their personal benefits. Minimizing the afore-mentioned second type of costs is very difficult in any type of economic organization, as opposing the decisions is possible only with managing influence costs within the organization.

In general, there is not much care taken about internal workings of an economic organization. 2However, investing in subprime market on a large scale is a decision of internal working and the extent of investment should depend on the economic growth. Many organizations have invested (advanced loans on lesser security) in subprime market, while in a period when the economy is in recession or not recording remarkable growth. The theory of markets controlled by impersonal forces is useful in managing the influence costs within the management, as the managers, who influence the decision of the firm have to take into consideration the market conditions and probable changes in near future.

The near future mentioned above should be nearer to the time that

...Download file to see next pages Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Economics of Strategy Essay Example | Topics and Well Written Essays - 3500 words”, n.d.)
Economics of Strategy Essay Example | Topics and Well Written Essays - 3500 words. Retrieved from https://studentshare.org/miscellaneous/1515061-economics-of-strategy
(Economics of Strategy Essay Example | Topics and Well Written Essays - 3500 Words)
Economics of Strategy Essay Example | Topics and Well Written Essays - 3500 Words. https://studentshare.org/miscellaneous/1515061-economics-of-strategy.
“Economics of Strategy Essay Example | Topics and Well Written Essays - 3500 Words”, n.d. https://studentshare.org/miscellaneous/1515061-economics-of-strategy.
  • Cited: 0 times

CHECK THESE SAMPLES OF Economics of Strategy

Internet Article Analysis

pplying the economic analysis of strategy to what the article of Auto Industry informs, the added cost of a hybrid compared to a conventional gasoline-powered vehicle makes these cars to follow a premium price,... Managers can make immediate improvements in performance by better matching the firm's strategy to its business environment.... The success of any strategy depends on whether the firm's decisions are compatible with these relationships....
5 Pages (1250 words) Essay

Management of Making Intermediate Goods

Economics of Strategy, (5th ed).... Intermediate products are essential inputs for making finals goods and therefore there are two main factors that necessitate their buying are: in-house production of intermediate goods are not feasible or highly expensive; and transfer price is cost effective....
1 Pages (250 words) Essay

Performance measurement

Economics of Strategy, (5th ed).... Performance management system is a set of strategic objectives as well as metrics of performance that organizations apply in order to gauge the productivity of not only individual workers but also for the entire organization (Besanko, Dranove, Shanley & Schaefer, 2010)....
1 Pages (250 words) Essay

Wal-Mart

Economics of Strategy.... It abandoned the strategy of advertising in the newspapers because Marketing strategy Marketing strategy Wal-Mart is a store that was created with the intention of providing daily household goods that a typical family requires.... It abandoned the strategy of advertising in the newspapers because of the inconsistency involved with it and took to using the television.... Marketing strategy....
2 Pages (500 words) Research Paper

Strategy Memorandum

Economics of Strategy.... One of the suppliers in China has some production issues and unable to supply the strategy Issue C: “The British toy maker Hornby ………strategy to reverse its fortunes.... In the given circumstances, the company needs to take into account the adverse economic environment and formulate a successful corporate strategy to cope with the business complexities (Johnson et al 2011).... Haberberg and Rieple (2008) demonstrate that a well-planned corporate strategy provides means to renew competitive advantage in line with the changing environment....
2 Pages (500 words) Essay

Strategy briefing paper regarding the strategic issue

Economics of Strategy.... The company has lagged behind the other… It is important for the company get back the market share with the perfect strategy implementation and the investments in the research and development of the handset technology.... With the advent of the internet strategy briefing paper regarding the strategic issue 18 November The Board of Directors, Nokia Corporation Analysis ofthe mobile phone industry and the areas of improvement for Nokia in the competitive environment....
2 Pages (500 words) Essay

The Vertical Boundaries of the Firm

Empirical and theoretical research into the new international economics traditions gives focus and emphasis to the different kinds of structures for governance existing between the simple anonymous market structures beside the determinants for boundaries and their respective markets.... Additionally, research into new international economics examines the characteristics exhibited by internal organizations....
4 Pages (1000 words) Essay

Incentives and disincentives to invest in research and development

The purpose of the following essay is to describe supporting factors that improve the productivity of the business environment and discuss the factors of influence of the role of innovation for economic growth, particularly the research and development and its incentives and disincentives.... hellip; Innovative developments constitute the factors that have influenced the rise in people's living standards in the contemporary society....
4 Pages (1000 words) Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us