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Financial & Economic Literacy for Managers Report

   

Added on  2020-06-04

11 Pages3304 Words75 Views
Financial and EconomicLiteracy for Managers

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1Assessment Questions......................................................................................................................11. Business economics concepts and providing relevant theories..........................................12. Demand and Supply and monetary policy of Bank to Housing market of UK..................33. Discussing macroeconomic indicators in UK over past years...........................................44. Leverage and current account management to facilitate decision-making of managers....55. Financial terms and calculation of investment appraisal technique...................................6CONCLUSION................................................................................................................................8REFERENCES................................................................................................................................9

INTRODUCTIONFinance and Economics are crucial for country and company to have good growth in allspheres. The present report deals with Morrisons Plc engaged in supermarkets sector. Moreover,financial ratios and investment appraisal technique is applied. Various economic concepts andtheories are explained helping management to facilitate decision-making in effective manner. Assessment Questions1. Business economics concepts and providing relevant theoriesMarket structureMarket structure plays important role in the competitive market when firms try tocompete with another to attain desired market share. There are four types of marketing structuresuch as perfect competitive, monopolistic competition, oligopoly and monopoly. Each of themarket structures have varied characteristics and assumptions regarding the market. In thisapproach of market structures, theories can be explained to show evidence of business economicconcepts. Neoclassical and modern theory may be discussed by referencing evidence. Morrisons Plc which is engaged in supermarkets sector faces perfect competition fromthe rivals present in the market. Neoclassical theory explains that supply and demand of productsis achieved through consumer satisfaction and his ability to achieve utility by paying money forthe goods purchased by him (Lusardi and et.al, 2017). This means that customer perceives valueof product which directly affects demand and supply of Morrisons Plc's commodities. On theother hand, modern economic theory is concerned with income and employment determinants,analysis of utility of customer satisfaction from goods purchased which affects economicdecisions. Moreover, it includes macro and micro analysis.Small and Medium Enterprises (SME)SME's are important part of the country so that it may be able to inject overall growth ofthe company in effective way. These business are quite helpful for initiating growth in thecountry and fosters development quite effectually. This help nation to grow in the best possibleway by adding efficiency to GDP (Gross Domestic Product) of UK. In relation to this, twotheories can be listed such as Barnard-Simon Theory of Organisational Equilibrium andEvolutionary Theory of Economic change by Nelson and Winter. 1

Starting with the first theory which states that important resource of SME is itsemployees which are small in numbers. This theory implies that participants are an integral partof company. All participants provide its efficiency to enhance productivity and as such, thecompany pays for the contribution made by them. This is the relevant theory in SME so that itmay retain employees which injects economic condition of the company. On the other hand,Theory of Economic change by Nelson and Winter is that firm outreach profitable business byoutreaching successful organisation by implementing well-structured strategy and as such,organisation is motivated to attain profit maximisation objective in the best possible way. Thishelp SME to have adequate profits (Bianchi, 2018).Multinational CorporationsMultinational corporations provides higher productivity to country in effectual manner.The theories associated with these corporations are Eclectic Paradigm theory given by Dunningand Vernon’s International Product Cycle are important in this aspect. The first theory states thatcompany follows paradigm related to FDI (Foreign Direct Investment). This is quite useful formultinational corporations as they try to extract advantage from investment. On the other hand,Vernon's International Product Cycle theory is based on the economic concept that ininternational trade, products are made and moves away from the originating point to across theworld. This model applies to capital goods which cater to demands of high income group. Growth strategyThe growth strategy has immense importance in carrying out the adequate results in thebest possible way. This adds to economy of the country in that way which help to increase GDPin quite effectual manner. In this business economic concept, two theories based on growthstrategy can be explained such as Resource based theory and other one is market development.These strategies play vital role to Morrisons Plc in quite effective manner. Resource based theoryis based on the concept that organisation should have strategic resources so that competitors maynot imitate them in any manner. In this aspect, strategic resources include valuable, rare, difficultto imitate and non-substitutable elements which others cannot easily copy (Resource-BasedTheory, 2018). Thus, this theory injects revenue and growth of the organisation in the bestpossible way. On the other hand, market development theory is another growth strategy that2

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