2) Economic Growth
Cycle Phase: Features:
Peak or Boom *Low Unemployment
*High consumer expenditure, investment and export earnings
*Good cash flow for businesses
*Higher levels of profits
Recession *Rising Unemployment
*Declining total demand
*Lower Investment expenditure
*Falling export sales
Slump or Trough *High Unemployment
*Very low consumer spending, Investment and export earnings
*Poor cash flow for businesses
*Poor liquidity (not enough money to run business on daily basis)
Recovery or
Expansion *Occurs when GDP starts to rise (after slump)
*National income increases
*Gradual increase in consumption, investment, exports and employment
3) Four ways businesses cope with a recession
1. Cost Reduction:
-cutting energy and lighting bills
-alternative suppliers with cheaper prices
-cheaper premises to help improve cash flow
-cutting staff if necessary
2. Price Reductions:
-To increase and sustain sales
-Public are more careful with spending therefore lower prices are favorable
3. Non-Pricing Strategies:
-Re-packaging
-Special offers
-Exceptional after-sales care for customers
4. Branding:
-Customer loyalty to a brand helps maintain sales during economic instabilities
-When exchange rates aren’t favorable, price elasticity of demands for exports remains high therefore isn’t affected
5. Outsourcing:
-Competitive price advantage if produced overseas therefore increasing profits
4) Growth through improved quality of factors of production occurs when businesses invest in key resources of the economy:
Capital goods – greater investments lead to greater economic activity which in turn attracts more business in the future.
Education & Training – of workforce increases productivity and competitiveness worldwide.
Health Technology – improved health care promotes a healthier workforce, minimizing absences and increasing overall productivity.
5) Ways in which labour force of a country can change:
Changes in demography – lower birth rate as well as earlier retirement rate creates smaller workforce and vice versa.
Changes in participation rates – measures self-employed versus employed, government incentives can promote higher participation rates by, for example, lowering income tax. Women returning to or starting work has also led to higher participation rates.
Changes in net migration – measures immigration (those entering a country for work purposes) against emigration (those leaving a country for work opportunities). A larger workforce helps raise productivity of economy.
6) Barriers to growth in LEDC’s:
-Lack of good infrastructure in both communications and transport systems
-Lack of skilled labour force as well as technical knowledge
-Rapid population growth leads to lack in resources to feed the larger communities
-Indebted poor countries are required to pay back these huge loans, leaving little money for investment and growth
Saturday, January 2, 2010
Skoda Auto Case Study
a.The two internal stakeholder groups suggested in the case Skoda Auto case study include the employees as they are the ones who were dissatisfied and went on strike which in turn affected the profit to the shareholders of the public limited company.
b.Considering that this is a multinational business, one of Skoda Auto’s stakeholder conflicts was that the Czech government hadn’t seemed to be regulating the unfair business practices such as the Czech Company’s adherence to employment legislation. Having felt neglected their full benefits and pay, the Czech employees resorted to a workers strike at an attempt to raise awareness of their dissatisfaction.
c.To minimize such a conflict, managers and directors of Skoda Auto could establish means beyond the government of each country where they are stationed to regulate unfair business practices. This would in turn decrease their reliance on the governments in influencing their profits. This may be costly but when it comes to larger businesses the managers and directors must avoid dilution of control considering the scale of the business (as is shown in this case study Skoda Auto lost a staggering $2.9 million per day alone). Yet if the business was much smaller, say on a national level, it would seem ridiculous to invest money into regulating unfair business practices as this is an aspect regulated by the government already. However, when the business runs on such a scale that there could be repercussions on the economy, further measures must be taken to ensure the fairness and equality upheld by the organizations in all companies worldwide.
b.Considering that this is a multinational business, one of Skoda Auto’s stakeholder conflicts was that the Czech government hadn’t seemed to be regulating the unfair business practices such as the Czech Company’s adherence to employment legislation. Having felt neglected their full benefits and pay, the Czech employees resorted to a workers strike at an attempt to raise awareness of their dissatisfaction.
c.To minimize such a conflict, managers and directors of Skoda Auto could establish means beyond the government of each country where they are stationed to regulate unfair business practices. This would in turn decrease their reliance on the governments in influencing their profits. This may be costly but when it comes to larger businesses the managers and directors must avoid dilution of control considering the scale of the business (as is shown in this case study Skoda Auto lost a staggering $2.9 million per day alone). Yet if the business was much smaller, say on a national level, it would seem ridiculous to invest money into regulating unfair business practices as this is an aspect regulated by the government already. However, when the business runs on such a scale that there could be repercussions on the economy, further measures must be taken to ensure the fairness and equality upheld by the organizations in all companies worldwide.
Subscribe to:
Posts (Atom)