LB5229:03 - Micro and Macro Economics: Analysis of XTV Network

This report provides a comprehensive micro and macroeconomic analysis of XTV Network Limited, a media network enterprise located in Australia and the USA. It examines various aspects of the company's business environment, including its products, customers, competitors, market structure, and demand curve. The report also delves into the factors of production, production costs, and cost structure analysis, highlighting the company's high fixed costs and operating leverage. Furthermore, it analyzes the macroeconomic factors affecting the business, such as political stability, inflation, unemployment, interest rates, and exchange rates. Finally, the report discusses the sustainability practices of XTV Network Limited, considering the externalities of production and consumption. This analysis offers valuable insights into the economic dynamics and challenges faced by XTV Network Limited in the competitive media market.

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

5ECONOMICS FOR A SUSTAINABLE WORLD
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

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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