Sunflower Incorporated.International Business - Assignment Example

? Sur International Business Economic growth refers to an increase in the size of a country’s national income. It can also be defined as an increase in the amount of goods and services produced by the economy of a country over a given duration (Wessels 4). It is a positive and quantitative change. It is brought about by improvement in production and in most developing countries growth is reflected by the increase in Gross Domestic product. Economic growth is usually measured as the annual percentage change of the Gross Domestic product after inflation has been regulated. To measure economic growth is to quantify the increase in the welfare of a country and derive with numerical accuracy of this large scale economic and social change. The formula for the calculation of economic growth is outlined below as; Economic Growth= Change in income/ Income of the Previous Period? 100 Economic growth is crucial to the national economy well-being of any country and; therefore, requires the government to take the necessary actions to help its citizens to enhance that growth. Many factors that promote strong economic growth are connected to the business framework cycle and efforts directed towards improving the living standards for the consumers. Factors that stimulate economic growth are namely, healthy competition within the market place, innovations in technology, increases in labor supply, and expansion in value and extent of the resources available such as land. Other factors include; science progression and productive knowledge, growth of individual skills and government incentives, the cultivation of new markets in emerging nations, and finally the investment in foreign ventures all are stimulants of a strong economic growth. Central bank is a bank that is owned and operated by the government. It is also a government bank and a banker’s bank. The central bank stimulates strong economic growth by conducting monetary policy that controls the money supply in the economy and hence generates more production and high living standards. The central bank also maintains the stability of exchange rates, ensures equitable distribution of income, stable prices of commodities and high levels of employment as ways of influencing the economic expansion. The government banker also sets the official rates of interest that are utilized to manage inflation so that economic growth can be positive and quantifiable. A trade deficit arises when a country buys or imports more than it sells or exports to other countries. A trade deficit is not necessarily undesirable. It bestows benefits and carries some costs and the benefits may outweigh the costs. Trade deficits are a vehicle for extending the gains from trade, where lending and borrowing among nations can lead to a more saving allocation efficiency, and preferred consumption pattern overtime (Sloman, John & Mark 24). Trade deficits do not necessarily cause slower economic growth or lead to any economy-wide job losses. However, a persistent trade deficit is harmful to the national economy since it may decrease aggregate demand and also reduce the actual Gross Domestic product by diverting manpower and finances from competing ventures like imports and exports where these resources are required most due to their productivity. Another consequence is the high levels of foreign investment into the deficit country. This has the effect of hurting investment locally as local investors prefer to keep assets than invest them due to their favorable nature. A persistent high trade deficit in a country can cause economic hardship in the long run in case of changes in political leadership or the beginning of a war. Persistent trade deficits tend to make countries more exposed to global variations in costs and products. This vulnerability though short-lived can produce risks that are highly unexpected for investors. International financial and monetary activities are becoming more integrated since they bring the countries involved more extensive international financial activity. The integration reduces the currency risk and also the likelihood of a nation to refrain from paying debt due to fear of sanctions from other member countries (Hill 15). This integration also brings financial diversion, which is a, result of decreases in the cost of borrowing from monetary union member countries. The integration also allows countries with a common currency in cases of reduction in the level of currency risk to borrow money from monetary union partners. The currency risk in lending to the monetary union partners is eliminated, and debt is serviced in the union currency. The benefits of the growing integration of financial and monetary activities are opportunities for better risk sharing and diversification, better allocation of capital, smoothing of consumption, greater macroeconomic discipline, deepening of financial markets, increase in the efficiency of the banking systems and of financial utilities systems and finally the exchange of know-how and of the best practices (Griffin, Ricky & Michael 25). The risks of the growing integration of monetary and financial activities is the temporary loss of macroeconomic stability, the volatility of capital flows, the reduction in scope for risk diversification in international markets, the pro-cyclicality of short-term flows and lastly the risk that the entry of foreign agents might significantly alter the division of the domestic market shares. Sunflower incorporation is a big company in distribution with more than 5,000 employees that operate as a bureaucracy, which requires validating its purchasing and pricing practices. The company purchases and distributes snack foods and liquor to retail chains throughout North America. The company owns one corporate office and is divided into twenty-two geographical units. Each unit functions as an independent little business venture, which comprises its own head. Although the company prefers to utilize a small approach in business to expand profits, Sunflower Incorporation is not well furnished to react to external surroundings and market changes, as well as some small companies. This is evident by the company’s inability to stay in the competition. In addition, Sunflower Incorporation is struggling because it has not concentrated on technological advancements. Its primary motive or concern is optimization, increasing profits and standardizing business functions (Hill 58). Ms. Agnes Albanese made numerous mistakes and did not handle the pricing and purchasing decisions properly. The first mistake that she made was making a crucial decision without gathering data. The other mistake was to use standardization processes across the board. She also implemented a change requiring regional managers to inform her office of any change in the competitor pricing which was a huge mistake instead of her office carrying out the research. Ms. Albanese also sent an email out to the district centers notifying them of changes in procedures without constituting a plan. That was a major change that required wide consultations within the company with all the executives in the region before being forwarded to a committee for discussion. The reason why Ms. Albanese is getting no notices is due to the ineffectiveness in implementing the change program that she initiated. Albanese’s proposal though great was not able to attain the required results. This is due to the fact that the proposal required principal alterations to the company’s buying and cost methods and Albanese failed to adopt the right plans for controlling the change management process. Ms. Albanese was unable to retain the change management program for a long duration even after agreeing with it, and her efforts were unnoticed since not a single regional executive bothered to send her the pricing and purchasing report. Ms. Albanese was also not noticed because of the fact that she diagnosed the problem with the company regarding the lack of standards for guiding the organization pricing and purchase decisions yet the regional managers did not want change management. Among the things that Ms. Albanese does wrong is making an important decision without constituting a plan or gathering data, and failing to research information concerning the problems facing the company. Other reasons include the inability to retain the benefits of the change management program for a long period, failure to incorporate organizational development in the change management program and finally the failure to use the right strategies for managing the change process. Works Cited Griffin, Ricky W, and Michael W. Pustay. International Business. Upper Saddle River, NJ: Prentice Hall, 2010. Print. Hill, Charles W. L.. International business: competing in the global marketplace. 5th ed. Boston: McGraw-Hill/Irwin, 2005. Print. Sloman, John, and Mark Sutcliffe. Economics. 5th ed. Harlow, England: Prentice Hall/Financial Times, 2003. Print. Wessels, Walter J.. Economics. 3rd ed. Hauppauge, NY: Barron's, 2000. Print. Read More