subject: Investing in Complex Times [print this page] Investing in Complex Times Investing in Complex Times
Global economy
Global economy is the overall economic performance of all the world's countries national economies. Being a globalized society as a result of technological increase, the world has been brought together by common monetary and financial systems like the World Bank and the IMF. In this case, valuation of the country's economic performance is entirely based on the value of the country's currency in the global market. It should be noted that, local currencies in the world economies are usually translated on the basis of purchasing power'. Basically, the higher the purchasing power of the currency, the better the economy of that particular country. It should be noted that, the performance of the world's economy is usually measured using the gross world product. More so, global equities and debt issuances are sometimes used to determine the ultimate stability of the world's economy (Braun and Borja 1097).
Question 2
US Domestic Macro-economy
US Domestic Macro-economy refer aggregate internal economic performance of US. Various forces like recession and boom within or outside the country have been found to impact a lot on the overall performance of the US economy. For instance, the recession conditions in US in the year 2008 has been reported to have affected all the other countries which trade with US, including the Middle East countries despite having huge volumes of oil reserves. it should be noted that, the performance of the US domestic macro-economy determines a lot on the overall employment level in the country. Considering the time of recession in the year 2008, there was reported more that 0.95 million employees who lost their jobs. In addition, salaries and wages were contracted as a result of the country lacking enough financial resources to support all the systems (Cronin 89).
It should be noted that, the consumer price index in US, which measures the level of inflation in the country is influenced a lot by the macro-economic conditions of the country. Certainly, if the price of the dollar in the world market is low, then a lot of money is expected to be in circulation since people will not be interested in purchasing the dollars. As a result, the inflation experienced within the country can be described as originating from the global economy, rather than from the domestic economic conditions. It should be noted that, the US interest rates are also affected by the macro-economic conditions in the country. As it was observed, the Great Recession experienced in the year 2007 through the year 2009 resulted into decline in interest rates by 0.25% (Barnes 61).
As a result, of financial constraints as a result, of adverse effects of the macro-economic conditions results into budget deficits. Considering the recently experienced recession in the country, the US economy faced the highest budget deficit in the world due to low financial resources within the country. Though consumption in the country almost remained unaltered, the country's overall economic performance faced huge budget deficit. As a result of the adverse effects of the recession, many people's consumption patterns were altered. As a result, many consumers have not been confident in changing their consumption patterns since the onset of the recession (Cronin 93).
Question 3
Interest Rates in US
The interest rates in US have been entirely dependent on the economic conditions prevailing within the country. Though the monetary and fiscal policies have been applied in regulating the interest rates in the country, the ultimate root of the interest rates' is on the level of inflation in the country. It important to note that, interest rates within the country determine the propensity of investors to invest in various economic projects within the country. On this regard, the interest rates within the country are the major determinants of the economic growth and job creation within the country (Barnes 63).
Question 4
The US Federal Policy
The US federal policy is a governmental policy made to enhance federations in the country in terms of modernizing the nationals of the country. More specifically, the US federal policy was established to enhance equity in consumption, be enhancing equal access of the country's resources among its citizens through the use of the green cards. Under this policy, all the citizens of the country were made capable to purchase without limitations in order to facilitate equitable distribution of access to consumer products among its citizens. As a result, the citizens were required to have the green card in order to be able to purchase unlimitedly, and then pay later (Beck 102).
Question 5
Business Cycles
Business cycle refers to the fluctuations in terms of business performances among nations at various times. The US business cycle has been one of the most dynamic and complex ones across the world. The US business cycle is characterized by certain times of recession and business expansions across various regimes (Eaton, et al 27).
In this case, essentials of investment across industries in the country have been entirely dependent on the business cycles within the country. More specifically, various investments in the country have been very sensitive to business cycles. For instance, during the time of boom, the country's investment levels have been observed to increase significantly with increasing money in circulation within the country. Conversely, recession times are always accompanied by low investment rates, since there are limited money supplies within the country. For example, during the recently experienced recession, the country faced severe business losses with very low investments; as some businesses ended up closing. In the current situation, the country is undergoing recovery phase from its currently experienced recession period. As it has been observed, the country is undergoing a very dynamic one and is undergoing various changes rapidly. As per the prevailing conditions, the next business trend in US would be an expansion level since performance has been increasing sequentially (Cronin 74).
Considering the currently increasing technology across the world, it would be most appropriate for the investors to consider the industrial sector as their ultimate choice to invest in. more importantly, this industrial sector seems the most potential to create and have high security in terms of business trends effects. According to the contrarian point of view, the industrial sector forms the realm of the changing society in which the most modern production techniques are thriving the best in the industrial sector. One of the most important aspects of industrial sector to make it quite reliable in investment is the way it is not affected by natural calamities easily like in the cases of agricultural calamities. More specifically, industrial sector is less susceptible to natural calamities than as it is in other sectors like agriculture and service sectors (Eaton, et al 32).
Question 6
Transport and Communications Sector
The US Telecommunications Industry
Telecommunications industry is one of most prosperous industries in US as a result of its importance in the economy. Being a globalized world, there has been the need to connect businesses from all over the world through a systematic means of communication. On this basis the telecommunications industry in the country has really played a very significant role in reinstating and facilitating business progress by enhancing continuous communication among businesses across the world. The concepts of connection marketing and interactive marketing are increasingly gaining attention as businessmen and entrepreneurs concentrate on the ways of maintaining and enhancing customer connections with the present customers rather than attracting new customers. In this connection, the existing researches on employees and customers satisfactions have been having deficit as most of them focus on how to attract new customers (Cronin 76).
SWOT Analysis of the US Telecommunications Industry
The US Telecommunication industry has been one of the most prosperous industries in the transport and communications sector in US. It has been revealed that, the industry receives continuous subsidies from the federal government from time to time, which facilitated its ultimately good performance. More importantly, the strength of the country lies on the currently experienced high technology in communication channels, which has enhanced its subsequent gain of polarity among the people. By having more than three quarters of the US population relying on communications channels online from one region to another, the industry has seen great success. The industry has been found to be making huge volumes of profits, resulting into its ability to maintain and sustain its production sufficiently. Being legally accepted, the industry has never been facing political justice challenges over its operations (Barnes 66).
However, one of the main weaknesses of the industry is that, the main weakness of the industry lies in its inability to control internal levels of making calls. The industry has been found to have its prices for the communication services fluctuate more often; resulting into making of the users get disappointed in most times. This is one of the main threat facing the industry, though there have been readjustments from time to time to stabilize the call rates. Another threat that has been facing the industry is the development of the increasing technology which may interfere with the secrecy of information conveyed within the industry channels. Terrorists are devising strategies to interfere with the communication channels, which poses danger to the existing coherence among the people (Beck 103).
It has been observed that, the US telecommunications industry has the potential to develop its channels across the world to be the most competitive. Being technologically oriented country, the country has the potential to come up with quite reliable communication channels which would further ensure the economic development of the country. This is a very great opportunity of the industry in the country in order to facilitate its higher and reliable performance in all times of the economic situations. More importantly, the industry has the opportunity to devise communication channels which would not be affected by economic trends in order to facilitate the provision of its services all the time. More so, the industry has the opportunity to utilize government allocations in the country which are made to each sector annually. In this regard, the performance if the industry could be great, as it has potential stakeholders (Eaton, et al 37).
The industry has also been faced with a number of threats which act to bar its efficiency and productivity in the economy. More importantly, the US telecommunications industry has really been found to face the danger of being displaced by the development of internet communication among the people. As opposed to the earlier time when people were not engaging in computer communications, the rise of e-commerce and online learning has facilitated the development of internet strategies among the people. As a result, the US telecommunications industry faces a lot of challenges as it tries to establish reliable communication channels. Generally, the industry faces the threat of having its services almost rendered archaic by the increasing communications channels across the internet (Cronin 84).
Question 7
Sprint Nextel Corp.
The Sprint Nextel Corp is based in US, where it provides landline, mobile and internet services both to the domestic market and the world wide markets. This company was established in the year 1998 when the Federal Government passed laws to approve the development of US Stack Company which was called Sprint Nextel Corp. After this, the Sprint Nextel Corp set up difficult programs that were aimed in changing its business from the governmenUS Domestic Macro-economy
US Domestic Macro-economy refer aggregate internal economic performance of US. Various forces like recession and boom within or outside the country have been found to impact a lot on the overall performance of the US economy. For instance, the recession conditions in US in the year 2008 has been reported to have affected all the other countries which trade with US, including the Middle East countries despite having huge volumes of oil reserves. it should be noted that, the performance of the US domestic macro-economy determines a lot on the overall employment level in the country. Considering the time of recession in the year 2008, there was reported more that 0.95 million employees who lost their jobs. In addition, salaries and wages were contracted as a result of the country lacking enough financial resources to support all the systems (Cronin 89).
It should be noted that, the consumer price index in US, which measures the level of inflation in the country is influenced a lot by the macro-economic conditions of the country. Certainly, if the price of the dollar in the world market is low, then a lot of money is expected to be in circulation since people will not be interested in purchasing the dollars. As a result, the inflation experienced within the country can be described as originating from the global economy, rather than from the domestic economic conditions. It should be noted that, the US interest rates are also affected by the macro-economic conditions in the country. As it was observed, the Great Recession experienced in the year 2007 through the year 2009 resulted into decline in interest rates by 0.25% (Barnes 61).
As a result, of financial constraints as a result, of adverse effects of the macro-economic conditions results into budget deficits. Considering the recently experienced recession in the country, the US economy faced the highest budget deficit in the world due to low financial resources within the country. Though consumption in the country almost remained unaltered, the country's overall economic performance faced huge budget deficit. As a result of the adverse effects of the recession, many people's consumption patterns were altered. As a result, many consumers have not been confident in changing their consumption patterns since the onset of the recession (Cronin 93).
Question 3
Interest Rates in US
The interest rates in US have been entirely dependent on the economic conditions prevailing within the country. Though the monetary and fiscal policies have been applied in regulating the interest rates in the country, the ultimate root of the interest rates' is on the level of inflation in the country. It important to note that, interest rates within the country determine the propensity of investors to invest in various economic projects within the country. On this regard, the interest rates within the country are the major determinants of the economic growth and job creation within the country (Barnes 63).
Question 4
The US Federal Policy
The US federal policy is a governmental policy made to enhance federations in the country in terms of modernizing the nationals of the country. More specifically, the US federal policy was established to enhance equity in consumption, be enhancing equal access of the country's resources among its citizens through the use of the green cards. Under this policy, all the citizens of the country were made capable to purchase without limitations in order to facilitate equitable distribution of access to consumer products among its citizens. As a result, the citizens were required to have the green card in order to be able to purchase unlimitedly, and then pay later (Beck 102).
Question 5
Business Cycles
Business cycle refers to the fluctuations in terms of business performances among nations at various times. The US business cycle has been one of the most dynamic and complex ones across the world. The US business cycle is characterized by certain times of recession and business expansions across various regimes (Eaton, et al 27).
In this case, essentials of investment across industries in the country have been entirely dependent on the business cycles within the country. More specifically, various investments in the country have been very sensitive to business cycles. For instance, during the time of boom, the country's investment levels have been observed to increase significantly with increasing money in circulation within the country. Conversely, recession times are always accompanied by low investment rates, since there are limited money supplies within the country. For example, during the recently experienced recession, the country faced severe business losses with very low investments; as some businesses ended up closing. In the current situation, the country is undergoing recovery phase from its currently experienced recession period. As it has been observed, the country is undergoing a very dynamic one and is undergoing various changes rapidly. As per the prevailing conditions, the next business trend in US would be an expansion level since performance has been increasing sequentially (Cronin 74).
Considering the currently increasing technology across the world, it would be most appropriate for the investors to consider the industrial sector as their ultimate choice to invest in. more importantly, this industrial sector seems the most potential to create and have high security in terms of business trends effects. According to the contrarian point of view, the industrial sector forms the realm of the changing society in which the most modern production techniques are thriving the best in the industrial sector. One of the most important aspects of industrial sector to make it quite reliable in investment is the way it is not affected by natural calamities easily like in the cases of agricultural calamities. More specifically, industrial sector is less susceptible to natural calamities than as it is in other sectors like agriculture and service sectors (Eaton, et al 32).
Question 6
Transport and Communications Sector
The US Telecommunications Industry
Telecommunications industry is one of most prosperous industries in US as a result of its importance in the economy. Being a globalized world, there has been the need to connect businesses from all over the world through a systematic means of communication. On this basis the telecommunications industry in the country has really played a very significant role in reinstating and facilitating business progress by enhancing continuous communication among businesses across the world. The concepts of connection marketing and interactive marketing are increasingly gaining attention as businessmen and entrepreneurs concentrate on the ways of maintaining and enhancing customer connections with the present customers rather than attracting new customers. In this connection, the existing researches on employees and customers satisfactions have been having deficit as most of them focus on how to attract new customers (Cronin 76).
SWOT Analysis of the US Telecommunications Industry
The US Telecommunication industry has been one of the most prosperous industries in the transport and communications sector in US. It has been revealed that, the industry receives continuous subsidies from the federal government from time to time, which facilitated its ultimately good performance. More importantly, the strength of the country lies on the currently experienced high technology in communication channels, which has enhanced its subsequent gain of polarity among the people. By having more than three quarters of the US population relying on communications channels online from one region to another, the industry has seen great success. The industry has been found to be making huge volumes of profits, resulting into its ability to maintain and sustain its production sufficiently. Being legally accepted, the industry has never been facing political justice challenges over its operations (Barnes 66).
However, one of the main weaknesses of the industry is that, the main weakness of the industry lies in its inability to control internal levels of making calls. The industry has been found to have its prices for the communication services fluctuate more often; resulting into making of the users get disappointed in most times. This is one of the main threat facing the industry, though there have been readjustments from time to time to stabilize the call rates. Another threat that has been facing the industry is the development of the increasing technology which may interfere with the secrecy of information conveyed within the industry channels. Terrorists are devising strategies to interfere with the communication channels, which poses danger to the existing coherence among the people (Beck 103).
It has been observed that, the US telecommunications industry has the potential to develop its channels across the world to be the most competitive. Being technologically oriented country, the country has the potential to come up with quite reliable communication channels which would further ensure the economic development of the country. This is a very great opportunity of the industry in the country in order to facilitate its higher and reliable performance in all times of the economic situations. More importantly, the industry has the opportunity to devise communication channels which would not be affected by economic trends in order to facilitate the provision of its services all the time. More so, the industry has the opportunity to utilize government allocations in the country which are made to each sector annually. In this regard, the performance if the industry could be great, as it has potential stakeholders (Eaton, et al 37).
The industry has also been faced with a number of threats which act to bar its efficiency and productivity in the economy. More importantly, the US telecommunications industry has really been found to face the danger of being displaced by the development of internet communication among the people. As opposed to the earlier time when people were not engaging in computer communications, the rise of e-commerce and online learning has facilitated the development of internet strategies among the people. As a result, t system to the documented profitable business principles. On this basis, this company established clear processes that were mainly focused internal reorganization and development of its staffs with an aim of attracting more customers than before (Braun and Borja 1097).
Most importantly, there were strategies of enhancing the internal processes which helped in the research of the needs of the customers in order to attract them by fulfilling their needs. It the attempt of fulfilling the needs of the customers, the Sprint Nextel Corp works in relation to the emerging technologies in their marketing and supplying services. As a result of this, the Sprint Nextel Corp has managed to attract many customers not only within US, but also to the rest of the world. As a matter of fact, satisfying customers' needs and requirements of their customers by providing them with the best quality products at affordable prices is the motto and aim of this company (Eaton, et al 41).
In this relation, this company attempts to alter its policies to fit the varying technologies in terms of telecommunications in order to gratify their customers. The performance of the Sprint Nextel Corp consolidated in the year 2005 when it acquired the high performance by having higher equities. It has been observed that, the economic added value of the company has been increasing significantly from the year 2004 to 2005 when its share equity was the highest in the
The Sprint Nextel Corp is a service corporation for automobiles which has manufacturing centers in 36 countries across the world. The Company has employed more than 256,500 employees which are also from various parts of the world. In the year 2005, the General Motors was ranked as the largest telecommunication industry in America and the fourth in the whole world. More so, this company has the third largest universal revenues among the telecommunications companies as indicated in a report that was released in the year 2008 (Cronin 85).
As it has been observed, the financial status of the Sprint Nextel Corp worsened in the year 2009; when it was declared bankrupt to be having negative equities. A lot of investors withdrew from this company it could not pay them adequately. On this basis, this company lost its reputation during this time and hence it experienced a lot of loss. On the other hand, the US government has tried to reconstruct the financial status of the Sprint Nextel Corp and to some extent there are a great number of investors who are currently resuming to buying shares in this company. The sales of the Sprint Nextel Corp have been changing over the past five years indicating its financially unhealthy status (Barnes 70).
In the year 2006, the total sales of Sprint Nextel Corp dropped by 26% which was indicated that; the company was somehow operating at deficits. Certainly, the CEO and the chairman could not detect that bankruptcy was on the corner approaching. As the sale of shares decreased, investors started withdrawing which had a very strong impact to the Sprint Nextel Corp. Importantly, the sale of the Sprint Nextel Corp bonds fell drastically and its stock as at December was below $19 which was the lowest price since 2003 (Eaton, et al 50).
As it was observed, the financial status of the Sprint Nextel Corp was deteriorating year ion year out with the year 2007 adjusting the net loss of $23 million and reported a net loss of $38.7 billions. On the other hand, the pre-tax income in this company increased almost by $900millions and the operating cash flow was improved to $2 billions. It is of importance to note that, 2007 was a very significant year for the improvement of Sprint Nextel Corp as there was the implementation of important structural costs decrease in Canada (Cronin 90).
After a profitable year in 2007, more improvements were expected in the year 2008 for the Sprint Nextel Corp. Unfortunately, extraordinary financial and credit market mayhem radically impacted the Sprint Nextel Corp. This reflected deteriorating marketing conditions in the US as a result of drop in stock exchange rates and low prices of the company's shares. On this basis, many invertors were discouraged from investing in this company which brought about mayhem within the company (Barnes 71).
As revealed in the table below, before the Sprint Nextel Corp was declared bankrupt it had a very positive financial status as can be revealed from the number of employees it has from the United States of America, number of plants in US and the level of debt it owe the creditors. As observed sequentially, the financial status of this company has been deteriorating as many investors pulled out leaving the company in great losses. On August 18, 2010 the GM filed its IPO brochure with the SEC in the pursuit of listing its shares on the stock exchange.
Description
July 10, 2009
After July 10, 2009
U.S.A. Dealerships
5,900
5,000
Ownership
Shareholders, bondholders, and secured creditors
U.S. Treasury, Canada Development Investment Corporation (CDIC)
U.S.A. Plants
47
34
Total Revenue
$ 197 Billions
$143 Billions
Total Expenditure
$ 152 Billions
$ 131 Billions
Debt
$93.7 billions
$17 billions
U.S. Employees
91,00
68,500
In the year 2010, the US government had already taken the control of this company and hence there were some attractive improvements in its financial status in the first quarter of the year 2010 as indicated by Jones et al. (2010). During this time, the overall revenue was $33.2 billion and the net income was attributed to stakeholders especially the common ones to $1.3 billion (Eaton, et al 51).
The Verizon Wireless
The Verizon Wireless is one of the companies in the telecommunication industry located in the United States of American. The company has been one of the best performing companies in the United States with more than ten sub-branches. This company is specialized in producing telecommunication handsets which use wireless networks. Following the currently increasing technology, the company has been performing very well through encompassing the currently increasing technology in its production. The Verizon Wireless was initiated in the year 2001, with its headquarters at Verizona (Cronin 94).
During its initial stages, the Verizon Wireless gained its capital through shares and debentures. More importantly, the company started with initial capital of 5 million USD. Within the first quarter of its operations, the Verizon Wireless made a profit of 0.45million, which marked its good start. In the year 2005, the company had increased its annual sales volume to 7.87 million USD. This was the consolidation level of the company since in the subsequent year, 2006, the company did not realize any significant increase in its share equity. At this point the company was at its maturity stage, as annual sales volumes and share equities remained almost stable. This is reflected in the financial year 2006 when the company's annual sales became 7.89. (Braun and Borja 1098).
In the year 2007, the company expected to perform better through increased share equities. In the first quarter of the year 2007, the company's share equities were 0.23, followed by a subsequent fall by 0.27. More specifically, the share equity in the year 2007, July was -0.04. This was the marking of the company's decline in productivity as a result of the recession period which was setting in. Considering the nature of the worlds banking systems, which is highly interconnected as a result of e-commerce and globalization,; many businesses and investments have been made overseas. Following the growth of housing Bubble between the years 1998 and 2006, America started experiencing subsequent increase in inflation, as commodities continued to soar in prices. As a result, many individuals found themselves unable to afford for most of their investments and other personal requirements. As a result, a lot of money was borrowed from financial institutions to finance such investments. Certainly, the taking or mortgages within the country at such higher rates in pursuit of financing various investments resulted into appreciation of prices for commodities within the country (Braun 76).
The ultimate effect of such increased borrowing and subsequent increases in prices resulted in the company undergoing sharp and unexpected depression due to decline in liquidity ration among various banks and individuals. In the year 2007, the country faced one of its worst, financial crises by having its GDP decline by 17%. Analysts explain that, such a decline in productivity in US as a result of crisis in credit facilities springing from low liquidity within the country was found to impact investment level within the country to a great extent. As it was revealed, the poor performing economic conditions in US in the year 2007 affected the world market by 7%. This shows how interdependent various economies of the world are; resulting from direct overseas investments, as well as online transactions. The great depression resulted into down stream of various stock markets around the globe as well as evictions and lengthy unemployment level resulting low productivity among corporations and social organizations (Beck 108).
One of the most significant characteristics of most businesses in the contemporary society is that, they are performed online. Basically, the act of devising e-commerce strategy of marketing by organizations and firms over the internet has seen many businesses high in performance. This has been one of the most potential channels meant to reach a wider customer base since firms and organizations wishes to reach all parts of the world. As opposed to the advertising using television and radio, which are restricted within certain regions, the use of internet will make organizations and firms; thus making them to be known in many other parts of the world; expanding its clients catchments. As a result, the Verizon Wireless would be making huge volumes of sales due the increased number of clients. As a result, the failure of market condition in US attributed to the failure of other businesses online (Barnes 67).
Conclusion
As it was revealed the status of having many business operations overseas being done online resulted into various businesses throughout the world decline, as a result of the global impact. It is important to note that, the internet strategy of marketing commodities would be more accurate since the customers would be able to view a variety of the commodities offered online. Due to the fact that, the organizations would be quite dynamic in terms of their commodities, more clients from the entire world are expected to purchase a variety of commodities since the higher the number of commodities varieties will enhance a variety of commodities since each customer has his/her own unique tastes and preferences. In addition, the internet strategy would ensure the displaying of the commodities with very attractive graphics resulting into more clients ordering the commodities.
Being a globalized world, e-commerce strategy is anticipated to create a lot social networks resulting into more sales for the organizations and firms. Many business transactions were to be made online through financial institutions which have been well connected over the world; resulting into the depression affecting other country's performance greatly. Various social networks have been available on the internet like the face book and other social bogs which have enhanced a more interactive business environment. Basically, the use of internet as a means and channel of promoting and advertising the company's commodities would greatly enhance the achievement of the company's goals and objectives. Generally, the organizations' and firms' aim of reaching the global market would be cherished through the use of the internet strategy as this would ensure the reaching of many people all over the world; which resulted into the impact in US affecting the entire businesses over the world.
Works Cited
Barnes, D. (2001). Understanding Business Processes. Washington: Library of Congress
Beck, Thorsten, "Financial Development and International Trade: Is There a Link?"
International Economics, 57: (2002):107-131.
Braun, Matias. Financial Contractibility and Asset Hardness. University of California:
University of Califirnia Press, 2003.
Braun, Matias, and Borja, Larrain. "Finance and the Business Cycle: International, Inter-
Industry Evidence," Journal of Finance, 40, (2005): 1097-1128.
Cronin, Michael. Unchained Value: Credit in International Business. Harvard: Harvard Business
School Press, 2000.
Eaton, Jonathan, et al. Trade and the Global Recession. University of Chicago: University of
