StudentShare solutions
Triangle menu

Economics of Strategy - Essay Example

Not dowloaded yet

Extract of sample
Economics of Strategy

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. 2
However, 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 ...Show more

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…
Author : waelchireva
Economics of Strategy essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Economics of Strategy"
with a personal 20% discount.
Grab the best paper

Related Essays

Economics
As such, economic analysis relates to the study of economic systems in an industry to ascertain the effectiveness of the operations of a given industry with reference to its profitability1. With this, we are able to establish the optimum use of the limited resources to achieve a given economic objective.
6 pages (1500 words) Essay
Business & Economics of Strategy
This paper tries to analyse the automobile industry with related theories and actual observation in its ongoing business trend. The proponent tries to generally make use of PEST analysis, and industry analysis. Part I. Analysis of the macro-environment Political Analysis The Automobile Industry is a promising business sector in the world.
9 pages (2250 words) Essay
Economics
The essay emphasizes in the role undertaken by government and monetary authorities in the economy to maximize social welfare. It also throws light on the recent strategic tools of business adopted by the entrepreneurs in the market. Part I Keynesian Theory John Maynard Keynes was a British economist, his theories and ideas have fundamentally influenced modern macroeconomics.
14 pages (3500 words) Essay
Economics
Through the use of marketing techniques, Starbucks is able to capture the upscale market and sell a cup of coffee for a high price of $2 or more. Marketing has been an important tool for the business organization as it mainly
3 pages (750 words) Essay
Micro/Macro Economics...of Strategy
A firm would ultimately resort to lower price levels as the competition gets heated up and when the rivalry amongst competitors is of immense importance for the overall
2 pages (500 words) Essay
Economics
nificance of environmental factors on corporate strategy along with developing a special set of skills by leaders and managers to align corporate strategy with the competitive pressures of the time (www.economist.com). This paper investigates the influence these environmental
10 pages (2500 words) Essay
Economics
Macroeconomics is the study of the conduct of the aggregate economy. Macroeconomics scrutinizes various economic issues including unemployment, economic growth,
4 pages (1000 words) Essay
Strategy
The retailers are losing confidence in the company for the fear that whether their orders will be fulfilled in time. One of the suppliers in China has some production issues and unable to supply the
2 pages (500 words) Essay
Strategy briefing paper regarding the strategic issue
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
2 pages (500 words) Essay
Exit strategy in monetary economics
The model is a primary tool in the contemporary macroeconomics. Fundamentally, the DSGE model tends to stress the dependence of today’s choices on the anticipated and uncertain outcomes in the future. The dependence is a major attribute of
3 pages (750 words) Essay
Get a custom paper written
by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT
Comments (0)
Rate this paper:
Thank you! Your comment has been sent and will be posted after moderation