Economics for a Sustainable World

This study explores the impact of microeconomic and macroeconomic factors on business enterprises and the importance of sustainability practices. It focuses on the case study of XTV Network Limited and analyzes its production costs, market share, and customer base. The study also examines the influence of political stability on business operations. Find study materials and solved assignments on economics for a sustainable world at Desklib.

Running head: ECONOMICS FOR A SUSTAINABLE WORLD
Economics for a sustainable world
Name of the Student
Name of the University
Author’s Note

1ECONOMICS FOR A SUSTAINABLE WORLD
Table of Contents
1). Introduction to the business and general business environment............................................2
a) Name, location and type of business.......................................................................................2
b) Type of business production....................................................................................................3
c) Main customers of XTV Network limited...............................................................................3
d) Location of most of the customers........................................................................................4
e) Competitors of XTV network limited.....................................................................................4
f) Market share and market structure...........................................................................................4
g) Close substitutes for business products...................................................................................4
h) Demand curve facing XTV network limited...........................................................................5
i)Ability to mark up price above the marginal cost.....................................................................5
j ) Relation with average income of the customers......................................................................6
b) Production costs and scale.......................................................................................................7
c) Cost structure analysis.............................................................................................................8
3) Macro Analysis............................................................................................................................9
a) Stability of political system.....................................................................................................9
b) Inflation.................................................................................................................................10
c) Unemployment......................................................................................................................10
d) Interest Rate...........................................................................................................................11

2ECONOMICS FOR A SUSTAINABLE WORLD
e) Exchange rates.......................................................................................................................12
f) Overall macroeconomic conditions.......................................................................................12
4) Sustainability practice of the business.......................................................................................13
a) Externalities of production....................................................................................................13
b) Externalities of consumption.................................................................................................13
c) Sustainability practice by business affecting long-term business ability..............................13
Conclusion.....................................................................................................................................14
References......................................................................................................................................14

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List of Tables
Table 1: Production cost................................................................................................................10
Figure 1: Elastic Demand................................................................................................................7
Figure 2: unemployment rate of Australia over the last five years................................................12
Figure 3: Interest rate of Australia.................................................................................................13

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1). Introduction to the business and general business environment
The present study provides an overview on how microeconomic and macroeconomic
factors affect the business enterprise. As the main purpose of an organization is to maximize
profit margin and control cost, these economic factors influence its business environment.
The microeconomic factors such as availability of resources, customers, suppliers,
employees, investors, competitors influence the business operations and decision- making of
an organization. Likewise, the macroeconomic factors including-political system,
unemployment, inflation, interest rate, exchange rate of an economy in which the company is
operating also impacts the business culture and performance (Group, 2013). The enterprise
selected for this study is XTV Network Limited.
a) Name, location and type of business
The XTV Network Limited is the media network enterprise located in Nedlands,
Australia. This company was founded in the year 2011 and was previously engaged in
building, managing and deploying interactive online XTV networks for the organizations. It
is one of the ASX listed companies that permit the business to establish multi- channel online
network, which adopt branded video and other user- created content with the real- time feeds.
The media company has started to provide technology platform to the enterprise and
promises in rewriting the way organizations communicate with both the employees and its
customers. At present, this organization has been selling its technologies in the US. The
vision of this enterprise is to deliver any corporation with capability to reduce cost of

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production and add consumption of the media by providing lean – back and real- time TV
experience without requirement to install new devices.
Name of the company XTV Network Limited
Founded in the year 2011
Headquarter Australia
Location Nedlands, Australia, USA
Type of business Media Network Organization
b) Type of business production
The XTV network limited produces or sells variety of products that include- Digital
Signage, Cloud TV Networks and other Premium Channels. It Cloud TV Networks organize
as well as aggregate video, social media and Web feeds into one destination as well as
displays it on the device that mainly supports web browser such as-tablets, smartphones and
so on. In addition, digital Signage mainly delivers XTV Cloud Network wirelessly to
projector, HDTV, monitor and kiosks with high definition multimedia interface port ("XTV
Networks Ltd (ASX:XTV)," 2018). Its regularly curated video and premium channels are
available for use and content from other sources.
c) Main customers of XTV Network limited
The main customers of XTV Network limited is sales team of healthcare organizations.
The customers mainly attains the value of XTV products in its environment. XTV Network

6ECONOMICS FOR A SUSTAINABLE WORLD
provides its customers XTV platform for organizing combinations of video, news and social
feeds into real- time screen organization.
d) Location of most of the customers
As of the year 2017, most of the customers of XTV Network limited are located throughout
Australia and USA.
e) Competitors of XTV network limited
Competition in the media market is mainly based on variety of factors that include-
product offering, advertising, location of store and customers service. One of the top
competitors of XTV Network Limited is Ross Vedio that competes in Application Software
Field. Other competitors of XTV Company includes Yubuy, Grass Valley, Kaltura, New
Tek. Both Yubuy and NewTek generates less revenue than XTV network limited. This
company has been ranked 9th among the top 10 competitors in Australia ("Quarterly and
Estimated Annual Revenue," 2018).
f) Market share and market structure
From the annual report 2018, it has been seen that XTV Network Limited has no total
sales revenue. The market Cap of XTV is $10 M and equivalent shares of this company is
1213 million. The market share of XTV Network limited is relatively small in comparison
with other media companies operating in Australia. Even though the market share of this
enterprise is low, it has maintained its position in Australian market as provider of media
network. Moreover, XTV Network Limited has been operating under monopolistic
competitive market structure. In monopolistic competitive market structure, there are large of
sellers selling closely related products and has no hurdles in entry (Geroski & Jacquemin,
2013).

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Quantity
Price
D
D
g) Close substitutes for business products
One of the close substitutes of Cloud TV network is Tricaster, which is a product that
mainly merges live video broadcast graphics with audio mixing, social media, recording and
web streaming. Other substitutes of the products offered by XTV Network Limited include-
live production switchers, skype for broadcasting, 3PLAY instant replay system. The
availability of close substitutes of XTV cloud Network makes the demand for this product
elastic.
h) Demand curve facing XTV network limited
As XTV Network Limited operates under monopolistic competitive market structure
where there are large number of media companies selling differentiated commodities, the
demand curve is highly elastic than that of monopolist but less elastic than for the perfectly
competitive entity.
Figure 1: Elastic Demand
Source: (As created by Author)

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i)Ability to mark up price above the marginal cost
As XTV Network Limited has been operating under monopolistic competitive market
structure, it has limited control over the product price. The entities in monopolistically
competitive market maximize short run profit under the rule MR (Marginal Revenue)=MC
(Marginal Cost). If XTV Network Limited decides to increase its product price above MC,
then it might lose few of its customers (Gershon, 2013). The extent of loyalty to its goods or
service means that few customers might continue to purchase from this media company.
j ) Relation with average income of the customers
The customer’s income has direct relation with the sale of media products. XTV cloud
TV network is taken into account as normal product. If the average income of the customers
are less or reaches at specific level, then they might purchase one network and purchase no
more products even if their income increases. Increase in average income of customers in the
market signifies that large number of individuals might be keen to buy these products
manufactured by the media company (Straubhaar, LaRose, & Davenport, 2013).
2) Production costs and scale
a) Factors of production
The factors of production are mainly classified into four types such as- land, labor, capital
and entrepreneurship. These factors help to manufacture several products and services of the
business enterprises. Effective use of these factors of production helps the company to
improve product quality and reduce production costs.

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Land-This is one of the natural resources that is used by XTV Network Limited for
manufacturing products. As Australia is largely endowed with this resource, this company
uses this for building good infrastructure. The Cloud TV network, signage and other
premium products are manufactured by assembling numerous inputs such as silicon that is
mainly used in electronic chipset.
Labor- This refers to effort used by individuals for bringing products and service to the
competitive market. For the XTV Network Limited, labor is a vital factor that produces
products and assisting its customers. The laborers are also important for this company as they
helps in innovating and designing new network products.
Capital- Fixed capital relates to the machinery, equipment and physical plant that are utilized
for manufacturing products. The working capital refers to the stocks of semi-finished and
finished products in future or might be produced into consumer products. For the XTV
organization, advanced technologies have been used for innovation of new networks and
enhancing productivity. Furthermore, integration of technologies also help to enhance
productivity of labors.
Entrepreneurship- An entrepreneur is the individual who mainly supplies commodities to
the market for making profit (Zaridis & Mousiolis, 2014). It is regarded as some specialized
form of the labor input. For this company, the entrepreneurs invests their capital in the
business for maximizing profit. Since the company has made loss in the current year, the
entrepreneurs faced loss from return of their investment (Geroski & Jacquemin, 2013).

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b) Production costs and scale
For making production decisions in long run as well as short run, an enterprise
determines the costs that are linked with producing various output level. For XTV Network
Limited, the fixed costs relate to the costs that they bear irrespective of output while variable
cost refers to the costs that varies with output.
Table 1: Production cost
Production costs of XTV limited
Year
ended
on 30th
June
2018
Year
ended
on 30th
June
2017
Fixed Costs
Consultancy and legal expense 164,379 198,131
Administration expense 17,662 53,892
Interest Expense 438,076 372,395
Compliance and regulatory expense 35,892 26,808
Purchase of plant and equipment 0 0
Total Fixed Costs 656,009 651,226
Variable costs
Employees benefit expense 25,892 26,808
Foreign Exchange Loss 41,966 299
Total Variable costs 67,858 27,107
c) Cost structure analysis
The cost structure of any business changes across various sectors. The cost structure of a
media network company mainly deals with all impression, clicks and other activities during
the particular date range based on pricing information and schedule (Straubhaar et al., 2013).
The cost structure of XTV Network Limited mainly revolves around the production process
and marketing of products. After assessing all the factors of production, fixed and variable
costs, it is necessary to understand XTV cost structure. As compared to the variable costs of

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XTV, this company has higher amount of fixed costs and its proportion of total fixed costs to
total costs is considerably high. As this media network company has huge amount of fixed
costs, it tends to have high amount of operating leverage. However, this enterprise pays
larger amount of operating leverage, it did not record any revenue in the last year. If this
entity sustains the present sales, then both the variable as well as fixed costs becomes
covered (Kneese, Ayres, & d'Arge, 2015).
3) Macro Analysis
There are numerous factors in macro- environment that impacts the decision making of
the enterprise managers. These factors include-political stability, change in tax, trade
barriers, change in demographic, change in government policies. Based on the change of
these macro economic factors, XTV network adopts business strategy in order to cope with
such change and sustain in competitive business environment (Carraro, Katsoulacos, &
Xepapadeas, 2013).
a) Stability of political system
Several economists are of the view that Australia is one of the safest destination for doing
business or making investment. The nation’s regulatory as well as political environment is
stable, progressive and open, thereby boost the investors’ confidence in making investment to
this country. The strength of Australia as investment destination stems from political system,
which has been mainly assessed as being effective in combating with economic challenges as
well as policy direction. The stable political environment of Australia supports well-
established as well as transparent political processes, competent governance, robust legal
system and independent bureaucracy. In fact, the strong law rule in Australia also protects the
property rights as well as mitigate corruption. Moreover, the judicial system of this nation

12ECONOMICS FOR A SUSTAINABLE WORLD
operates impartially and anti- corruption measures are also effectual. Even the US economy
is also taken into account as politically stable.
The economic growth of Australia is strong as compared to most of the OECD nations
including UK and US. Presently, this country has been holding highest GDP growth rate of
the developed nations. According to IMF, the GDP growth rate of Australia had been
estimated to around 2.2%in the last year ("Australia Inflation Rate," 2018). In addition to
this, the US economy has been also maintaining robust GDP growth rate over the last few
years. From the GDP growth rate of US and Australia, it can be said that XTV Network
Limited has been operating under the strong economies and thus investors can be confident
in making more investment in this company. Other macroeconomic factors given below also
reflects stable economic condition of these two nations where the company has been
operating.
b) Inflation
Australia has been maintain stable inflation rate over the last five years. The inflation rate
in Australia has been around 1.9% to 2.4%. As per ABS, inflation has been underpinned by
rise in prices of alcohol, tobacco, food, transport and other beverages. Besides this, the
annual inflation rate of US has been also stable over the last few years. The inflation rate
declined to round 2.2% in the year 2018 from the previous year ("Australia Inflation Rate,"
2018). However, low inflation rate in both Australia and US effects the individual’s income
and purchasing power. As XTV has been operating in these two nations, it can be predicted
that low interest rate aid this company to borrow money at ease. It also helped this business
to operate effectively and earn higher revenue from the sales of products.

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c) Unemployment
Over the last five years, the unemployment rate in Australia has remained steady. The
unemployment rate recorded in the year 2018 is 5.1% which has been slightly lower than
5.4% in the year 2017 (tradingeconomics, 2018). Even the US government has been able to
keep the unemployment rate low over the years. Overall, there have been rise in employment
rate in these two nations over the past few years.
Even though the employment rate has increased in both Australia and US, it has not
benefitted XTV Network Limited. Rising employment led to increasing consumption in
Australia, but this has not effect on XTV product sales. Moreover, with rising employment
opportunities and increasing GDP, XTV could not hire more employees and reinvest them in
terms of employee benefits to improve its sales. Thus, it lead to reduction in sale of product
for XTV in the present year.
Figure 2: unemployment rate of Australia over the last five years
Source: ("Australia Unemployment Rate," 2018)

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d) Interest Rate
The RBA (Reserve Bank of Australia) has always maintained low interest rate over the
past few years. The cash rate has been kept low at 1.5% in the year 2018 amid sluggishness
in the inflation and slowdown in the housing market ("Australia Inflation Rate," 2018). The
monetary policy adopted by the RBA supports the economy by assuring low borrowing costs
for the households as well as businesses. The XTV company has been exposed to high risk
that is connected with interest rate.
Figure 3: Interest rate of Australia
Source: ("Australia Inflation Rate," 2018)
e) Exchange rates
XTV company has been exposed to the exchange rate movements especially in AS/US$
rate. This media company has faced several challenges owing to fluctuations in exchange
rate. Movement in exchange rate effect on the total amount paid for the purchases of the
goods produced by this company. The effect of exchange rate fluctuations has recouped from
the suppliers and then passed to the customers ("Index of Economic Freedom," 2018).

15ECONOMICS FOR A SUSTAINABLE WORLD
f) Overall macroeconomic conditions
The macroeconomic conditions in Australia and USA has been favorable for this media
company. But XTV company has been sensitive to the changes in economic conditions,
which in turn influenced its financial as well as operating cost The change in inflation rate of
Australia and US affects the sale of products and purchase of equipment. Fluctuation in
unemployment rate also influence on its hiring of laborer in business (Wetherly, 2014). Since
the equipment are purchased from foreign countries, fluctuations in exchange rate influence
the cost of business operations.
4) Sustainability practice of the business
a) Externalities of production
Production of Cloud TV network outcomes in negative externalities such as energy
depletion and resource wastage. The products manufactured by XTV affects the health of the
people residing in Australia and US. The media company also attains some positive
externalities that occurs from the entities economic activities (Porter & Heppelmann, 2014).
The XTV company makes researches for integrating advanced technologies and equipment
in order to innovate new media products. The innovation of cloud TV network positively
affects the consumers by providing vital information and connecting with others.
b) Externalities of consumption
The consumption of the products produced by this media company involves both positive as
well as negative externalities. Positive externality occurs as the consumers benefits from
attaining vital information about the changes happening across the globe and develop better
understanding about the awareness programs through the Cloud TV network and other

16ECONOMICS FOR A SUSTAINABLE WORLD
premium channels. The negative externality involves the fact that the young people becomes
addicted to these premium channels and cloud TV network.
c) Sustainability practice by business affecting long-term business ability
The macroeconomic conditions might remain challenging to the XTV network but the
sustainable practice adopted by the business influence its long- term ability of business
(Ortiz‐de‐Mandojana & Bansal, 2016). The sustainable practice integrated by this business
include-
 Producing innovative products through integration of new technologies
 Introducing effective advertising method in order to lower the costs of production
 The Research and Development (R & D) team helps to bring out innovative product
through less wastage of resources (Boons & Lüdeke-Freund, 2013).
Conclusion
From the above discussion, it can be concluded that XYV Network Limited should
develop and adopt effective business strategy in order to sustain in the competitive business
environment. As the market share of XTV is very low as compared to its other rivalries, the
company should focus on developing innovative media or network products in order to improve
its performance. As XTV Company is highly sensitive to macroeconomic factors such as
unemployment rate, inflation rate, exchange rate, the Australian government monetary policy of
stabilizing these factors will help this company to improve its business operation in future. The
firm should focus on changes few business policies as per the change in Australia’s economic
condition. Moreover, negative externalities becoming larger than positive externalities, it makes
the entity less viable in the market. Additionally, the organization must also concentrate on

17ECONOMICS FOR A SUSTAINABLE WORLD
improving product design as well as its functionality and also analyze the present market trends
in order attract the customers and enhancing sales revenue.
References
Australia Inflation Rate. (2018). Retrieved from
https://tradingeconomics.com/australia/inflation-cpi
Australia Unemployment Rate. (2018). Retrieved from
https://tradingeconomics.com/australia/unemployment-rate
Boons, F., & Lüdeke-Freund, F. (2013). Business models for sustainable innovation: state-of-
the-art and steps towards a research agenda. Journal of Cleaner production, 45, 9-19.
Carraro, C., Katsoulacos, Y., & Xepapadeas, A. (2013). Environmental policy and market
structure (Vol. 4): Springer Science & Business Media.
Geroski, P. G., & Jacquemin, A. (2013). Barriers to entry and strategic competition: Routledge.
Gershon, R. A. (2013). The transnational media corporation: Global messages and free market
competition: Routledge.
Group, W. B. (2013). Doing business 2014: Understanding regulations for small and medium-
size enterprises (Vol. 11): World Bank Publications.
Index of Economic Freedom. (2018). Retrieved from
https://www.heritage.org/index/country/australia

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Kneese, A. V., Ayres, R. U., & d'Arge, R. C. (2015). Economics and the environment: a
materials balance approach: Routledge.
Ortiz‐de‐Mandojana, N., & Bansal, P. (2016). The long‐term benefits of organizational resilience
through sustainable business practices. Strategic Management Journal, 37(8), 1615-1631.
Porter, M. E., & Heppelmann, J. E. (2014). How smart, connected products are transforming
competition. Harvard business review, 92(11), 64-88.
Quarterly and Estimated Annual Revenue. (2018). Retrieved from
https://www.owler.com/company/xtv#financials
Straubhaar, J., LaRose, R., & Davenport, L. (2013). Media now: Understanding media, culture,
and technology: Cengage Learning.
Wetherly, P. (2014). The business environment: themes and issues in a globalizing world:
Oxford University Press.
XTV Networks Ltd (ASX:XTV). (2018). Retrieved from
https://www.nexttechstock.com/company/xtv/
Zaridis, A. D., & Mousiolis, D. T. (2014). Entrepreneurship and SME's organizational structure.
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