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firms economic decisions

firms economic decisions

  • Type of paperAssignment
  • SubjectBusiness
  • Number of pages3
  • Format of citationAPA
  • Number of cited resources2
  • Type of serviceWriting from scratch

In this Session Long Project, you will follow one firm of your choice for the entire session. You will analyze how this firm makes economic decisions as well as how events in the economy affect the firm. Please choose ONE Fortune 500 firm from the following list (feel free to use ANY firm, it does not have to be in the top 10): Fortune 500 After choosing one firm, address the following questions in a 3- to 4-page essay: What is the organization you are going to use? Why do you think it will be an interesting focus for your economic analysis? What are positive and normative statements? Describe the difference between these two types of statements in your own words. Write at least ONE positive and ONE normative statement about your firm. Find any current event/article regarding your firm from an online resource (nytimes.com, online.wsj.com, etc). Be sure to reference this article in your paper. Summarize the issue and how it relates to at least ONE of this module’s economic concepts (opportunity cost, scarcity, factors of production, diminishing returns, spillover principle, etc.)

General Motors Company

General Motors Company is a global automotive business with the main focus of retaining customers for life. Due to this, the company is committed to treating their customers with respect. Further, the company believes in caring for their customers not only after the purchase of a motor vehicle, but also as long as they retain it. Appreciation of General Motor’s customers and everyday fighting to retain customers allegiance inspires the company to make improved, high value cars, safe automotive, trucks as well as intersects. General Motors workforce utilizes the finest personnel in the automotive industries as they have a rich diversity and a dedicated team of workers.  From heavy-duty cars to electric cars, the firm offers a large assortment of vehicles that satisfies the wants and drivers anticipations on an international level. There are eight different automotive products under the General Motors business sectors which are; Buick, GMC, Chevrolet, Cadillac, Wuling, Baojin, and Jiefang.  General Motors allocates the top most precedence to matters that affect their customers’ comfort and their worth of living. Due to the above, the company is driven to maintaining the top-most quality standards in their activities. Quality and undoubted safety of their automotive is a big part of their foundation.  More so, General Motors expertise has been prioritized.  The business keeps on to excel in engine and drive train development, and striving to drive exciting developments in alternative vigor and purposeful motor vehicle design (Pavlínek, 2015).  Despite all the above, General Motors has many positive as well as normative factors that’s affects its production and sales activities in general.

Positive statements are objective statements that are testable, amendable or can also be rejected as they refer to the available evidence.  In addition, positive economics deals with explained objectives as they test or reject theories.  In our case, a fall in General Motors incomes will lead to a rise in demand for personal-label production parts.  On the other hand, normative statements could mean a judgment of value. The term means a subjective statement of opinion rather than a proven fact that is testable by looking at the available evidence.  In our example, if there is much unemployment in General Motors, the government might increase inflation rates in their production activities which is more harmful than unemployment.

General Motors was one time seen as one of the top managed and mainly successful companies in globally. Between the years 1980 and 2009, it declined in market allocate from 62.6 to 19.8 percent leading to General Motors bankruptcy in the year 2009. Factors such as high legacy labor, health care costs, letdown to understand the contest they faced and the incapability to quickly respond efficiently to competition after realizing it are the factors that led to its downfall. Suggestively, while the company was highly handicapped through rising heritage costs, its decline was largely affected by poor designs, substandard quality automobiles as well as low productivity(Henderson, 2014). The firm seemed to be incapable to assume the managerial principles thus enabling its Japanese challenger, Toyota, to produce cars of lower costs even though General Motors was initially richer than its rivals. Significantly, the factors for failures could be decades of overly generous union contracts putting the firm in overwhelmingly big cost disadvantage. General Motors had higher labor costs as compared to their rivals Toyota. According to Associated Press of 2007, heritage health care and many retirement funds owed to their retired workers, work costs at General Motors went as elevated as $73 per hour, the Toyota costs were around $48 per hour.  General Motors costs were soaring mainly because of the firms declining market share. More so, low quality and design was at least an important crisis as that of legacy expenditures.

Despite all above, General Motors has increased its export of automobiles. In the month of April 2015, General Motors made announcements of investing $5.4 billion in the countries plant improvements in a period of three years. Since the year 2009, General Motors announced U.S facility investments have created around 3,650 new employments and yet protected the arrangement of around20,700 other jobs. General Motors exported 233, 145 units of automotives in 2014 from America, with Canada as its largest export market (Henderson, 2014). The firms’ second prevalent export target was the Middle East, as it exported around 44,356 units during 2014.  Mexico, China, Israel and Switzerland were other notable General Motors export markets. General Motors manufactures in 30 countries and in the year 2014, the firm sold a sum of 9,924,880 vehicles worldwide an increase of 2% from 2013. Its sales in China went up by 12% which is General Motors largest market with more than three million vehicles sold there. (Pavlínek, 2015). Production of the model called Cadillac ELR, an unlimited range of thrilling vehicle, was started in 2013 at the Hamtramck stand. Bob Ferguson, the company’s vice president said that the 2013 North American worldwide Auto Show that adding to the U.S marketplace, the ELR would be exported to the major global luxury markets, as well as China and Europe.

As the majority of automakers tend to build in the markets that they sell, there I the possibility of opportunities globally to export the U.S made automotives.  All the above trends by General Motors show that the U.S automotive business is making a noteworthy contribution to the achievement of the industry. The firm has mastery the factors affecting their competition and production costs as they have mainly adopted their competitor’s management methods.

Reference

Helper, S., & Henderson, R. (2014). Management practices, relational contracts, and the decline of General Motors. The Journal of Economic Perspectives, 28(1), 49-72.

Pavlínek, P. (2015). The impact of the 2008–2009 crisis on the automotive industry: global trends and firm-level effects in Central Europe. European Urban and Regional Studies, 22(1), 20-40.