Macro and Micro Economic Factors that Influence Plant Activity

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Recommended: macro- & micro-economic

This paper will first discuss factors that describe and analyze the macro- and micro-economic factors that could directly or indirectly influence plant operations here at ABC Complete Kitchens. Next, it will explain legal considerations that our organization must be prepared for, which are also relative to obtaining credit, having reliable market conditions, and avoiding product liability

Capital Investment

One of the most important concerns to our organization is capital investment. By investing profits back into our machinery we can stay competitive by increase productivity. Each worker must have available to him/her the proper equipment to complete tasks with ease. The newest technology available to the industry must also be provided to workers in order to compete. Training for our employees (as mentioned in a memo sent earlier this year) will increase human capital which is an invaluable asset. (Riley, 2006)

Economies of scale

Therefore, by updating plant equipment ABC Complete Kitchens can gain competitive advantage through scale economies. Scale economies are caused by lowered cost of production due to an increase in output. By investing in machinery our company can increase production, lower cost per unit, and therefore gain higher profits. Pricing for our industry will be determined by price elasticity of goods needed to for production.

Price Elasticity

Prices on goods needed for production will strongly influence prices of goods produced. Supply and demand determines how elastic prices will become. When supplies become minimal and demand stays regular prices are forced upward.

According to Smith, T., 2010:

Consumers will buy more of a product when its price declines and less when the pri...

... middle of paper ...

...ectiveness within the Global Perspective (Custom ed.). (2012). Retrieved January 14, 2012, from Vitalsource Web site: http://online.vitalsource.com/#/books/9780558870447/pages/17259874

Riley, G. (2006). In Tudor2u.net (Ed.), AS Macroeconomics / International Economy. Retrieved January 14, 2012, from Tudor2u.net Web site: http://tutor2u.net/economics/revision-notes/as-macro-capital-investment-spending.html

Smith, T. (n.d.). In Northcentral University (Ed.), Economies and the Legal Environment of Business. Retrieved January 14, 2012, from Scribd.com Web site: http://www.scribd.com/doc/46675812/Economics-and-the-Legal-Environment-of-Business-Paper-Final-Draft

Terry, Kristin. (2010, March 1). In Six Sigma (Ed.), What is SIX-Sigma? Retrieved January 14, 2010, from Six Sigma.com Web site: http://www.isixsigma.com/new-to-six-sigma/getting-started/what-six-sigma/

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