1. Measurement of unemployment usually has a role during the management of an organization. For example, it provides measures of labor in various aspects such as labor supply, labor input and the extent at which the current time of labor and human resources are really utilized. This information can be used by organization’s management to evaluate human resources developments in planning and formulating policies. Unemployment data can be used to effectively understand current trends and all changes in labor markets (Schneider, 2008). This can be used to analyze economic and social aspects with an aim of evaluating macro- economic policies. Managers in an organization need to understand internal and external factors that contribute to the well being of the country’s economy. Unemployment measurements can be used to provide an overall evaluation of the economy of the country and provide ways for the mangers to come up with measures to handle the current market. An organization can use the information to understand the income- generating capability of various economic activities. The management can also evaluate the characteristics of people who are not in a position to participate in the workforce regardless of the employment chances already available to them. Unemployment measurements can assist organizations in evaluating ethnical, age or gender inequalities in the work force and how these inequalities can be handled by the management (Mauscha, 2009). Also, the organization can use the measurements to assess different people’s participation in work opportunities and any changes that they exhibit over time based on age, gender or ethnicity.
Inflation measurement may lead to several changes in the management of an organization. Inflation refers to a general price increase and a reduction in the value of money that eventually affect businesses and the government at large (Holley, 1987). It is usually measured in terms of retail price index and it is usually given as an index number. Inflation affects the management of different organizations due to the changes encountered by the stakeholders. For example, in some organizations, inflation may lead to pay rises to compensate the employees for the inflation experienced while in others, the exact value of their income may fall and become worse. This shows that inflation may cause re distribution of wealth and income among the workers in an organization. Due to high interest rates caused by inflation, business costs become high while borrowing becomes less that leads to less investment. A reduction in investments causes a reduction in growth and employment in organizations (Matutinovic, 2005). Prices increase for raw materials, wages and supplies which in turn causes business costs. Thus, inflation may have an effect on the labor market and employment opportunities for various organizations. When inflation occurs, managers in most organizations always examine their options to decide whether they should expand operations or reduce the number of employees through retrenchment.
2. Managers need to do different types of analysis so as to come up with a clear perception of a specific industry. This may involve evaluation of an industry and its economic prospects while bearing in mind all the risks involved in such an entity. The three types of analyses that the manager can carry out in obtaining insight into a specific industry are; business strategy, financial, and accounting. They are analyzed as follows.
Business Strategy analysis
A manager can do Business strategy Analysis so as to learn more about a specific industry. Business strategy Analysis aims at identifying the main value drivers, organizational risks and also assesses the probability of profits qualitatively (Olson, 1989). The value drivers to be identified include all economic activities that can possibly generate future cash flow to an industry. In most cases, business strategy analysis aims at creating and enhancing competitive advantage. This type of analysis enables the analyst to assess the business strategy of a company with an aim of evaluating profitability and sustainability of the firm’s industry. This analysis forms a viable basis for other analysis such as accounting and financial analysis.
Accounting Analysis
This is the other method that a manager can use to analyze a business and learn more about an industry. The main aim of using accounting analysis is to evaluate the extent of accounting information system that expresses the business reality in a particular firm (Lederer, 2005). Organizations usually consist of accounting policies that govern the operations and also they have accounting estimates that they try to achieve. These values (accounting policies and estimates) may sometimes distort the actual economic status of an organization, and this is the reason as to why an accounting analysis should be done to assess the extent of the distortion. Accounting usually offers the managers all the information required for the accounting analysis to be successful. Accounting analysis can help the manager to base the financial analysis on the results. Therefore, the manager can have a better understanding of the firm’s industry.
Financial Analysis
A manager can use financial analysis to know learn more about an industry. In such a case, the manager compares the previous and current financial information to determine whether the firm‘s industry can maintain and sustain its financial status. Financial analysis requires that the analyst must possess the ability to efficiently carry out the crucial analysis and also he must be in a position to use the financial data to explore various business issues. The basic tools that are used in financial analysis are cash flow analysis (deals with flexibility and cash liquidity of a firm) and ratio analysis (works on determining the organization’s product market performance). Financial analysis is usually important in order to assess profitability, risks, resources and funds in the company. This can assist in enabling a manager to learn more about the status of a specific industry.
3. Trade refers to exchange of goods and services’ ownership from one entity to the other. Trade can be in the form of financial transactions or exchange of goods and other goods. Trade plays a major role in offering ways used by companies to plan strategically. Trade allows organizations to exchange what they possess with what they do not have with an aim to promote economic growth and enhance income and employment. Most businesses know that improved trade leads to an increased Gross Domestic Product since most of the available resources are utilized more efficiently through trade (Albrecht, 2008). Trade has been seen to increase the overall efficiency gains that enhance the income levels and encourage trade openness among industries. Such changes usually affect the prices of various tradable goods and services while diverting resources from existing returns points.
An organization may find the importance of trade in areas such as outsourcing, industrialization, globalization and other areas that assist the firm to exhibit growth and development. For example, the EU (European Union) believes that trade issues will continue to form a large part of developing the third world countries by providing organizations with successful income sources. However, some economists feel that trade largely benefits the developed countries more than it does in developing countries. Industrial set ups in developing and less developed countries are immensely affected by the liberalization of trade policies, tariffs and globalization. Some organizations may find themselves being unable to compete with other organizations across the globe especially if they have been operating under government protection. International trade is very beneficial to the organizations that participate in it since it offers opportunities for technological growth among the party players.
Trade also makes organizations to consider costs related to trade especially transportation costs that may extremely reduce most of the benefits of trade (Carbonara, 2008). This particular factor can lead to changes in patterns of trade especially when cost of trade in relation to the costs of production changes significantly. Also, in the cases where the trade cost decreases, trade too increases due to an increased comparative advantage in the market. Thus, any changes in trade costs affect the manner in which industries carry out their strategic plans. The effects of these factors affect the economy of a country and the globe at large since the market of goods and ratio of produced goods may change over time.
Albrecht, C., et al. (2008). Corporate Finance Review: Financial statement fraud, 12(4), pp. 5-13. BUSN602 XBRL Tools
Carbonara, G., et al. (2009). The Journal of American Academy of Business: Mergers and acquisitions: 14(2), pp. 188-196.BUSN602 Mergers Acquisitions
Holley, C., & Ziegenfuss, D. (1987). The discounting dilemma: The CPA Journal, 57(10), pp. 100-103. BUSN602 Discounting Dilemma
Lederer, P., & Mehta, T. (2005).Economic evaluation of scale dependent technology investments: Production and Operations Management, 14(1), pp. 21-34.BUSN602 Technology Investments
Mauscha, M., Janvrin, D., Plouff, J., & Kruger, B. (2009). XBRL tools. Strategic Finance, January, pp. 47-55.BUSN602 Statement Fraud
Matutinovic, I. (2005). Journal of Economic Issues: The microeconomic foundations of business cycle, 39(4), pp. 867-899.BUSN602 Micro Business Cycles
Olson, M. (1989). : The American Economic Review: A microeconomic approach to macroeconomic policy, 79(2), pp. 377-382.BUSN602 Micro Approach
Schneider, A. (2008). Summit Enterprises. Journal of the International Academy for Case Studies, 14(8), pp. 63-68.BUSN602 Summit Enterprises
