Business Decision Making: Impact of Fiscal and Monetary Policy - Assignment Example

?Sur Business Decision Making? Research Document Submitted to XXXXXXXXX Graduate Faculty of the School of XXXXXXXX in Partial Fulfillment of the Requirements for the Degree of XXXXXXXXXX by XXXXXXXX City, State November, 2013. Table of Contents P2. 2: Impact of fiscal and monetary policy 4 P2: 3 Impact of Apple company competition policy 6 P3: 1 How market structures determines pricing 6 P3: Relationship of Market forces of demand and policy 7 P3: 3 Pest analysis of Wal- Market Supermarket 8 P4. 2 Analyse the impact of global factors on UK Supermarkets 9 P4: 3 Evaluate the impact of three policies of the European Union 10 Task One: Advice for the garden center 11 Task Three: Advice for the shoe retailer 12 Task four: Advice for a company introducing new computer system 12 Appendix 15 P2.2: Impact of fiscal and monetary policy Fiscal and monetary policy narrows down spending and taxes. Basically, reduced taxes on organizations are best for fresh firms. Low taxes would mean that new firms battling to the mainstream can retain most of their profits. Likewise, spending by the government assists fresh firms. The government is able to give out revenue by redistributing it to those new organizations through subsidized loan, grants, or other forms of spending which are driven towards new or small firms. The government may as well spend more funds to form a partnership with a fresh company. Such happens within the local and state government level. For instance, a Supermarket research organization may be awarded federal or state loans and grants in order to start up new stories of supermarket (Lewis 56). Normally there are usually disagreements over the monetary and fiscal policy. Some individuals and organizations assert that the government must redistribute funds from income taxes simply because people will gain in the long run from more establishments of supermarket stores. Some are also arguing that the government ought to redistribute funds from business since these firms are already making lots of profits and it is very essential to have alternative stores departments. From a different perspective, many are not of the idea that the government must be involved. The reasoning is that if establishing a supermarket store is a good business idea, the funds from the government would not be in any need. The sole reason why these funds are required is because the business not efficient enough to maintain itself. So it is like the government is promoting unsuccessful firms while punishing those which have become successful. This is seen as an unsustainable cycle given that the performing organizations struggle as the worst performing ones acquire more funds. Eventually, the best performing firms will die off, only leaving unsustainable firms which would otherwise die off if it were not for this government (Alvarez 39). P2.3: Impact of APPLE company competition policy Apple Inc. is a multinational corporation in America. The company has a strong brand name which makes it to be considered as one of the most successful companies in the world that deals with electronics. According to Porter E. Michael, there are 5 main forces of competition in the computer industry. The following are some of the competitive forces for the Apple Company; the bargaining power of the suppliers, the bargaining power of the consumers, the intensity of the existing rivalry among its competing firms, threat of substitutes, and the threat of new competitors. The 2 most important competition forces for Apple Company include; the bargaining power of the suppliers, and the bargaining power of the consumers. The bargaining power of the suppliers is the ability of the Apple firm to negotiate some good terms which is largely influenced by the firms that it relies on. Apple is known to have good bargaining power among its suppliers since they are in a position to outsource most of their manufacturing. They are also having the capacity to vertically integrate by producing some supplies on their own. This has allowed them to have a higher advantage in the computer industry. To address this issue in the near future, Apple Company should resort to buying these supplies in large quantities so that they exercise a significant leverage among its suppliers. This leverage will enable Apple Company to negotiate favorable and convenient pricing and terms (ONS 112). P 3.1: How market structures such as perfect competition, oligopoly and monopoly in The practice determines the pricing and output decisions of a business. The Oligopoly market structure consists of the few suppliers of a product that one supplier's actions can have a significant impact on prices and on its competitors. Competition is key to how markets operate, fosters innovation, growth and productivity. This in return leads to creation of wealth and reduction of poverty. Competition may sometimes prove to be good or wrong, depending on several variables. Competition among companies may as well benefit or hurt the society. Firms are bound to be in competition with each given that they may be producing the same products which are to be sold to the same set of customers. Competition is a significant element of an economy which is a free-market. To achieve a minimized cost at this level, 3 driving factors such as economies of scale, cheaper cost inputs as well as low operating expenses, are mostly used by the firms. On the other hand, the quest for differentiation motivates the industries to stay on top while using a different approach to marketing. For instance, through designing unique products which are not available in the market through innovation and re-branding, promotion, and advertisement. Firms must therefore work hard to convince its customers to buy quality products as well as services from them at a cheaper cost as compared to its rival competing firm. It is upon the customers to choose the best firm they would wish to buy products or services from. To consumers, competition has proved to be the basis of protection as well as incentive to continue progressing. One of the common characteristic of the oligopolistic market structure is how the firms involved inter-depend on each other. Unlike in a monopolistic market structure, a change in the price or output of one of the firms will directly have an impact on the sales as well as profits in other firms that are deemed to be its competitors. That is why in most instances, oligopolistic firms tend to widely consult its competitors before arriving at its output decisions (World Bank 28). P 3.2: Relationship between the market forces of supply and demand and organizational responses Slower demand growths, lack of product differentiation as well as the international competition have depressed the profitability of most mature industries. As a consequence of this, the firms have segmented their target markets as well as introducing a niche strategy for growing and being efficient. Most firms have considered these factors as crossover as they tend to advance from kinds of production, management of customer relationship, analyzing the attributes and preference of the customers through a relationship that is created with customers Attaining some form of insulation from the regular threat of a price competition, by way of differentiation, is somehow attractive in the mature industries and product standardization is generally accompanied by the enhanced differentiation among complementary services as well as an image. Across a wide range of mature firms, the industry's attempt to shy away from the never-ending price competition involving standard offerings, utilizing a mixture of different variables. Limited opportunities for the establishment of a sustainable competitive advantage in mature industries can be overcome by creating an impulsion for marketing innovation, product design, proper customer service as well as innovation (World Bank 64). When the level of competition is high, most competing firms will be compelled to lower the prices of their products so as to attract more customers as compared to a monopolistic market structure where the prices remain relatively high since there is little or no competition involved. When the market prices are reduced, consumers will gain the purchasing power and hence be in a position to afford several items at lower rates. The economy will in return be improved as a result in lower prices of products and an increased purchasing power of the currency. P3.3: PEST Analysis of Wal-Mart supermarket. PEST analysis is applied when describing the actions that are quite necessary so as to describe both the negative or positive effects of particular elements to a business. The continuously changing political, economic, social and technological forces, PEST, make Wal-Mart to strategically think of long term plans. Politics- the supermarket has been subjected to several lawsuits involving political actions. Such as gender discrimination. Economic- Wal-Mart is likely to be affected when U.S moderates the increment of supermarkets so as to leverage the capital assets in order to expand sales and returns in the U.S stores. Social- most consumers feel comfortable to shop at Wal-Mart since it is a one-stop service. Due to social influence, Wal-Mart is taken as their first choice. Technology- Wal-Mart applies technology in its operations, especially in marketing. It relies on the social media and internet for selling and advertising its products (Fishman 76). Wal-Mart is one of the world’s biggest corporations as they have attained a sustainable competitive edge over some period of time as a result of having adopted a strategy on cost leadership as well as offering products at fair prices. Wal-Mart critics argue that its lowered prices draw customers away from other smaller businesses, which is hurting the community. It is known to spearhead the sustainability on environment by investing heavily in solar power plants, providing products that are environment friendly across its stores as well as promoting the recycling processes of its various products. Wal-Mart has achieved the cost leadership specifically by enticing price sensitive clients and providing reduced price consumer products. These strategies on cost leadership are aiding the Wal-Mart to minimize its operations on cost hence enjoying higher profits including the bigger market share. It employs several techniques such as gaining benefits from the economies of scale that helps them to maintain lower prices as compared to their competitors. This makes Wal-Mart to be in a position to expand its fixed costs across a large number of its units of the products leading to a lowered cost on each unit. P 3:4 Monopoly Is an economic situation where they exist one specific supplier of a particular commodity. In general characteristics, monopoly do lack competition and in this event they tend to dictate business economic policies. A monopoly cannot be distinguished in size but the nature of commodity it sells. However, in the UK economy, the law is observant of existence of monopolies. In an event of monopoly, the government step in through price fixation policies or provide an investment climate that can support oligopolistic competition. Again, there are existence of government-granted monopoly which are also determined as legal monopolies. This government owned firms provide national services that are considered risky or to expensive for an individual company to handle (Kenndy, 12). Government legalized monopolies exist in form of copyright, trademarks or patents. In this discussion, monopolies will be important in analyzing certain price-fixing methodologies across a given market structure. P4.2         Analyse the impact of global factors on UK supermarket organisations. As analyzed in the above discussion it is prudent to draw attention on the fragile nature of UK economy. UK economy is largely controlled by health and nature of external policies. Firstly, this discussion acknowledges the aspect of trade and how UK supermarket organizations are controlled on several accounts by the trend. In a close scenario 2008-2009 recession had significant influence in spending in UK local market. Primarily, the recession constrained spending in the entire world, and to some extend UK supermarket organizations were affected significantly in determining prices for globally affected commodities. The recession; for instance, frustrated leading producers of white, Russia being a close example, banned export of the produce. This bans adapted by many current for fear of future economic upheaval significantly affected local markets on several accounts (Fishman, 56). Subsequently, changes in foreign markets of products encourage local producers to exports their products to those destinations. In this case, UK supermarkets organizations often face scarcity of the product leading to adjustment of policies. A close example of this product is the acute demand of cement in china, which have significantly led to adjustment of local prices due to scarcity. Based on the massive changes of global market due to externalized policies and decision, it is coherent to state that UK local market is fragile and largely affected bt external markets. P4.3         Evaluate the impact of three policies of the European Union on UK business European union is governed by a series of policies which institute required measures and on overall category the measure are vital in improving vital business process. This section seeks to discuss three core policies which alter European business environment. The policies will be based on a broad persepective. Firstly, the climate policy sought clarity on weather environment, and in any case, sought reductions of C02 emissions to significant amounts. Member states tackling industrial activities which are considered belligerent to the environment are advised through this policy. The second imperative policy is Foreign and Security policy. This policy in particular is considerate of important business environment in a political approach. Close friends of this policy is United States of America and Canada, who have been in constant watch of world political threat – terrorism- which is considered a bellicose to business environment. Thirdly, the regional policy is substantial in determining business health of European business in aspects of trade withing European union (World bank, 44). The policy significantly alters bi-lateral and Multi-lateral trades, and general gatt provisions, which in in this case are seen to be affecting the external trade in one way or another. Task One: Advice for the garden center To provide a critical analysis, data should be obtained about customers and how they purchase different products. In this case, the consideration that plants, watering systems, paving and stationery have no demographic barriers is eminent. Primarily, what should be considered while generating data is high costs and business output. Based on this, secondary data will seek information will seek to examine how demographics, in this case how different customers have different purchasing habits. In this advice, focus will be centered on packaging methods. Therefore, the questionnaire will seek to generate information regarding a particular survey methodology. The questionnaire will provide sufficient data what should be done to act on a specific modulus. The panel constructed by the merchants will use the questionnaire to help in advising merchants on the appropriate methods of understanding what different sexes, and age segments desire in specific products. Again, there is close consideration that the questionnaire should apply the comprehensive methodology; in this case, focus will be directed on what prompts individuals to purchase specific products. According to this report, it is eminent that the Garden center is based on departmental store mechanism. Therefore, while formulating survey questionnaire, the bold concept of approach should be applied. Questions will seek to ask the natures of different products, and why a customer visiting Garden center will get a onetime treatment. See sample questionnaire at the appendix Task Three: Advice for a shoe retailer Calculate Price variation and determine the price in 2014 if the price is in 2010 is pounds 8. P2-P1 * 100/P1 P2-(P1 * 100/P1) P2 =8 * 100/8 P2= 10 Price in 2014 will be 10 pounds Task four: Advice for a company introducing a new computer system Hello, following your intention in supplying the above named computer system. It is prudent for you to understand some basic consideration that should be adhered to while considering a purchase. Primarily, there is bureaucratic process that should be considered while initiating a lucid supply strategy. Firstly, the procurement department has specified 28 days as the minimum days required to deliver the computers from the first day of the receipt day. Secondly, it will take a computer supplier 3 full days to process the required computer system. Thirdly, it is necessary to provide purchase details; this will come of proper quotation officially directed to procurement department. Fourthly, training period specified by the procurement department are four days. Fifthly, there is a necessity to explain relevant plant to the procurement department. Sixthly, it is necessary to specify a duty Rota that should be produced for a staff training program. Seven, details of items supplied will be entered into the system, and this will take a total of 21 days. Eighthly, six days are specified for installation of electrical sockets and network access points. Ninthly, it will take a full day for installation of encryption software and other security systems. Finally, the follow-up program will take a full two days to ensure that everything is specified. Tenderer, you are requested to adhere to this requirements and timetable, failure to do so will warrant an automatic dismissal of the bid. Works Cited Alvarez, Paul. Implementing Competition Related Provisions in Regional Trade Agreements: is it possible to obtain development gains? New York and Geneva: United Nations, 2007. Print. Fishman, Charles. The Wal-Mart Effect: How the World's Most Powerful Company Really Works—and How It's Transforming the American Economy. St Martin's Press: New York, 2006. Print. Kennedy, Rod. Monopoly: The Story Behind the World's Best-Selling Game. New York: Gibbs Smith, 2004. Print. Lewis, Wright. The Power of Productivity. University of Chicago Press, 2004. Print. Office of National Statistics. The ONS Productivity Handbook, Basingstoke: Palgrave Macmillan, 2007. Print. World Bank. Global Economic Prospects 2003. Washington: World Bank, 2003. Appendix Sample Questionnaire QNS 3) How did you come to learn about Garden centers ……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………… QNS 2) which seasons do you like visiting Garden Center? A) Autumn B) Spring C) Winter D) Summer QNS 3) As a customer, do you consider garden center products comprehensive to meet you passion For plants……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………… QNS 4) Do you prefer coming to Garden as the best alternative compared to going to other centers ……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………… QNS 5) Do you consider garden center business approach, in this case, a departmental store, an appropriate business strategy ……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………… The survey methodology to apply here is use of probability samples. This will ensure developing of data in a sampled way. Firstly, focus will be directed to use coverage of the target population, costs, flexibility and respondents. Read More