Monday, August 25, 2014


According to Dwivedi (2012), macroeconomics is the study of the behavior and performance of the economy as a whole. It studies the relationship and interactivity between the ‘factors or forces’ that influence the level and growth of national output and employment, general price level, and the balance of payments positions of an economy. The study will examine the business cycle, Real Gross Domestic Product, inflation and unemployment inclusive of how the economic variables behave over the business cycle and a final look at the Australian economic statistics.
Business cycl
Business cycle is the alternating periods of economic growth and contraction, which can be measured by changes in real GDP. Business cycles are inherent in market economies. Alternatively, Peak, recession, trough and recovery mark the four phases of the business cycle. Peak is the business cycle phase in which real GDP attains its maximum after rising during a recovery while recession is a downturn in the business cycle during which real GDP declines, and the unemployment rate rises (Tucker 2010). It is also referred to as contraction. On the other hand, trough is the business cycle phase in which real GDP reaches its minimum after falling during a recession while recovery is an upturn in the business cycle during which real GDP rises and is also referred to as an expansion.

Real Gross Domestic Product, inflation and unemployment
The GDP is a specific metric. It only includes the total market value of all final goods and servicers produced within a country’s domestic boundaries during a designated time period. It does not include the value of non market activities such as unpaid house work nor does it include 3
illegal activities (Tucker 2010). It only encompasses the final goods and services, those that are sold to the consumers. It does not include intermediate goods and services that is, those that are utilized in the production process or are purchased for resale. A woolen jacket is a final good, but the woolen thread, zip, dye and the cloth that used in making it are all referred to as intermediate goods. The GDP excludes intermediate goods because to do so would equate to double counting (Tucker 2010). If a retailer pays five dollars for a car model and resells it for twenty dollars, it implies that there is an intermediate transaction (in which the retailer pays five dollars) and a final transaction (in which the consumer pays twenty dollars). When summed up, it adds to twenty five dollars, which is more than the product’s final value.

Inflation is a sustained increase in an economy’s average price level. The consumer Price Index and the Producer Price Index are the types of indices used to detect an increase in the price level. The GDP deflator can also be used to measure the ratio of nominal GDP to the real GDP measure (Tucker 2010). Notably, a higher-than-anticipated inflation benefits the employers while the lower-than-expected inflation benefit the workers.

Similarly, hyperinflation is a very high inflation rate. In this scenario, prices rise very quickly normally more than a thousand percent in a single year and the money becomes a poor store of value (Tucker 2010). On the other hand, stagflation occurs when an economy’s output decreases and its price level increase; production stagnates (recession) while prices and unemployment rise.

Under the United States employment statistics, the adults, civilians and the non institutionalized population fall under the employment category. This is an indication that the 4
statistics address those who are over sixteen years and are not in the military, prison, or a mental hospital. These are the people who form the labor force and can be counted as either employed or unemployed (Tucker 2010). A civilian, non institutionalized adult is deemed to be unemployed when the person does not have a job but is actively looking for one. Unemployment can be classified into three namely cyclical, frictional and structural and sums up total unemployment. The below diagram describes a hypothetical business cycle composed of four phases:
Peak, recession, trough and recovery. The straight line shows the growth trend line and measures the real GDP fluctuations and reveals that real GDP has trended upward over time.
Per year Real Peak GDP Peak Real GDP Trough Growth trend line Recession Recovery One business cycle (Tucker 2010) Time
In the ever-changing environment, the economic variables are also expected to change over the business cycle. For instance, industries expand in some years while the unemployment level

Thursday, August 21, 2014

Marketing Principles

Various element of the marketing process
There are a number of definitions of marketing that can be found in a variety of literature and discourse.
First, marketing can refer to the different ways in which firms interact with the consumers so that they can be able to create relationships that are beneficial to both the firms and the consumers. The second definition that will be explored is with regards to the fact that marketing is the communication process that allows the firms to be able to pass the value of the products to the different consumers and is very important to the attraction of the different customers.
The two definitions have one main similarity in that they all acknowledge the fact that there will be relationships between the firm and the customers (Hill and Jones, 2010). The marketing through the process of the communication between the firms help in the establishment of the relationships that are being explored in the firm. However, there is a difference that can be noted between the two definitions in terms of the value and the attraction of the customers.
The difference come in the view that the first definition just acknowledges that there will be a mutuality of benefits but the later definition clearly states the benefit that will be achieved by each of the individuals. For instance the firms will benefit through the attraction of the customers while the customers will benefit through the value that they will be offered.

2 The marketing process entails the finding of the unfulfilled needs of the consumers and offering the products that have the ability to satisfy such needs of the customers. IKEA group is a company that was founded in Sweden in 1943. The company mainly deals in home furnishing and furniture which are sold through their chains of stores. The company specializes in the provision of stylish products while offering them at very affordable rates.
First, there is the consideration of the situational analysis which is undertaken with the aim of determining the opportunities that the firm has in fulfilling the needs of the customers; understanding the environment where it operates in as well as the capabilities that it has. The situational analysis of IKEA will be undertaken through the 5C analysis, PEST analysis and the SWOT analysis. The second process is the marketing strategy development; which makes use of segmentation, targeting and positioning as well as the consideration of the value positioning in the market for instance IKEA’s low cost but high quality furniture products.

Also, there is the view with regards to the marketing mix decisions of the firm i.e. the products, the pricing elements, place (distribution) and the promotion that may make use of an integrated marketing communication campaign (Thompson and Martin, 2010).

IKEA just as Samsung considers the elements of the promotion of the products. The final element that is considered is the implementation and the control of the marketing i.e. the adjustments that need to be made when there are changes in the operational environment of the firm.
There are a number of marketing concepts that can be noted. First, there is the sales principle which is also known as the Pareto principle that holds that 80 percent of the sales that are recorded by a firm are realised from 20 percent of the customers of the firm. The idea here is that IKEA will realise 20 percent of sales from the other remaining 80 percent of the customers.
Secondly, there is the market segmentation where the portions of the markets that are different