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Microeconomic: Today’s market economies reply mainly on the activities of consumers, business and resource suppliers to allocate resources efficiently. Thoes activities and their outcomes is the subject of microeconomics (1).
The world economy is in a hard time and recession. The US is not different. Although Obama President has mainly focused on economic rehabilitation to help the US escape from the crisis, generally the US still has a long way to go with high inflation rate and unemployment and the US economy looks a bit more pallid (2). In this situation, there are also some factors which can have effect on the operation of ABC kitchen Inc.
1. Possitive effect
As a company having a stable capital and product market share, ABC Kitchen Inc. still plans on expanding the business with a new plant in despite of the economic crisis. Simultanously, this period is a suitable time for strong companies to expand their production and control the new market when the economic is rehabilitated. Although we are going through the crisis, ABC Kitchen Inc. still can take the advantage of the following factors: - A lot of companies went bankrupt and had to dismiss workers to cut down spending which made the unemployement rate in the US increased, during the second half of last year the economy still managed to lose more than a million jobs (2). Therefore, labour market has been extended. Although a huge number of workers are unemployed, there are still a lot of skillful ones. Hence, if the recruitment is well prepared, ABC Kitchen can find qualified and experienced workers with a reasonable cost. With these skilled workers, the new plant can promptly adapt to the new operation and minimize unstable working time. Besides, company can reduce cost of training, transferring and other unexptected cost during training time. - The economic crisis also makes the market smaller and the competitors meet more difficulties. …show more content…
It is a suitable time for ABC Kitchen to control new markets and areas of its competitors. Moreover, we can rearrange company’s structure to improve its operation such as focusing more on effective areas and products.
- Material suppliers and construction companies are going through a hard time and they have to reduce the price to keep the business. Thus, the initial cost for new plant in the economic recession will be less than it can be in stable period. Accordingly, ABC Kitchen can lower the price to compete against other competitors. With the new plant, we can prove its stability and financial potentiality to customers and business partners in order to improve marketing activities, company’s prestige and competitiveness.
- Many companies are trying to keep their market share by lowering the price which is an advantage for us to negotiate with material suppliers to get a better price. Moreover, if we are able to get a long term contract with a good price, we can get a big profit by improving the quality with a low cost for other orders, especially when the US economy is being reinstated (3). 2. Adverse effect The world economy as well as the US economy is facing a lot of difficulties such as financial issues, high inflation and unemployment rate, and bankruptcy. Not only big customers but also individual ones have to cut down spending. Potential customers such as restaurants, hotels and conventional centers are the subjects which were strictly affected by the economic crisis. They also loose a significant number of customers which causes a bad effect to their spending and profit. Besides big customers, our individual ones are also affected by the unemployment, income reduction, and high cost of living. They need to spend less money for unnecessary household commodities like kitchen implements. The recession also causes difficulty for real estate market. A lot of construction projects are pending while they are considered to be a big customer for kitchen equipments. The sales of high-grade products will go down first because these products are mostly made for high-income customers. It is difficult for us to get profit from such products as kitchen cupboard and equipment with sophisticated design. The demand of our products is liable to be decreased, especially the luxury or customized products. Obviously, it can be seen that it is a challenge to keep our sales stable. 3. Solutions for the new plant during the recession - Promote marketing activities, advertizing,
The world economy is in a hard time and recession. The US is not different. Although Obama President has mainly focused on economic rehabilitation to help the US escape from the crisis, generally the US still has a long way to go with high inflation rate and unemployment and the US economy looks a bit more pallid (2). In this situation, there are also some factors which can have effect on the operation of ABC kitchen Inc.
1. Possitive effect
As a company having a stable capital and product market share, ABC Kitchen Inc. still plans on expanding the business with a new plant in despite of the economic crisis. Simultanously, this period is a suitable time for strong companies to expand their production and control the new market when the economic is rehabilitated. Although we are going through the crisis, ABC Kitchen Inc. still can take the advantage of the following factors: - A lot of companies went bankrupt and had to dismiss workers to cut down spending which made the unemployement rate in the US increased, during the second half of last year the economy still managed to lose more than a million jobs (2). Therefore, labour market has been extended. Although a huge number of workers are unemployed, there are still a lot of skillful ones. Hence, if the recruitment is well prepared, ABC Kitchen can find qualified and experienced workers with a reasonable cost. With these skilled workers, the new plant can promptly adapt to the new operation and minimize unstable working time. Besides, company can reduce cost of training, transferring and other unexptected cost during training time. - The economic crisis also makes the market smaller and the competitors meet more difficulties. …show more content…
It is a suitable time for ABC Kitchen to control new markets and areas of its competitors. Moreover, we can rearrange company’s structure to improve its operation such as focusing more on effective areas and products.
- Material suppliers and construction companies are going through a hard time and they have to reduce the price to keep the business. Thus, the initial cost for new plant in the economic recession will be less than it can be in stable period. Accordingly, ABC Kitchen can lower the price to compete against other competitors. With the new plant, we can prove its stability and financial potentiality to customers and business partners in order to improve marketing activities, company’s prestige and competitiveness.
- Many companies are trying to keep their market share by lowering the price which is an advantage for us to negotiate with material suppliers to get a better price. Moreover, if we are able to get a long term contract with a good price, we can get a big profit by improving the quality with a low cost for other orders, especially when the US economy is being reinstated (3). 2. Adverse effect The world economy as well as the US economy is facing a lot of difficulties such as financial issues, high inflation and unemployment rate, and bankruptcy. Not only big customers but also individual ones have to cut down spending. Potential customers such as restaurants, hotels and conventional centers are the subjects which were strictly affected by the economic crisis. They also loose a significant number of customers which causes a bad effect to their spending and profit. Besides big customers, our individual ones are also affected by the unemployment, income reduction, and high cost of living. They need to spend less money for unnecessary household commodities like kitchen implements. The recession also causes difficulty for real estate market. A lot of construction projects are pending while they are considered to be a big customer for kitchen equipments. The sales of high-grade products will go down first because these products are mostly made for high-income customers. It is difficult for us to get profit from such products as kitchen cupboard and equipment with sophisticated design. The demand of our products is liable to be decreased, especially the luxury or customized products. Obviously, it can be seen that it is a challenge to keep our sales stable. 3. Solutions for the new plant during the recession - Promote marketing activities, advertizing,