Kitchens Case Study

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Register to read the introduction… 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
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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

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