Week 6 Team Part - Essay Example

Larson Inc. has to prepare itself for the future by predicting the different economic outcomes that may occur and its consequences. The decisions made by the managers of corporations affect its economic output. Managers have to be aware of the external forces that can impact the results. The economy is an important subject for managers to study. Three economic outcomes that Larson Corporation may encounter are listed below.Economic growthA decrease in revenuesConstant incomeEach of these three possibilities require different business strategies in order to optimize the business results the enterprise.

Larson Corporation currently operates in two major marketplaces: United States and Germany. Exploiting these markers further can help the company grow. An alternative solution the company may pursue in order to increase its revenues is to expand internationally. The expansion can occur in different ways. The simplest solution that requires the least amount of resources is exporting. The main product the company sales, batteries, are a homogenous product which is needed by everyone around the world.

The world’s population is 6.6 billion. The combined population of America and Germany is 393 million. This data means that Larson Inc. has only been able to penetrate 6% of the marketplace. The firm may experience some economic growth if the domestic economies of Germany and the United States improve. Batteries are needed to power all electrical devices. One of the largest industries in the world is the cellular phone industry. In 2010 there is an estimated 4.7 billion cellular phone users worldwide (Plunkett Research, 2010).

These phones need batteries to be powered up. There are also thousands of other types of products that utilize batteries. The extra money the company generates during an expansion can be used to develop new products or services. A second economic option for Larson Inc. is to encounter a decrease in its revenues. When a country has negative growth domestic product for two consecutive quarters it enters into a recession. During a recession a business such as Larson may experience a decline in its overall sales numbers.

A strategic approach utilized by managers during a recession is to implement cost cutting initiatives. Layoffs in personnel are a short term cost cutting solution that many companies use to decrease its expenses. Investing money in more efficient equipment can lower the cost of producing goods. Typically during bad economic times managers are hesitant to invest money in capital goods. Outsourcing contracts can help companies lower its cost per unit. Workers in countries like China earn less than a tenth of what American workers make.

The third economic alternative for Larson Corporation is the cero growth alternative. During bad economic times maintaining stable income is a preferable outcome than losing money. The majority of companies have negative income growth during a recession. If a company has a constant income the only way for the firm to increase its profitability is by decreasing costs. The use of technology can help companies reduce cost through process improvements. ReferencesPlunkett Research (2010). Wireless, Cellular, and RFID Industry.

Retrieved September 15, 2010 from Plunkett Research database.