The History Of Macroeconomics And Microeconomics

Published Date: 02 Nov 2017

Factors That May Influence The Plant’s Operations And Legal Considerations

Just to name a few of the economic factors which may have an influence are taxes, which. interest rates and the dreaded unemployment factor. Let’s begin with taxes, because we all have to pay them, (which is not an option), and are a factor that involves the financial well-being of an organization by carving into their earnings or by offering certain incentives in the form of tax breaks for certain kinds of organizational actions, but state and local authorities with higher taxes warn against business activities by elevating operating costs, and making organizational business less fruitful. Elevated employment taxes can deter any organization from taking on any new employees, but certain tax incentives for things such as investing in various business based activities can make an organization more likely to purchase items needed for successful ventures. Next let’s look at interest rates, an organizations interest rates have a great influence on their total cost of borrowing any type of money, because it costs a lot more to borrow at a higher interest rate than at a lower one, and at one time or another, all businesses or organizations will have to borrow money at some point in time. It is a fact that most organizations borrow money in order to expand or pay for their day-to-day business actions, extremely elevated interest rates will only slow the growth of the organization, but if they have a low interest rate, they will be increasing the risk of inflation because then capital will become so easily available that it won’t be worth as much, so which would better for the organization in the long-run, and as stated by Cho and Shin (2012) "the decline in home prices has limited borrowing by small businesses, because small business owners typically use home equity to help finance their borrowing, which in turn has limited the ability of small businesses to expand and hire new workers (Schweitzer & Shane, 2010) (p.164). We will now look at the all-time dreaded factor, unemployment. Unemployment is a factor that affects all organizational activity, on a day-to-day basis, because it determines the amount of nonrefundable monies that patrons have available, and also affect wage scales. Because unemployed people survive on a less than a full income, they spend less than those who are employed spend. Anytime there is a very high unemployment rate, it puts a damper on the day-to-day business activity which takes place by cutting into customers spending habits. Plus, higher unemployment rates produce market conditions whereas the provision of labor cost is far greater than that of the demand for the type of business being sought out, causing the organization in itself to have to pay their employees lower wages. Oh, and I totally left out technology is another very important factor, which can affect any business or organization especially today. In society today, technology is everything, and can have a great effect on the fact of if your business or organization is a success or a total failure. Having the latest technology is a must for any organization competing in the world of business today because it has simply taken over, computers, smart-phones, hand-held devices for scanning credit cards are simply a must for all businesses and organizations. Even the smaller "mom & pop" businesses are now doing all their business transactions’ on a computer, and if any businessman or woman thinks the computer is too hard, just try running a business without one today, and as stated by Pick and Rasool (2011) "do countries that have higher levels of business and technology investment have higher levels of government support, legal framework, and social openness" (p.57). Whether you call yourself shrewd or not, everyone in business needs to stay on the everyday modification in the business world, in order to compete and keep moving up and forward, instead of trying to catch up and adapt later. Utilizing and being familiar with all the latest crucial everyday technologies will step-up the economic reward of any organization competing in the world of business today, it is a must, and will surely improve an organizations speed, efficiency, distribution and customer service.

Other Factors Which May Influence Operations And Legal Considerations

As far as regulations are concerned, state, local and federal regulations determine how easily or not a business can take advantage of economic chances and adjust to the everyday changing economic situations. These standards affect the power of smaller businesses to create jobs and taxable income. Also, having effective bankruptcy laws already in place can be easily utilized by organizations who find themselves in trouble. Supply and demand is another factor to look at, because when demand for a product or service which an organization goes down, so does that organizations’ growth for that specific time period involved. This in itself usually results in added pricing pressures and sometimes even lost customers. The profitableness of any organization relies on consume spending, which is always shown by the spending habits associated with the products and services being offered by that particular organization. Some of the topics discussed above such as unemployment and high interest rates play a key part in the ways consumers are able to spend their monies. Interest rates, Inflation and the Foreign exchange rate can also have a big impact on businesses and organizations worldwide. Interest rates are known to fluctuate, and can have a large impact on the way, and the things we purchase every day, because when interest rates are sky high, we are simply more cautious in the way we choose to spend money, so therefore most of us shy away from larger purchases such as cars or new homes because we simply do not want to borrow the needed monies, and even those who do have what is called, adjustable mortgages aren’t really any better off, because they still are not safe and can still face financial hardships and also still lose their homes. As far as inflation is concerned, the higher the inflation, the higher the prices, so we are still hesitant to do too much spending, especially when it comes to the higher priced items, because inflation simply decreases the value of the dollar. Our foreign exchange rate and how the note value of currency shows in the international market. In the U S, when the value of the dollar is at its’ heights in comparison to other nations’ monies, we are then able to import more of their goods and services, and as stated by Al Batainah (2012) "the rise of major regional trade, financial and industrial blocks has resulted in new regional economic powers with more competitive and negotiation forces and powers including the power to impose their own conditions" (p.1340). But still in all, the higher value of the dollar means that all the other countries may be a lot less motivated to import products from the United States because of that fact, so where does that really leave us, seems like you really can’t win for loosing.

Macroeconomics and Microeconomics

Microeconomics is in general the study of individual and business decisions, while macroeconomics looks at the higher up commonwealth and governmental decisions. Would you say that culture has anything to do with, or even plays a part these studies, I would have to answer yes, because as stated by Esteban-Guitart (2012) "culture is political in the sense that it is governed by particular interest groups and it benefits the well-being of those interest groups" (p.255). And since individuals and business owners are not all the same, or from the same exact culture, we must also bring that into consideration. In the world today, both macro and microenomics studies are vast with a broad range of fundamental ideas on the subjects. When looking at any business or organization, especially today, macro and microenomics play a key role in looking at how they go about making decisions, and they look at the economy as a whole. Microenomics simply study and look closely at all decisions made by people, businesses and organizations involving distribution of supplies and the total price of all goods and services they do or may be providing, including all taxes and regulations which all are to be followed. Microenomics also try to get a clear focus of the way businesses and organizations handle supply and demand, and how price levels are set. When looking at Macroeconomics, it is simply the study of how our entire economy operates as a whole. It studies things such as the gross national product and the ways in which it is effected when it comes down to things such as unemployment, changes in unemployment and price levels, just to name a few. This study simply wants to look at the ways in which this would be affected if that was to happen. While these studies of economics seem to be different, they are in reality interdependent of one another, while at the same time complimentary to one another, but only because of all the many lap-jointed issues associated with the two fields, but nevertheless, they both still deliver the necessary means for any and all business and organizational professionals, and should always be grouped together in the same category in order to fully understand how companies operate and earn their monies, and simply how the whole economy is managed, held-up and kept together as a whole, because as stated by Cho and Shin (2012) "given the flood of foreclosed homes that are clogging the system, the high unemployment rate, and the evidence that unemployed homeowners, if helped, often pay off their mortgage, it appears that foreclosure relief efforts better targeted toward unemployed homeowners would help stabilize the housing market and help unemployed workers" (P.165). Next, we will also have to look at, and be very clear on the legal factors associated with, because they themselves can set specific boundaries and completely change how we operate as an organization. We just might have to hire additional supervisory staff or purchase additional equipment after new laws come into effect, or are passed. If we plan to employ minors at any point in time, we definitely have to understand child labor laws, because a great deal of the time, they limit the hours that they (the minors), will be able to work until they are of age, and very often do require set break periods, and if we choose to employ several minors, we just might have to hire additional staff or maybe even temps just to cover the hours that the minors cannot legally work, because all legal factors must be followed and fulfilled. All the above all have to be taken into deep consideration when operation any business or organization, and let us not forget the political macro factors which include things such as taxation policies, all safety regulations which are -issued by the government, all government contracts, and even shifting of the controlling political parties, (democratic or republican), all have to be taken into consideration. And last but not least, let us not forget that we do still have environmental concerns, because they are important to organizations, both in the long and short term. Will we go green or not, what about natural disasters, even though they are more frequent in other areas, we still have to be prepared just in case. Broadly speaking, it is fair to say that no business or organization has control over their macro environment, but they can always protect themselves by being prepared for the unforeseen. The owners of ABC Complete Kitchens Inc., have to look at the fact that we are still in a recession, and even though things are constantly going up then down, then back up, we are still in a recession, so therefore, be honest and admit (if only to yourself), that inflation and unemployment are both situations to be dealt with, and we probably still have a very long-hard road to travel before we reach our destination, or where we are trying to go. Now even though things are looking pretty rough right now, and out of our control, this will still be a brand new business, and as a whole, we will either sink or swim, but as long as we go in with an open mind, while at the same time having all our plays in order, new or not ABC Complete Kitchens Inc., should be able to succeed in their endeavor into the business world.

Conclusion

In closing, I would just like to add the fact that our world’s economy can be very fickle and is often simply a mere part of an assortment of different factors. When the economy is going strong, unemployment is low and we all enjoy increased spending power, but if our economy struggling, more people are out of work and our assurance seems to just dwindle away. As our assurance diminishes, less and less money is put back into our economy, causing businesses and organizations to become unprofitable and jobs to vanish. This is something we must closely examine, and Pray to come up with a solution which will help us all in the longrun.