Question

Our week one discussion is primarily focused on two introductions: macroeconomicsand microeconomics.

Macroeconomics is focused on the overall level of economic changes, i.e., changes in unemployment and monetary changes (currency exchange rates). There are many macroeconomic events that greatly influence a manager’s decisions about production and pricing; yet many of these events are beyond the control of management. As such, for your first discussion assignment please complete the following task by Wednesdayand then respond to at least two of your classmates’ posting by Sunday:

• Select a macroeconomic event and explain why you believe that this event does influence management decisions and why it cannot be controlled by management.

Management decisions about demand, supply, production, pricing and market structure are all microeconomic options and choices. It is an analysis of consumer behavior (spending), production, and how pricing relates to demand. In microeconomics there are ongoing trends in both demand and supply that directly influence the price of a product. For the second part of this week’s discussion complete the following task by Friday and then respond to at least two of your classmates’ posting by Sunday:

• Select a specific industry and then identify and discuss a significant trend in supply or demand that directly influences management’s pricing decisions.

Answer 1

Macroeconomic event does not influence management decision:

For the current discussion let us consider the changes in Gross Domestic Product (GDP).

GDP is the aggregate of value of goods and service produced with the domestic territory of an economy after eliminating the effect of intermediary consumption.

when it comes to the decision making of a business unit the Manager need not consider the GDP factor as it does not affects the pricing or profitability of the business unit. moreover when the Manager has to take any business decision he can only keep in mind the Macroeconomic conditions prevailing for a long run forecast of the business and need not consider such situations for the decision making in short run.

Also the Manager will not have control over the macroeconomic factors since it is a broader concept and the impact on such factors cannot be controlled by an individual.

Thus the Manager need not consider the Macroeconomic factors in business decision making for the simper two reason:

1.He does not have control of the macroeconomic factors as they are decided by the behaviour and activities of the group of individuals or general public. so the Manager need not consider the uncontrollable factors.

2. The Macroeconomic factor changes in the long run and will be constant in short run. Since most of the business decision are taken for a short run duration. the Manager need not consider the same.