economics, these include the assessment of recent economic trends which influence any sort of business, strategies which any firm might choose to adopt regarding any change in the markets such as change during recession or economic downturn and the tactics which any firm should implement in order to achieve its strategic goals. Although we will answer all of these questions in general but our main focus regarding these questions will remain on the firm Foot Locker which is a sportswear retailer firm.
Recent economic trends and its influence on businesses
The economic environment all around us is rapidly changing, the money we make through our businesses and the direction where it will be heading towards in terms of growth at business level is determined through the trends in the worldwide economy. Therefore it is very important to know more about these trends in order to make a business go forward and be more successful. Some of the major global economic trends are as follows.
The rise in Gross National Production, GNP of Western and Eastern Europe, the United States and Asia is growing steadily. Some level of minimal growth is also recorded in regions of Africa, Middle East and Caucus. "Those nations which are experiencing high levels of growth will also have better increment of wealth in them" (Lipsey, 1997), nations such as China where the growth levels are very high is thought to change the dynamics of world economic very significantly in the upcoming years. Therefore the main point here is that these developing nations have a huge potential for itself as well as for its investors in terms of making a lot of money as well as expanding the industries and economic structure of the nations involved.
Service sector is regarded as a huge business today, by year 2001 the developed nations had seventy two percent of their total new growth related to the service industry whereas the developing nations had just over fifty percent of their growth related to this sector. It is estimated that in the developing nations the businesses of software, hotels, restaurants, food services, telecommunications and others will take a huge share of percentage in the overall economy in the near future.
Contrary to the popular belief, the industrial sector such as manufacturing is being observed to go through a serious decline in developed nations whereas in the developing nations it has faced minimal challenges and therefore the decline here is minimal alongside massive potential to expand. Because of high cost of labor and unions in the developed nations the market of labor is uncompetitive.
Therefore it is cheaper for firms to move overseas and perform the operations there. Here it is seen that the top destination for the multinational firms is the Far Eastern nations such as China, Vietnam, Indonesia and Philippines when it comes to the set up of industries. The Chinese are very famous for providing many different facilities besides the huge and cheap labor they posses, these facilities include cheap utilities, good infrastructure and so on. Much of the economic growth in China is due to higher exports and these sort of foreign investments in the economy tend to keep this trend going. China also has the largest foreign exchange reserves in the world and this is very important to attract investment from the world.
In other nations such as India, it is seen that the foreign firms tend to invest in the hi-tech sector such as software and call centers. For many foreign executives, this is a great way to beat up the current global recession which has given a huge impact to the Western World and therefore they are now looking towards East to make profits or even just to survive.
An important point for the businessmen to note here is that if it wants to base its business on industries then it must find something innovative which could improve the services of the business.
Throughout the world, many nations including the developed ones are aiming for much better communications and technology, the economic and commerce activity among the developed countries is through the electronic forums such as internet and telecommunications. There have been huge projects currently ongoing in the Far Eastern developing nations as well as the African and Middle Eastern regions in order to improve the level of business there so that this environment of business becomes friendlier for the investors especially from the Western World.
The main point to note here for the businessmen is that in order to thrive in the global environment it must be a part of the worldwide electronic grid such as internet, e-commerce and so on. This not only allows the business to take much better opportunities in a competitive environment but also serves as a warning provider in case any dire event occurs which might hit the businesses such as the financial crisis of 2008, here many firms went on to avoid severe losses because they were able to predict it beforehand through the use of technology and information sharing.
The debt of consumer nations is also a huge concern for not only the business owners but for the nation economies as whole, in this scenario as the consumers from developed nations purchase more and more from the developing nations they find themselves in more debt. This amount of debt must eventually be reconciled. In case of the average American, it saves about minus one percent of its total income, and for the spender it can only spend up to a certain amount. Therefore it is extremely necessary that a limit must be applied to the level of debt which any business or the nation economy could afford to have.
When assessing the firm Foot Locker, we can deduce that in the current economic times this firm can generate much profits by shifting its manufacturing process in the Eastern nations such as China, Foot Locker can take huge advantages of the cheap labor present in the region and since the Far East is already home to many Western firms dealing in sportswear equipments therefore Foot Locker would find it easy to get skilled labor. This step will help the firm to establish any new base in the region or to strengthen itself further, the market trends in these territories can also help Foot Locker to better understand the dynamics of global business.
II. Strategies for firms
The financial crisis of 2008, was the worst disaster the world has faced in terms of economics since the Great Depression of 1929. It is also predicted by many analysts and economists that another such event might occur in the near future therefore businesses should have to do everything they can in order to brace for the possible other financial storms and to plan for survival since the damage can be of unthinkable level. There are many strategies which can help any business to survive or even to thrive in times of economic recession, some of these methods are as follows.
The first point is regarding diversification. "In any weak economic structure, being able to diversify is regarded as one of the best solutions for any business" (Downward, 2003). The more varieties of services a business can provide, the more types of consumers it would be able to target. For example if we create our business plans which primarily target just the big name clients then we have the option to expand our marketing services in order to attract those clients. This includes issuing sales letters, press releases, web content or any other business related services and products.
Another method to gain clients here is to offer seminars which attract smaller clients, they might not be able to pay on individual basis but together as a unit among the other smaller clients they should have the capacity to do business with the firm. This is just one of the few innovative techniques which the business could choose to afford, all it needs is diversification in terms of business planning and new ideas which help in gaining more consumer trust.
The second point is regarding the offering of outstanding customer service, once any business has started to attract customers then the main worry for the management is regarding the ways to retain them. In a stagnant national economy this task is considered to be an extremely difficult one. The business must provide a very high quality service or product as well as exceptional customer service. "Wherever the flow of money is tight, the clients expect much more from their capital being invested" (Hodgson, 1999). If the firm wants to keep its business going with the clients then it must focus on keeping them happy.
Businesses should refine its strategies regarding customer service so that every function from taking an order to the delivery process is focused on the client. The businesses may also conduct surveys regarding customer satisfaction just to make sure if the demands of its customers are properly met. Besides…