Economics and the Market Forces, Research Paper Example

In the entire world, sound management practices are the force behind success of any institution be it private or government institution, profit making or non profit making as well as charitable institutions. The decisions that are made in all cadres of management levels are highly dependent on appropriate analysis as well as a clear understanding of the economic ramifications of the decisions so taken. Thus put, economics touches on most if not all management decisions as well as future strategies. My motivation to take economics major is informed by this understanding as well as the knowledge that it is an essential area of management as well as decision making that cannot be ignored by any business or organization that plans to be a going concern. Any decisions that are to be made at management level ought to put into account the likely ramifications of these decisions as the financial implications can render these decisions irrelevant.

First the world right now is faced with a serious economic recession as well as ever fluctuating market prices. Organizations need to know the likely sources of credit facilities due to the ongoing credit crunch. To make these decisions, proper analysis by a financial expert is therefore necessary to help in making these decisions.  During the years preceding the current financial crisis, serious scandals rocked the market. These include the collapse of WorldCom and mostly notably the collapse of Enron and the subsequent collapse of their auditors, Arthur Andersen. For the investors seeking to put some money in the stock market, it is imperative that they have economics professionals who specialize in market speculation and thereby advising them on the best way to invest their money and by so doing boosting their confidence and increasing the trade volume in the stock market. The other area where economics major is very applicable is in the lending and credit institutions. This is especially in view of the volatility of the markets.

The other area that as an economics specialist I will be of a major use is in helping government agencies design fiscal strategies. This is especially in such times as these of recession and global meltdown, the government needs to make sound physical policies concerning the stimulus package as well as the implementation of an appropriate tax regime to help stimulate the recovery of the economy.

Article Summary

Emaps Under Pressure 16 Dec 2009

Emap is a private equity company that is owned by Apax partners and Guardian Media Group (GMG). It is faced by eminent collapse if it is unable to renegotiate its financing arrangements as its operations are faced by what has been described as significant doubt. The company’s financials show that their failure to renegotiate its financing arrangements would force its situation into becoming unmanageable. In the six month accounting period to September 30 2009, the company reported a 3% fall in revenue compared to a similar period last year. In light of this the company seeks to renegotiate its covenants to enable it comply and hence continue operating as a going concern.

The business interest that was acquired by GMG and Apax in March 2008 for $ 1 billion has suffered in the wake of the global economic crunch leading to job cuts. GMG one of the two partners in the investment has disclosed plans to cut 100 jobs as well as offering voluntary redundancy. This is intended at resting over 800 editorial staff.

The article focuses on the effects of the global economic meltdown as well as the responses that the companies are coming up with to respond to the meltdown. This is the major issue worrying the world of business today. The topic is relevant as it highlights the struggles faced by the companies with the reducing purchase power of consumers. This has affected the ability of the companies to meet their trade targets as well as service the credit responsibilities. The purchase power of the consumers is what drives the market demand and this has therefore led to a low demand. The profits volumes have also equally diminished with the decline in purchase power.

Economic Intuition

The paper highlights the relevance of economic principles of demand and supply. The changing times have not reduced the power of Emap to meet its customer’s demands for the supply of the publications it makes since it is in the business of meeting the customer’s needs. However the market driver of market demand has been adversely affected by the economic meltdown. Since demand is driven by the purchasing power of the consumers, this purchase power has been decreased by the lack of finances. This has led to the decrease in the revenue and eventually the profits of the company. This has of course brought with it adverse consequences as the liquidity of the company has been affected hence reducing the ability to pay their debts.

These short run economic changes have led to the impact being felt in a more direct way by the various corporations. This is most particularly the case in regard to employment. The people working for the companies that are faced by these uncertainties are facing a problem retaining their staff since the demand for their products has waned offer time. This has made these companies layoff staff in an effort to remain afloat. This is causing unemployment all around the country as many companies are responding to the economic situation in the same way.

Conclusion

The current economic times have seen companies survive situations of extreme turbulence as well as changing market circumstances which have led to companies being forced to take extreme measures in an effort to stay afloat. This has been in the form of renegotiating their credit facilities as well as shedding off and unnecessary bulk they might have in the form of staff  as well as looking for most efficient and cost effective operation systems.

Reference

Times online. Emap under pressure to sort out debt. Retreived 16 November 2009 Available http://business.timesonline.co.uk/tol/business/industry_sectors/media/article6958090.ece.