Business World, to Be Able to Plan

¶ … business world, to be able to plan and to track and also to forecast the relevant economic indicators that would make or break the business. Scenario planning is one tool that can be utilized for just this purpose. What it does is this: it helps the manager of the concern to better manage certain unexpected events that may occur, and create and develop strategies that would be able to cope with such unexpected eventualities. However, if the manager planned to use scenarios for his planning, the most important part of his plan would be to incorporate an early warning process into the plan, so that he would be able to monitor the regular environment as often as he wanted to, and as early as he wanted to, even before the proposed scenarios were played out. (Use Early Warning to Strengthen Scenario Planning)

In order to decide and to gauge the performance of the organization with the help of the economic indicators, one must, at the outset, identify the main issues, and then go on to define the focus of the assessment process. Therefore, a manager must be able to include four main areas in his plan, and these would be the indicators. The first one would be the influences of the external environment, and this would include the administrative, the legal, and the political issues in an organization, as well as the economic and political, including the involvement of the stakeholders. The motivation of the employees of the organization is another area, and this would include the mission, the history, and the rewards and the incentives that are offered to them. The organizational capacity is the third area of concentration, where the manager must be able to demonstrate strategic leadership, and utilize the human and economic resources that are available to him at its optimum best levels. (Chapter 4, Diagnosing the Performance of your Organization)

The performance of the organization could then be judged according to the various activities that are conducted within to achieve its best performances, and this may include the team's effectiveness, efficiency, proficiency, and its financial viability. Since it is a fact that data gathering may be a boring and tedious task, and it is also very difficult for an organization to acquire data on a particular performance, and so on, and also very difficult to arrive at a consensus about the quality as well as the quantity of each performance indicator, it would be helpful if the manager learnt to ask himself a few questions like: what exactly is good performance, and is good performance enough to achieve the company's goal? Basically, the effectiveness of the organization would depend on the manner in which it moves towards the attainment of its goals. (Chapter 4, Diagnosing the Performance of your Organization)

Question: 2

A government surplus affects the economy in many more ways than one, and generally, there are varied opinions on what can be done with the surplus. One is that taxes can be lowered; another is that the federal government would now be able to spend more; another is that the funds can be used for retiring accumulated debts. Most people however, thought that the federal government deficits would absorb savings; therefore, deficits would be bad because they would end up reducing national savings, and this in turn would reduce the amount of funds available for national investments, and this would eventually retard economic growth. (The Federal Government's Budget Surplus, Cause for Celebration?)

In the same way, when there is government deficit, it affects the economy as well. This is because they not only erode the national economy, but they also erode the ability of the economy to create national wealth and funds. In the world of debt, government deficits can be called unique, and since the government never borrows money for personal gains but for the redistribution of income throughout the country, and because it can only pay off these debts with the help of bonds and taxes that the citizens are expected to pay, it can borrow at a lower interest rate than the private sector, and this enables it to clear the debt. When, however, a non-productive government borrows from a productive private sector, then the economy would be in trouble, because it is not possible to measure deficit. Therefore, when there is government deficit, then it will have a negative impact on the economy. (Do Deficits Matter?)

There is a difference, however, between budget deficit and debt. This is that while deficit is the fiscal year difference between what the government makes form taxes and other forms of borrowings, and the amount that the government actually spends, called outlays. Generally, the items that are included in the deficit are either 'on-budget' or 'off-budget', and while on budget outlays exceed on budget receipts, off budget receipts exceed off budget outlays. Therefore, when the total debt is a total of deficits and off budget surplus, the on budget requires that the government borrow some more to keep it running. The money can be borrowed by selling off trust certificates and bonds to the public, and the accumulated surplus would be kept in the Treasury, and the Treasury Securities become a part of the total debt. (Frequently asked questions about the debt)

Question: 3

If the stock market were stable and the unemployment rates were about 5.4%, what must be the best fiscal policies that could be recommended to the government? When there is a high rate of unemployment, then both consumer confidence as well as consumer activity would shrink down to lower and lower levels, and this would inexorably push the growth rate further and further down. Fiscal policy in itself has quite a few drawbacks, and these may be increased debts and higher interest rates, and maybe in the long run, with cuts in interest rates, this may be the perfect solution. While this may be the case in the U.S.A., in Europe, since the interest rates are higher; there is more scope for cuts, and with the EU imposing restraints on budgets that would prevent individual countries from practicing free fiscal policies, this would be a better solution. (The Short Run.com)