Strategic Choices
1. Time to wrap up the concepts we have been discussing in class. Please select a firm whose stock is publicly traded on a U.S. stock exchange. What strategic changes has this firm made over the past 18 months to respond to changing macroeconomic conditions? Were those strategic changes successful? Could the firm have made additional or better strategic choices?
Caution Perfect Data
Watch the "Breaking the Wall of Economic Uncertainty: Data Mining" video.
2. One word of caution is to not wait to make a decision until you have 'perfect data' - because you will rarely, if ever have it. There is so much data available and more ways to dissect the data you do have that you can have 'analysis paralysis'. In cases like this, you keep waiting to have all the data, meanwhile the decision point may have passed. Also, in business, having the first to market is significant and if you wait too long, someone else may come along and take your market share. So, set the parameters for data collection and a deadline and stick to it!
Keeping up with the FED
3. Hopefully this class has brought to light the importance of looking and listening to the remarks of the Federal Reserve. The Federal Open Market Committee met on 26 & 27 July - please review the minutes from this meeting. Also, there will be plenty of business articles about the meeting and the minutes. As we briefly discussed earlier in class, review carefully the FOMC's press release (when it comes out) to see what it is saying explicitly and implicitly. This is not just important for this class but going forward for your personal and professional activities.
What do you see in the remarks not only in the FOMC press release? The link is below and for convenience, I also pasted it below. Feel free to highlight and/or cut and paste into your response.
http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm
Trade Deficit
4. Trade deficit is an economic measure of a negative balance of trade in which a country's imports exceeds its exports. A trade deficit represents an outflow of domestic currency to foreign markets.
Economic theory dictates that a trade deficit is not necessarily a bad situation because it often corrects itself over time. However, a deficit has been reported and growing in the United Statesfor the past few decades, which has some economists worried. This means that large amounts of the U.S. dollar are being held by foreign nations, which may decide to sell at any time. A large increase in dollar sales can drive the value of the currency down, making it more costly to purchase imports.
References:
Trade Deficit (2016, September 9). Retrieved from http://www.investopedia.com:http://www.investopedia.com/terms/t/trade_deficit.asp
Economic Reality
5. Below is a link that discusses that sometimes economic realities do not coincide with academic theories. This is a case in point where that economic theory states when there is job growth (low unemployment), inflation will follow. But that was not the case in 2015, nor does it appear that it will change in 2016.
Enjoy reading this and exploring why!
http://www.deflation.com/press/u-s-economists-puzzled-by-low-inflation/
HIGH GDP=Prosperity
6. As mentioned throughout this course, we had discussed how data can be used to support two opposing sides of the same issue. Gross Domestic Product is a standard economic measurement used by economists, politicians, businesses, and academia to gauge whether things are getting better or worse, economically. However, there are many other measures used to 'refine' the definition of economic success - for example, there is the Genuine Progress Indicator, that uses variables for the calculation of GDP but includes variables like crime, pollution, changes in amount of leisure times, etc. to measure if we, as a society, are better off.
What variables do you think should be included to measure your 'prosperity'?
David
http://www.investopedia.com/articles/economics/08/genuine-progress-indicator-gpi.asp