Financial and Economic Literacy for Managers

Running Head: Financial And Economy Literacy for Managers
Financial and Economic Literacy

Financial And Economy Literacy for Managers 1
Table of Contents
Question 1.............................................................................................................................................3
Introduction.......................................................................................................................................3
Impact of globalisation on the economies..........................................................................................3
Rise of Multinational corporations because of Globalisation.............................................................3
Real world examples of companies that have adopted the concept of globalisation..........................4
Conclusion.........................................................................................................................................4
Question 2.............................................................................................................................................6
Introduction.......................................................................................................................................6
Demand Sided Policies......................................................................................................................6
 Monetary policy.....................................................................................................................6
 Fiscal policy...........................................................................................................................7
Supply Side Policies..........................................................................................................................8
 Infrastructural development..................................................................................................8
 Cutting Corporation Tax:........................................................................................................9
Conclusion.........................................................................................................................................9
Question 3...........................................................................................................................................10
Market Structures............................................................................................................................10
 Perfect Competition.............................................................................................................10
 Imperfect Competition.........................................................................................................10
 Oligopoly.............................................................................................................................10
 Monopoly............................................................................................................................10
Concept of Demand in Market.........................................................................................................10
Concept of Supply in Market...........................................................................................................12
Question 4...........................................................................................................................................14
Introduction.....................................................................................................................................14
Use of costing concepts and budgeting techniques by managers.....................................................14
Conclusion.......................................................................................................................................16
Question 5...........................................................................................................................................17
Part a) Amortisation Schedule.............................................................................................................17
Part b) Present value of required deposit calculation...........................................................................17
Part c) Evaluation of alternative projects.............................................................................................18
References:..........................................................................................................................................19

Financial And Economy Literacy for Managers 2
Table of Figures:
Figure 1: UK Net Borrowing -% of GDP..............................................................................................7
Figure 2: Demand Curve for Gasoline Product....................................................................................11
Figure 3: Supply Curve for Gasoline Product......................................................................................12

Financial And Economy Literacy for Managers 3
Question 1
Introduction
Globalisation simply means that corporations have global presence. In the recent era, the
scope of concept of globalisation has become wide due to the advancement of technology that
has allowed the organisations to touch the boundaries of international economy. In economic
terms, the term globalisation implies to the enhanced economic integration across the world
due to major components of nation’s economy such as its trade, investments and funds are
increasingly crossing the global borders.
Impact of globalisation on the economies
The effect of globalisation can be seen on various areas such as financial market
interdependence, enhanced role of multinational companies, technology transfers from one to
another country, greater interdependence of various fiscal or regulatory policies and increased
dependence of national markets on the international trade. Because of the rapid development
of technologies, mobility of labour force, goods, services, finance and capital across the
world has become quite convenient and cost effective. Also, the level of communication in
the global world has improved significantly because of introduction of different means of
communication. Technological progress has also resulted in drastic decline in the cost of
communication of information from one country to another country (Gereffi, et. al., 2001).
All these factors have made it easy for the large companies to grow and expand the business
without considering their geographical limits.
Rise of Multinational corporations because of Globalisation

Financial And Economy Literacy for Managers 4
The multinational corporations of the countries help in nurturing the growth and prosperity
their respective economies by generating foreign exchange through the export of their
products and services. The foreign exchange that is generated by the MNCs of a country
enables it to enter into trade deals in the potential international market where payments are
required to made in the local currency of such countries (Ionescu, & Dumitru, 2011).
The economies of UK and US have been the strongest economies across the world but after
the recession even these economies had to face severe repercussions. Local corporations are
rapidly going global by the ways of setting up of plants in the overseas markets in order to
take advantage of the cost effective labour resources and to get closer to the markets where
the demand of their products is higher (Landefeld, 2003). It is generally observed in many
surveys that the labour cost of UK is comparatively higher than that of other companies. Due
to this, the UK firms that are engaged in the business of manufacturing of consumer products
or other goods under which high component of labour cost is involved are unable to compete
with other manufacturing concerns of other countries (Stearns, 2016).
Real world examples of companies that have adopted the concept of globalisation
 Most recently Apple Inc. has become a virtual firm which has outsourced its
significant portion of production work to the other counties such as Asia.
 Another example of multinational corporations is the case of Toyota Motor Corps.,
which is a Japanese company. Toyota is shipping is car parts manufactured in Japan
to US for their final assembly because of availability of high-class technology and
human intelligence factors in the US economy. Only around 1/3rd of the total
operations of the business are carried in japan and almost 2/3rd of the business
operations of Toyota cars are carried in different counties (Schifferes, 2007).

Financial And Economy Literacy for Managers 5
Conclusion
Globalisation has therefore allowed the companies to expand their business to the
international markets so that the customer base of those companies could be enhanced.
Besides this, it has become easy for the countries to take advantage of the technologies that
are developed by the different countries to enhance their productivity. The concept of
globalisation is that it has positively contributed to the strengthening of economies of
different countries through various modes.