This week students will review and revise their Week 3 Research Analysis for Business Signature Assignment based on economic analysis. Expand their Week 3 analyses to evaluate the challenges of expanding their chosen company’s production to a foreign market.
Tutorial help on Excel® and Word functions can be found on the Microsoft® Office website. There are also additional tutorials via the web offering support for Office products. Revise your Week 3 assignment, Research Analysis for Business. This Week 6 report should only include one conclusion, so you will need to rewrite the conclusion you included in your Week 3 assignment, Research Analysis for Business. Select a foreign market in which to expand your chosen product.
Prepare a minimum1,850-word report addressing the points listed below. The use of tables and/or charts to display economic data over the time period discussed is highly encouraged, you may submit any economic data in Microsoft® Excel® format in a separate file. You may use the U.S. Department of Labor’s Bureau of Labor Statistics (BLS), U.S. Dept. of Commerce’s Bureau of Economic Analysis (BEA), the Federal Reserve of St. Louis’s FRED data, the CIA World Fact Book, World Bank data, and World Trade Organization, or other appropriate sources you might find on the Internet.
• Evaluate current global economic conditions and their effects on macroeconomic indicators in your selected country. Provide forecasts for population growth, gross domestic product (GDP) growth, GDP per capita growth, export growth, and sales growth.
• Evaluate any competitors’ existing production in the chosen country.
• Assess sales forecasts in the selected country by using the Federal Reserve of St. Louis’s FRED data, the CIA World Fact Book, World Bank data, World Trade Organization, or other appropriate sources you might find on the Internet.
• Categorize the type of economy that exists in your selected country as closed, mixed, or market. What is the difference between these types of economies and how might this affect your expansion?
• Assess how your chosen country’s current credit market conditions, especially interest rates and the availability of financing, affect demand for your product or service and your planning or operating decision for your production in that country.
• Analyze the role of the selected country’s central bank on that country’s economy.
• Compare the availability, education, and job skills of the work force in the selected country. Discuss any additional challenges of international production, such as political stability, availability of government financing or other incentives, threat of capital controls, and exchange rate risks.
• Explain any additional supply chain challenges you anticipate if attempting to make your product in your chosen country and selling the product in other countries.
• Based on the data gathered and analysis performed for this report write a conclusion in which you:
◦ Create business strategies, including price and non-price strategies, based on your market structure to ensure the market share and potential market expansions and explore global opportunities for your business in a dynamic business environment and provide recommendations.
◦ Develop a recommendation for how the firm can manage its future production by synthesizing the macroeconomic and microeconomic data presented.
◦ Propose how the firm’s position within the market and among its competitors will allow it to take your recommended action.
◦ Recommend strategies for the firm to sustain its success going forward by evaluating the findings from demand trends, price elasticity, current stage of the business cycle, and government.
◦ Recommend any comparative advantages your company will have over competitors currently operating in that country, and defend your position, either for or against, expanding your company’s production into your chosen country based on your research.
Integrate with the Week 3 Individual Assignment. The final report should be a minimum of 2,900 words.
Cite a minimum of three peer reviewed sources.
Include all peer-reviewed references and government economic data sources/references from Week 3.
Format your assignment consistent with APA guidelines.
Week 3 Assignment:
The organization being taken into consideration in the present scenario is in the name of PepsiCo. This organization is being based in the United States of America and is being providing various kinds of beverages and food products to the customers. In the course of beverages and food products, it is being identified that the organization has its market being located in various parts of the world. Here, discussion is going to be made regarding various crucial things about the organization in terms of economics.
The market structure of the organization is in the name of Oligopoly form of market structure. There are few organizations in the market which are being controlling the highest share in the market. Other organization which is in the category of oligopoly in this market structure is the organization in the name of Coca Cola (Ruster, 2009). This organization helps in ensuring that, proper share in the market is being maintained in the course of ensuring that, and better needs are being developed without any kind of trouble or issue.
The market share of the organization PepsiCo in comparison to its competitors is 14.41%. This market share has dropped down to a certain extent and the organization has to ensure that, it recovers with the market share to a certain extent for ensuring that, positive results are being generated in the area of ensuring that, best results are being generated in the course of doing the operations.
The organizations which are being found in the category of Competitors of PepsiCo include the organizations such as Coca Cola Company Dr Pepper Snapple Group and Reeds. These are the competitors of the organization which are also being providing various categories of consumer products in a way that the organizations are being doing well for the purpose of ensuring that, best areas of doing the tasks are being identified and there are no issues taking place at a particular point of time in the course of doing the working at a particular point of time in the course of achievement of targets.
Barriers to Entry
The market in which the organizations are being working is oligopoly form of market structure. In this kind of market structure, there are certain kinds of barriers to entry which are to be taken into consideration. The barriers to entry in oligopoly form of market structure include the following barriers. The first barrier to entry in this form of market structure is economies of scale (GDP Growth, n.d.). The organizations which do not have economies of scale are not likely to continue in the market for a long period of time. Another entry barrier is product differentiation. In this area, the organization has to identify that it is being working in a way that, it products the products which are entirely different in comparison to the existing products so that, its stays in the market for a long period of time.
Trends in Current Macroeconomic Indicators
a. Current stage of business cycle: according to the information available in June 2017, the economy of the United States of America is in expansion phase. The economy is in expansion phase since the year 2009 since last 8 years. Normally, the expansion phase, lasts only 5 years but current expansion phase has continued for a long period of time of late.
b. GDP: At the present time, the GDP of United States of America is at the level of US$18.57 trillion.
c. Inflation: The rate of inflation in the country at the present time is at the level of 1.60% which is much lower in comparison to the rate of inflation in other parts of the world.
d. Unemployment Rate: The rate of unemployment in the United States of America at the present time is at the level of 4.40%. This again is much lower in comparison to the rate of unemployment in other parts of this world.
e. Federal Funds rate: The federal fund rate in the country at the present time is 1-1.25% in the United States of America.
f. Prime rate: The prime rate is 3% above the federal fund rate.
Impact on firm
The annual sales of the organization PepsiCo is being taken into consideration for a period of last 3 years. The sales of the organization in the last 3 years have been on a decline trend. The sales was $66 billion in the year 2014, it reduced to $62 billion in 2015 and then further reduced to $61 billion in the year 2016. This shows that even though, inflation is being going down but the sales have not increased. This way, inflation or reduction in unemployment rate is not having any impact on the level of sales being generated by the organization at the present time.
The business strategy to be adopted by the organization is to ensure that it works towards providing health products to the customers (PepsiCo, n.d.). With the help of healthy products, the customers are more likely to make sure that they move forward for the purpose of obtaining the products and ensuring that, proper results are being generated by them in the course of products being taken by them.
In terms of price elasticity, it is being identified that, the product is inelastic. The changes in price of the product do not have impact on the way in which the organization is being providing the products. The products are not being priced very high therefore, it is being identified that the organization would be doing sales of the products in the same way irrespective of the change in price of the product.
Business strategies: In terms of business strategies, the organization should ensure that it adopts the strategy of being innovating and providing new kinds of products to the customers. The customers will be more inclined to make purchase of the organizational products at a particular point of time.
Future production: The future product is likely to improve as the economic condition of the country is being improving to a considerable extent and the gross domestic production in the country is also being increasing to a certain extent at a particular point of time.
Firm position: The position of the firm at the present time is appropriate and in the course of the position of the firm, it is likely that the position would be strengthened to a certain extent as there are not much competitors in the market.
Recommendation for sustaining growth: To sustain growth in the market, it is being identified that the organization should make sure that it is being working well towards avoiding any kinds of issues which are likely to arise to it. To the organization, it is going to be crucial to work towards the tasks and accordingly make decisions in the course of achievement of positive results regarding the area of operations.
GDP Growth. (n.d.). Retrieved August 4, 2017 from www.tradingeconomics.com
PepsiCo. (n.d.). Retrieved August 4, 2017 from www.finance.yahoo.com
Ruster, C. (2009). Macroeconomics. Routledge.
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