Economics Increase in the Value of Currency Research Proposal

Pages: 5 (1963 words)  ·  Style: Harvard  ·  Bibliography Sources: 3  ·  File: .docx  ·  Level: College Senior  ·  Topic: Business


Increase in the value of currency

There is no straight forward answer to whether the impact on a business will be negative or positive after the country has witnessed an increase in the value of currency, since there are a number factors involved. Below we will try to incorporate each of those factors.

The firm that sells domestically

For a firm that sells domestically, it may confront tougher competition from importers since the price of finished products imported from other countries may turn out be cheaper than the price of its products. However, the complexity of the marketplace is such that one cannot be certain about any speculation. For instance, firms that welcome innovation and encourage the growth and development of the organizational knowledge, as well as, performance can overcome these tribulations. This is so because in these firms, novel marketing strategies work a lot better, also, such firms are more flexible, especially when they are not very old. Globalization has led to market expansion, which in turn has led to a continuous process of growth and development in the organization (Utterback and Abernathy, 1975). Therefore companies that sell domestically and are in sync with the aforementioned principals might not be affected that much by an increase in the value of their currency.

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Whereas if companies, targeting the domestic market, are not applying successful marketing tactics and strategies due to their rigid business structures and their stubborn bureaucratic bosses, then it is highly likely that competition will endanger their very existence. This is because their tasks are anything but innovative; they are more and more identified by their routine, as well as, repetitive workload. Responsibilities turn out to be more prominent and boundaries are formed. The organization does not take any form of risk as a lot more is at stake for the company. They incline towards rigidity and inflexibility, which ultimately leads to their demise (Lewin and Massini, 2003; Penrose, 1959; Schumpeter, 1942).

The firm purchases supplies from other countries

Research Proposal on Economics Increase in the Value of Currency Assignment

The firm that purchases supplies from other country has very little to loose if it experiences an increase in the value of its domestic currency. However, if the company is old and has rigid management structures; than, innovation decreases with the age of the organization and with it the performance of its research and development department (Lewin and Massini, 2003). On the other hand, newer organizations tend to display a more flexible management structure and have lesser hierarchies. This allows them to change and adapt according to the changes in the external environment. They continue to transform the innovation introduced with their products and services, which ultimately augments their overall corporate performance. On the other hand, old organizations have problems in adapting rapidly owing to their large bureaucratic structure (Lewin and Massini, 2003). If these old companies face competition from newer entries in the market that too are importing from abroad, then these old companies may confront problems in the near future.

The firm sells products domestically and in other countries

For a firm that sells domestically, as well as in other countries, it might confront tougher competition (1) from importers in the domestic market; (2) and companies operating in its exporting countries due to the increase in its prices. However, if the company has an innovative culture than it might help them function and adapt more effectively. Innovative companies have a much quicker process of accumulating knowledge and experiences. They also are able to augment the development of core competencies that affect their performance constructively. These firms are identified by an innovative culture. Furthermore, they have a tendency to take greater risks so that they can get greater returns. These firms tend to acquire better results in international markets than the other organizations. Conversely, if their management structure is rigid, then it is highly likely that they will fail to maintain their market share (Lewin and Massini, 2003).

Innovative international firms, due to their young age, sometimes lack in human capital, as well as, other resources. Here old organizations come out on top since they have built up these resources during their functional period. Older organizations solely depend upon their tangible resources to generate high level performances; whereas young organizations rely upon innovation, entrepreneurship, as well as, other intangible resources so as to acquire an easy entry into overseas marketplaces. Increase in the value of the currency may and may not affect businesses that sell their products domestically, as well as, internationally. The outcome solely depends on how well the company adapts to this change (Lewin and Massini, 2003).

The firm has manufacturing plant in another country

The firm that has a manufacturing plant in another country has very little to loose if it experiences an increase in the value of its domestic currency. However, outsourcing has its problems and if the company is not aware of them, then they might loose out while others gain from this change in the currency value. The country chosen to manufacture the products might not have the kind of capable workforce needed to produce quality products. If the workforce is productive, the conditions might not be as favorable. If both these conditions are favoring this company, it has to ensure that administrative and operational efficiencies consistently transform with time (Autio et al., 2000). All in all, if every thing works out well for the company than it might experience increase in corporate profits.

Liquor licensing

Companies producing and selling alcohol have been regulated by the federal government. One can assert this move to be a social regulation tactic. This is because in some localities, one could see a storm of retailers selling alcohol products to underage children. Furthermore, research shows that the demand in alcohol consumption increases if the supply increases. People tend to purchase added quantities of alcohol if they see that they are getting it at a bargaining price. Retailers tend to lower the price due to competition they face from other retailers in the neighborhood. All of a sudden, an individual that could afford one or two bottles; is taking home an entire crate of alcohol beverages. The federal government's regulation has limited the number of outlets that can be opened in a particular neighborhood with hopes of changing the behavior patterns of the consumers (Pollack et al., 2005). This will assist in the reduction of alcohol consumption, which will ultimately benefit the communities.

Justice Department guidelines

Justice department is perhaps one of the oldest institutions in the United States of America. It, therefore, has been a very strong and rigid bureaucracy. Any attempt to bring about a change would require a great deal of not only planning and effort but also time and money. The sole aim of the department of Justice is to apply the law passed by the Congress and Senate of both, their respective states, and the federal government. The Justice Department guidelines framed by the government are aimed at regulating this institution so that it is able to perform better and make the execution of laws accessible and equal for every citizen of America. In addition, the regulations help this organization enforce the laws and defend and interpret the constitution in line with the law. Moreover, the regulations assist in protecting the American people from not only domestic but also foreign threats. The Department of Justice also has the liberty to provide leadership in not only controlling crime but also preventing it. It furthermore, attempts to give righteous punishment for those found guilty under the law. Lastly, the regulations allow fair and impartial trial for all American citizens. The ultimate beneficiary for these social regulations is the American people (United States Department of Justice, 2008).

The clean air act

Energy has been the foundational block for all modern activities, whether it is fighting a war (at the state level), or taking part in recreation (at the domestic level). Energy production and consumption involves a great deal of carbon emission, which creates air pollution. Critics assert that this is the most dangerous threat facing us today as one can live without water and food for several days. However, it takes only minutes for death to occur, if there is no air. Air pollution damages the environment, the trees, the plants, corps, lakes, rivers, as well as, animals. It completely damages the environment; but also it damages the local buildings and monuments. It limits one's ability to see and also affects aviation flights. The clean air act allows the federal government to regulate industries so as to minimize air pollution. It is an economic regulation that has set clear operational and functional standards for companies and therefore, it punishes those which fail to live up to those standards. It has changed the way business is carried out in the United States. The ultimate beneficiary for this act is the American people. They get to breathe uncontaminated air, which helps them immensely. Fewer Americans, as a result, suffer from various forms of respiratory problems. Furthermore,… [END OF PREVIEW] . . . READ MORE

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