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Financial and Economics Literacy for Managers Assignment

   

Added on  2020-06-04

13 Pages3351 Words53 Views
Financial and economicsliteracy for managers

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................11. Providing economic concepts of market structure, multinational corporations, growthstrategy and small and medium enterprises............................................................................12. Economic concepts of demand, supply and monetary policy of Bank of England onHousing market of UK...........................................................................................................33. Key macroeconomic indicators and past trend in UK........................................................44. Concepts of leverage and current account management....................................................55. A) Financial ratios..............................................................................................................6B) Present value concept........................................................................................................7C) Net Present Value..............................................................................................................8CONCLUSION................................................................................................................................9REFERENCES................................................................................................................................9

INTRODUCTIONFinance and economics are interrelated terms in the nation for attaining economicgrowth. Present report deals with concepts and theories of economics which is relevant tobusiness whatever be its structure. Morrisons Plc is chosen which is engaged in supermarketbusiness. Financial ratios are calculated for firm to assess financial performance in effective way.NPV is also computed for choosing better alternative for investment purpose. 1. Providing economic concepts of market structure, multinational corporations, growth strategyand small and medium enterprisesMarket StructureMarket structure is a place where organisation compete with each other in order to attaina greater customer base. This is essential for company so that it may gain market share in thebest possible way. The structure consists of monopolistic competition, oligopoly, perfectcompetition market and monopoly. In addressing the market structure, various theories can behighlighted under such category. Two theories such as modern and neoclassical approach bothare relevant to market structure. Starting from neoclassical theory which states that consumer needs and preferences arethe main driving forces by which supply and demand of particular commodity is affected. Thismeans that customer satisfaction is achieved if they get required utility by paying for the product.Thus, this theory focuses on accomplishing customer satisfaction to gain market share byoutreaching rivals (GAUDECKER and VON, 2015). Another one is modern theory that isrelevant to market structure. This is concerned with macroeconomic indicators that directlyaffects the organisation. Morrisons Plc is also affected by factors such as income and purchasingpower of customers, demand and preferences of customers etc. This theory states that companyis affected by purchasing power and buying habits of consumers. Multinational corporations (MNC)MNC are larger organisations that help nation to achieve economic growth in the bestpossible way. This means that MNC shapes country towards prosperity by having branches ininternational locations. It also helps UK to foster towards development in effective manner. Thishelp companies to gain revenue and ultimate benefit is provided to the nation. In accordance tothis, Raymond Vernon's Theory of product life cycle and Eclectic Paradigm Theory by Dunning1

are both relevant to it. Vernon's Theory states that commodities produced by company travelsthrough various stages before reaching to customers. The stages are inception, growth, maturityand decline. The product goes through these phases and is affected by market forces. Mainly,capital goods are produced and provided to international customers often of rich classes. Furthermore, Eclectic Paradigm theory given by Dunning states that FDI (Foreign DirectInvestment) is garnered by MNC in order to expand their reach to more international destinationsfor enhancing business (Finke, Howe and Huston, 2016). This is required so that organisationmay expand and more employment opportunities will be added which helps the nation to fightwith unemployment and organisation will gain desired level of revenue. Thus, these businessconcepts help MNC's to earn profits which accelerates economy in effectual way. Growth StrategyOrganisation enters in the market to gain profits and thereby growth is required in orderto attain more revenue and greater customer base. Morrisons Plc also requires expanding marketshare so that customer may be provided with more products in supermarket. In relation to this,market development and Resource-Based theory is relevant in this aspect. The marketdevelopment theory is derived from Ansoff Matrix. This highlights that company sells itsproducts to new markets so that new customers may be added to the firm. Usually, organisationattracts customers to sell its existing commodities. This directly help to achieve higher marketshare and growth is accomplished. Another theory is Resource-Based which states that firm should have some sort ofresources that competitors do not have. This will be beneficial for the organisation as productswill not be imitated by them. In this aspect, resources should be non-substitutable, valuable, rareand complex to imitate (Lusardi and et.al, 2017). This means that Morrisons Plc is required tohave such resources which establishes its value in effective way. It will be helpful for the firm toachieve more revenue and customers will be attracted quite effectually. Thus, both these theoriesare useful in order to gain growth by implementing structured strategies. Small and Medium Enterprises (SME)These organisations are integral element to foster growth in the nation quite effectually.GDP (Gross Domestic Product) is quite increased with the help of SME as economic growth is2

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