The Economic Depression - Research Paper Example

Assignment Introduction As some economists theorized, the symptoms of the Great Depression appear to have taken in another form in the recent economic onslaught (Cox, 2010). This interesting notion is sufficient to saying that what happened before and after the 1930s depression will likely happen to today’s economic downturn though not necessarily through the exact events. It will merely have the same effects on the businesses and more importantly, on the people’s lifestyles. Though there were other several reasons which contributed to the eventual rise of the Great Depression, it was said that the stock market crash in 1920s catalyzed it (Hwa, 2008). Generally, the failure of policymakers and the feeble financial system initiated the depression. However some economists believed with Keynes’ principle in explaining the “real cause” of the Great Depression -- capitalism (Rothbard, 2000). While capitalism may be to be blamed for the economic turmoil in the 1930s, the absence of enough evidence of the existence of capitalism in the modern economy absolves laissez-faire as the reason behind today’s persistent recession (Paul, 2002). Theoretical setting If the today’s economy is indeed depressed, large corporations and small firms will be the first entities to crunch. With the decline of market stocks, investors would likely resell shares or worse, discontinue investments on any business undertaking. Businessmen will depend on government funding to shore up businesses. However when companies can no longer allot for debt servicing, they may undergo bankruptcy. Besides, easy money is not a guarantee since banks are also not recession-proof (Ewing, 2010). The weakening of the financial system would compromise productivity, and largely, labor force planning hence a massive unemployment. High rates of unemployment would result to decrease in demand as those who lost their jobs will cut costs of living. Furthermore, unemployment would result to homelessness, hunger, and/or other psychological and physical problems. Coming out of depression To come out of the economic depression, companies should not rely greatly on debt. Aside from the fact that seeking aid from financial services likely incurs bad debt, it eliminates the susceptibility of banks during crises which is not the case. This would also increase independence as they will have to write off toxic assets and make better use of other assets (Ewing, 2010). Banks can no longer depend on low interest rates since this will only increase the dependence of corporations on them. Also, companies should not always resort to a massive reduction of employees because this will only start the cycle of depression. Perhaps, the most important approach to come out from an economic depression is an effective debt servicing. If national debts go unattended, this will only induce tax raises which will be adding salt to injury. Implications of the WW II There is an implicit notion that the Great Depression sparked the World War II. This may go to show that war is a big business, “a necessary evil” which did not only depopulate the world but also moved the worldwide economy especially the economy of the United States which during that time funded Germany (before the rise of the fascism of Adolf Hitler) throughout the depression (“Effects of the,” n.d.). Interestingly, the depression seemed to end after the World War because there was a massive increase of demand of commodities (food, medical equipments, war armories, etc.). Conclusion If today’s recession will continue to birth depression, it may fuel a third World War -- which will never be a favorable case to the human race. So, people should not merely consider the Great Depression as part of the history books. They should learn from it. Otherwise the future of the economy and governance will be what history tells them to be. References Cox, J. (2010, Aug. 24). Economy caught in depression, not recession: Rosenberg. CNBC. Retrieved from http://www.cnbc.com/id/38831550 Effects of the great depression. (n.d.). Retrieved from http://www.buzzle.com/articles/effects-of-the-great-depression.html Ewing, J. (2010, June 28). Report warns that many banks still vulnerable to crises. New York Times. Retrieved from http://www.nytimes.com/2010/06/29/business/global/29bis.html Hwa, O. (2008, Oct. 22). Great Depression versus now. The Star Online. Retrieved from http://biz.thestar.com.my/news/story.asp?file=/2008/10/22/business/2335258&sec= business Paul, R. (2002, July 9). Has capitalism failed? Retrieved from http://www.lewrockwell.com/paul/paul42.html Rothbard, M. (2000). America’s great depression. Retrieved from http://www.hacer.org/pdf/Roth4.pdf Assignment 2 Rationale Pets are family. When animals become companions, they offer a different kind of love and affection that keeps humans active and alive. Even with the surge of the stringent economic times, pet owners still spend for the comfort of their pets. In fact, according to 2009 - 2010 US national survey, there are 71.4 million households adopting pets -- approximately consuming the 62 percent of the statistical chart (“Industry Statistics,” n.d.). Therefore, pet retailing would be a good business idea. The $500,000 initial investment should be enough to start up a diverse pet boutique that accommodates pets, pet supplies, pet services and other significant pet care products (i.e. pet books) for dogs, cats, birds, and fishes because the four species rank highest among the top owned pets (“Industry Statistics,” n.d.). As a response to ethical issues concerning pet retailing, the pets that will be sold are only active breeds and not endangered. Selling active breeds reduces overpopulation in animal shelters. Likewise, it will also be important that suppliers must be government-licensed. Identifiable fixed costs A clean and healthy-looking store should get the business going. It would be practical to canvass for a strategically-located retail space and then, decorate it appropriately. With regard to the current market prices, the budget allocated for the retail space rent for a year, contract signing, furniture, equipment, and fixtures expenses excluding maintenance is approximately $35,000. The boutique would also have to include an online shop. With the surge of e-commerce, it is but fitting to come up with a viral marketing plan for any retail business. What will only be sold online however are pet products and supplies and not the animals themselves because transportation could be harmful to the animals. Online marketing would cost around $1,000 -$ 1,500 for creating and sustaining a website for a year. Perhaps the most important cost to be identified would be the medical attention needed by the animals. It will be on a regular basis and especially on cases of dire needs (e.g. illnesses, or other fatal conditions). A conservative budget allotted for medical attention (which also includes critical situations) for each animal for a year is $250 - $750. Breaking even after a year With references to most online pet retailers, the prices of all the pets haggle around $50 to $10,000 bracket range. Pricing would importantly depend on breed. Moreover, because of the relatively high power of suppliers (animal shelter and pet selling hosting sites), prices of all pet animal species will range from $25 - $5,000. Because the store may not profit mainly from selling animals, it can profit greatly from the pet supplies and services. Pet services are starting to dominate the pet industry (“Pet Business Retail,” n.d.). Labor planning and costs would be included. From all the goods and services sold, the store should approximately gross at most $2,000 a day to at least break-even after a year. Besides, based on a 2008 report, pet store owners which responded to a 2005-2006 survey had an average profit of $600,00 (“Pet Business Retail,” n.d). Projected ROI within 3 years Market conditions could affect the return on investment. Based from the data mentioned above and taking full consideration to future economic situations, the return on investment would be about 18 to 20 percent after a year. For the next three years, it may be lesser because of the recurrent recession. The only assurance remains on the recent statistics gathered. Pet retailers profess that their businesses are still significantly profitable. Some may experienced a decrease in profit, yet still, profits remained sufficiently stable to sustain the business (“Pet Business Retail,” n.d). References Industry statistics and trends. (n.d.). Retrieved from http://www.americanpetproducts.org/press_industrytrends.asp Pet business retail statistics. (n.d.). Retrieved from http://www.pet-business-opportunity.com/pet-business-retail-statistics.html Assignment 3 The article “The 50 Most Innovative Companies” implies that the Asian and European companies are slowly replacing US corporations in the international “agora” (Arndt, et. al., 2010). Asian companies which consist 30 percent of the list, rested on innovation to master the global commerce while US companies only consider innovation as componential to their overall business and marketing strategies. Resourcefulness has fuelled the immense innovative power of eastern corporations. That is why US corporations should feel threatened by the stability posed by Asian corporations specifically from China, South Korea, Japan and for the first time, Taiwan. The consumer electronics and automotive industries are getting the strong grip in the global economy and wherein western corporations are evidently losing to eastern companies. Ford Motor is now behind Toyota Motor and China’s BYD -- totally kicking General Motors (which was one of the “Big Three”) and Daimler Chrysler out of the picture. South Korea’s LG Electronics which used to take the 85th spot in the 2006 survey now rooted on the 7th spot. Taiwan’s HTC is also following suit while 3M which used to be among the top ten in the 2006 survey, is however dethroned. Comparing the 2006 survey with the 2010 survey, it can drawn that US Corporations were greatly caught off guard by the inception of the recession in 2007. The worst case was that some of them didn’t prove resilient enough to thrive during the recurring recession that followed. Asian and European firms were also affected but not the same way with the US corporations. Empirically, the latter two either have taken advantage of the American recession or were wise enough to employ tools such as innovativeness and affordability for stringent economic times. For US corporations, innovating may have been a daunting task. Lest they might eventually crumble together with the economy, US corporations lost face and confidence in the international market. Probably torn between economy and ingenuity, US business leader may have forgotten that innovation is the idea of competition (Mammone, 2009). In effort to survive in the economic recession, they tend to cut costs which apparently affected productivity. Consequently, they were compelled to produce the same products and services with the same utilities for longer periods or be, in a word, incumbent. Some were successful but most of them were not. Innovation is also a communication process. More so, it is a way to gather intelligence information from competitors and target markets to meet current market demands (Mammone, 2009). Without high-quality research, businesses may only lag behind. It is never too late for US corporations. In fact they only have to choose between options that may be suitable for the organization. Like Apple and Google, some companies have the choice to differentiate their products especially if the competitors are also diversifying theirs. This approach would be suitable for General Electric. Another option would be to find another market niche for the current core brands. Take the case of Ford Motor. Ford is taking an opposite approach from that of Apple and Google yet it still dominated the American automotive industry. Ford Motor had been consistently adding value to its core brands (i.e. Lincoln). This approach might be appropriate for 3M because of its elaborate diversification. It appears that a majority of US corporations became preoccupied with repairing what had gone wrong within their organizations while forgetting the existence of other international players. In the first place, they fell short in foreseeing the potency of these players. Applying an entrepreneurial principle would be a double-edged approach to the existing problem. When innovating is the strategy employed by most competitors, then taking risks may be the only way too for US corporations to survive in the market for incumbents may not be emerged victorious against innovators during economic turmoil. References Arndt, M., & Einhorn, B. (2010, April 15). The 50 most innovative companies. Bloomsberg Business Week. Retrieved from http://www.businessweek.com/magazine/content/10_17/b4175034779697.htm Mammone, R. (2009, Dec. 29). Innovation is a better way to compete. Bloomsberg Business Week. Retrieved from http://www.businessweek.com/smallbiz/content/dec2009/sb20091229_621416.htm Read More