Managerial Economics and Globalization Essay

AbstractThis stem will describe the elaborate of a fictitious business and will assess the current environmental skitter factors opus de destinationining the factors that will have the greatest fix on set up operations and managements ending to continue or violate operations. Thirdly, this paper will evaluate the monetary performance of the order use the information provided in the scenario consider every key drivers of performance, such as company lettuce or red ink for both the short term and long term. Also, a recommendation as to how the company can repair its positivity and develop a brief plan to implement the recommendations. Lastly, this paper will assess the circumstances in which the company should end operations while providing a set of reasonable rules.1. Briefly describe the details of the fictitious business that you created for this assignment.The fictitious business in this assignment is named TopShop, which is an American multinational retailer wit h its main headquarters in New York. It is a high end fashion brand that specializes in fashion clothing, shoes, writing and accessories. Currently, TopShop has 150 workers for its factory in New Jersey, and has hired a adviser to commotion some advice that could help it make a decision as to whether it should shut down completely or continue operations. In addition, TopShop has coke workers that produce 6,000 units of output per calendar month (working 20 days / month). The daily enlist (per worker) is $70, and the harm of the unwaverings output is $32. The cost of opposite uncertain inputs is $2,000 per day. The firms fixed cost is high enough so that the firms total costs exceed its total tax revenue. The fringy cost of the last unit is $30.2. survey the current environmental scan factors. Determine the factors that will have the greatest impact on seed down operations and managements decision to continue or discontinue operations.The environmental scan factor refers to the macro environment and is the activity of getting information about events and relationships in a companys outside environment, the knowledge of which would assist top management in its task charting the companys future course of action. (Aguilar,1967). Comparably, finance, marketing, and operations will have the greater impact on plant operations and managements decisions in determining if the operation continues its business.First, finance is responsible for acquiring financial resources at favorable footings and allocating those resources throughout the business, as well as budgeting, analyzing, investment proposals, and providing coin for operations. Secondly, marketing aims to analyze and determine consumer demands in the future, thus selling and promoting its products and services. Thirdly, operations are responsible for production of goods and customer services in business. In addition, the production of goods or services supply could qualify inputs into outputs ( Michaels, 2011). Inputs such as capital, labor, and information are used to create goods or a service. That is wherefore companies take measurements at various points in the transformation process and then compares them with previously established standards to determine whether corrective action is needed.In other words, the three factors finance, marketing and operation can work in the film and interpretation of the political, economic, social and technological (PEST abridgment) events and trends which influence a business, an industry or even a total market. In summary, they have the greatest impact on plant operation and managements decision.3. Evaluate the financial performance of the company using the information provided in the scenario. Consider all the key drivers of performance, such as company profit or loss for both the short term and long term. Be sure to memorialise the calculations that helped you reach your conclusions.Topshops financial performance is in trouble. A decision was make to hire Mr. Blake Lively as a managing consultant to offer suggestions to remedy Topshops financial performance. Based on the data given, Blake considered the hobby key drivers of performance and the financial analysis. The details are pursuit blow employees produce 6,000 units in a month.The price is $32The total revenue per day = 6,000*$32 = $192,000Daily betroth per employee = $70Total wage in one month = 20days * 100 employees * $70 = $140,000Total variable star cost = variable inputs + total wage in one month= $2,000*20days+ $140,000 = $180,000 per month.AVC=TVC/Q=$180,000/6,000=$30 per unitNet income=Total Revenue-TVC=192,000-180,000=$12,000Based on the analysis of data, Topshop could continue its operations in short term because the $32 price is more than AVC $30, and the revenue received per month is $12,000.However, in the long term, Topshop should earnestly consider the option of shutting down completely. The main reason beingness that the firms fixed cost is high enough so that its total costs exceed its total revenue, and the price must be less than AVC. Under this situation, the firm has no other recourse plainly to close its operation.4. Recommend how the company can improve its profitability. Then, develop a brief plan to implement the recommendations.Every business can improve its profitability by aiming to increase profitability, reduce costs, consider the price, and expand the market. steal more effectivelyOne of the most obvious routes to increasing the profitability is to buy more effectively. It makes sense to review a supplier fundament on a regular basis and to determine if a firm can buy the selfsame(prenominal) au naturel(p) materials more cheaply or efficiently. However, it must be ensured that the cheaper raw materials will not reduce quality of product and service (He, et al., 2007). parcel out your costsClose management of the costs can drive firms profitability. Most businesses are capable of fining some forms of waste to reduce, still it is important to be mindful and not cut costs at the expense of the quality of products and services.Pricing considerationsIt is a good idea to regularly examine the pricing. Changes in the marketplace may help increase the price without risking sales. However, it is essential to test any price increases before they are made permanent.Expand your marketMoving into raw(a) market areas can transform a business and if handled correctly, can portentously increase the profitability. However, bear in mind that developing new products and services and selling in new markets can be risky and mistakes can prove very costly.5. Assess the circumstances in which the company should discontinue operations. Provide a rationale with your response.To qualify for presentation as a discontinued operation, all of the following conditions must be met1. The operations and cash flows of the component have been or will be eliminated from the ongoing operations of the entity as a dissolvent of the tendency transaction and2. The entity will not have any significant continuing involvement in the operations of the component after the disposal transaction3. A description of the facts and circumstances leading to the evaluate disposal, the expected manner and timing of the disposal and the carrying amounts of the major classes of assets and liabilities included as depart of the disposal group (if not reflected separately on the face of the statement).4. The dupe or loss recognized and, if not separately presented on the income statement, the supply in that statement in which the gain is included.5. If applicable, the amount of revenue and pretax profit or loss reported in discontinued operations.6. If applicable, the segment in which the long-lived asset or disposal group is reported.ReferencesAguilar, F. J. (1967). Scanning the work Environment. New York, NY McMillan.Michaels, R. J. (2011). Transactions and Strategies. 1st Edition. Mason, OH Cengage Learning.He, Y. Q., Chan, L. K. & Wu, M. L. (2007). Balancing productivity and consumer satisfaction for profitability Statistical and fuzzy regression analysis Original Research Article. European Journal of Operational Research, 176(1), 252-263Drake, M., Gerde, V., & Wasieleski, D. (2011). Socially responsible modeling a stakeholder cuddle to the implementation of ethical modeling in operations research. OR Spectrum, 33(1), 1-26. inside10.1007/s00291-009-0172-9