Economic Analysis of Business Strategies and Policies

This report delves into the application of economic principles within a business context, focusing on strategies for expansion and market analysis. It begins by examining market penetration strategies using the Ansoff matrix, emphasizing the importance of understanding market dynamics and technological adaptation. The report then explores macroeconomics, highlighting its role in business decision-making by analyzing external factors such as economic trends, investment climate, and international trade. Furthermore, it discusses the influence of fiscal and monetary policies on exchange rates, and the factors influencing policy formulation. Finally, the report identifies critical factors for success in international markets, including planning, demand analysis, pricing strategies, and the impact of government regulations and global factors, offering a comprehensive overview of economic considerations for business operations and growth. This analysis emphasizes the importance of adapting to changing circumstances and understanding the broader economic environment for sustainable business success.

Economic for Business

Table of Contents
QUESTION 1 ..................................................................................................................................1
QUESTION 2……………………………………………………………………………………..
QUESTION 3 …………………………………………………………………………………….
QUESTION 4………………………………………………………………………………..//////

QUESTION 1
There are distinct types of the courses of the actions which are required to be taken into the
consideration by the retail store in respect to expand the operational practices in effective
manner. For the purpose of being successful it is crucial for the firm to give emphasis on
evaluating the distinct types of the growth strategies which includes Ansoff matrix this basically
comprises the four type of the strategies that involves market penetration, product &
development and diversification. Market penetration is related with having the ability to increase
the sales of existing products into an existing market. Market development is related with
focusing on selling of existing products into new market the product development is related with
having proper approach to introduce the new products into existing market. Diversification is
concerned with selling new products into the new market. On the basis of this it can be
articulated that from these four courses to get the corrective strategy in turn attaining the reliable
practice to have higher performance in respect to expand into the market.
From the assessment, it can be interpreted that specified organization should concentrate
on adopting such technology which can allow to have correct level of actions in turn deriving
relevant processes for meeting the organizational objectives such as higher profitability,
effective level of utilization of resources, etc. gaining appropriate performance. Market
penetration is one of successful strategy that helps in deriving the concise pattern of working by
increase the sales of the goods in new market through concentrating on certain crucial measures.
This can be done by the firm through application the actions like inclining marketing efforts to
streamline distribution processes. In addition to this, it decreases the prices to attract new
customers within the retail market segment (Market Penetration, 2022). Acquiring a competitor
in same market so that attaining corrective level of results to meet the objective of having the
ability to get greater performance. On the basis of this it can be articulated that firm with help of
market penetration can get assistance in expanding its operational practices in market. This leads
the firm toward success by ensuring that reliable utilization of resources to have corrective
measures so that effective pattern of growth & development on market can be derived. This
allows to meet the objective of having effective competitiveness to get reliable financial
position in respect new market.
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Question 2
Macroeconomics is a branch of economics that is related with studying of performance
& behaviour of economy as whole. Businesses in order to grow and flourish requires to take
decisions that the right time. Analysing of the external business environment helps a business
capture the opportunities that are available for them in the industry. Also, it helps in keeping its
operations secure from any kind of major shocks by highlighting the threats existing in the
market. When a business study the factors of macro economy thoroughly it can utilize the
available opportunities and prepare for the potential threats before its competitors. This ensures
competitive edge for such business. Macroeconomics is used by businesses to identify an
accurate estimate of output that is required to be produced on the basis of general trends of the
economy. General trends take into account the essential factors like a country’s economic
activities, climate for investment, output related trend and employment trends, aggregate
demand & pricing trends (Mitchell, Wray and Watts, 2019). These all factors impact directly the
demand for the output by a business. Having an estimate of output forehand prepares a firm by
providing enough time to produce the expected level of output. If the expectations are low, then
a company can work upon increasing the demand through promoting the products or services in
the existing market. Alternatively, the company can also expand the sales by introducing the
offerings in markets other than the existing market. Hence understanding of macro helps in the
expansion of the company and also gaining a strong position in the market. Also understanding
of these factors helps in taking an effective decision with respect to the international trade.
Economy of a country is directly impacted by such country’s trade relations with other
countries. Changes in the global market, exchange rates, capital outflow and inflow implies
serious impacts over the company’s economic environment. A business also needs to adhere to
its responsibilities towards the society for its success and growth related prospects. Certain
policies that are devised by the governments with respect to ensure that business fulfil their
social responsibility can be known to business only if it understands macro economy factors.
Consideration of all the these by a company before expanding and consolidation ensures that
such a decision turns out to be beneficial for the company.
Question 3
Both the fiscal and monetary policies have their impacts over the exchanges rates. The
monetary policy has it affects on both the exchange rates and interest rates. Fiscal policy is the
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government’s policy that outlines the sources of income and expenses by the government during
a fiscal year. Fiscal policy affects the exchange rates by making changes into the income of the
citizens, changes in the prices of goods and services and interest rates. As a part of fiscal policy
government lower downs the taxes increasing the disposable income in the hands of people. This
increase the demand for foreign currency by the domestic citizens, increase exchange rate and
vice a versa (Chugunov and et.al., 2021). Government control the prices for goods and services
by providing subsidies when the government lowers down subsidy it provides the money
available in the economy in the hands of consumers lowers down decreasing the demand for
foreign currency. This lowers the exchange rates. Similarly, high interest rate being charged as a
part of fiscal policy of government also lowers the exchange rates. Exchange rates and the
interest rate in the domestic market are linked to by net international capital flows. When
exchange rates in the long run are predictable, the interest rates remain high during short and
medium run leading capital inflow, and increase in the foreign exchange supply leads to fall in
exchange rates. Alternatively, when the interest rate in the domestic market are lowered down
the exchange rates rises. This outcome both the existing and predicted monetary policy to have
strong relations with the aggregate demand and competence of domestic economy in the
international markets. Thus a change in the interest rate as a part of monetary policy brings a
change in the exchange rate (Mussa, 2019). The factors that are considered by policy holders
before making changes into the policy are related to how they what to shape the economy. Fiscal
and monetary policies are measures to regulate the economic activities over time. Crude oil,
monsoon exchange rate, global growth and fiscal deficit are few factors that influence the
monetary policy. Fiscal policy is formed by considering four main components, expenditure,
revenue, deficit and fiscal transfers.
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QUESTION 4
There are several aspects which are required to be highlighted for the purpose of making
appropriate policy formulation in turn deriving the success in international market can become
possible. This is concerned with possessing such concise e valuation of the factors that has the
impact on the processing of organization in market. The main reason behind this is that
possessing such courses which are important in respect to eliminate the challenges prevailing in
the market become essential for the enterprise (Alarussi and Alhaderi, 2018). The one of the
significant action whose avoidance can lead the firm in international market towards failure.
This includes the lack of the planning & acknowledgment which is concerned with possessing
ineffective ability to understand the working culture of country, identifying the sources from
where the material will be obtained, etc. having lack of planning can highly hamper the success
of the organization by resulting into the inability to st the corrective policies & strategies. On
the basis of this, it can be mentioned that lack of planning highly impact the working criteria of
the firm which can lea it towards ineffectual processing. Lack of demands regarding the offered
products by the company in the market can highly result into the negative accomplishing of the
organizational objectives. On the basis of this it can be specified that lower level of demand
analysis can outcome in hindering the overall results of the firm. Price is the another factor that
can contribute in attaining achieving success but inappropriate setting of margins of profitability
according to the disposal income prevailing of targeted audience has major impact on the
functioning of the company.
Higher cost can not enable the particular organization to receive such margins of profits
which can enable to cover the incurred expenses (Björkdahl, 2020). The approach to adopt the
changing circumstances has the higher level of ability to get significant reliability to retain the
targeted customer. Prevailing government regulation can be considered as negative influencing
for the growth and development of organization. The main reason behind this is that legal factors
highly contribute in deciding that the firm is having concise level of success or not as cultural
differences & way to handle situation in distinct market is different. From the assessment it can
be said that legal, economical, social, technological, environmental, etc. global factors can
influence the smooth processing of organization on global platform.
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REFERENCES
Books and jorunals
Alarussi, A.S. and Alhaderi, S.M., 2018. Factors affecting profitability in Malaysia. Journal of
Economic Studies.
Björkdahl, J., 2020. Strategies for digitalization in manufacturing firms. California Management
Review, 62(4), pp.17-36.
Online
Market Penetration. 2022. [online]. Available through:
<https://corporatefinanceinstitute.com/resources/knowledge/strategy/ansoff-matrix/>
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