Making a Global Economic Analysis

Global Economic Analysis

Describe the Economic State of the Country

The state of the economy of any nation or region is influenced by the economic conditions that change over time, consistent with the business cycle. The economic state of France, in accordance to the research findings, is at a contraction phase. This is owing to the fact that the economic conditions within the research are adverse. The absence of extensive and prevalent economic weakness throughout the whole economy is indicative that France is not presently going through contraction. This is largely because the weakness disseminates throughout the economy, not just in a geographic sense, but also in the sense of different sectors such as employment. This can be perceived through the different economic indicators analyzed. The real GDP, Productivity and GDP per Capita PPP are all declining, indicative of adverse conditions of the economic state.

Describe the Current Business Cycle and Its Implications

A business cycle encompasses the variations in economic activity that an economy experiences over a certain period of time. In essence, a business cycle can be defined with regard to periods of recession or expansion. Owing to the contractions highlighted above, the economy is going through a period of recession, as measured by declines and reductions in the economic indicators. In particular, the stage of the business cycle that the country is in, is the downturn or slump. This is owing to the unhealthy levels of output within the nation and the increasing inflation rates. The implication for this is that the company will experience extreme challenges with regards to growth. One of the issues in growth that the company will experience will include higher insurance premiums and minimal competition amongst insurance companies. This might be a great opportunity for the company to make the most in order to grow. However, the company will also experience stricter underwriting criteria, which implies that underwriting will be more challenging and difficult. In addition, the company will experience decreased capacity, which implies that insurance companies will write few insurance policies (English, 2013).

All industries and sectors go through cycles of expansion and contraction. The company that I work for is set in the insurance industry and corresponding to other industries, the insurance industry is also naturally cyclical (English, 2013). According to English, the business cycle for the insurance industry characteristically endure for a period of about two to ten years and are made up of a hard market as well as a soft market. Subsequent to going through a soft market, the insurance industry, for roughly 8 years, owing to an amalgamation of factors, started to change, solidifying and compacting up in the year 2011. Towards the end of the year 2012, the soft market had begun to decline, and at the present moment, the company and the industry is facing a hard market (English, 2013).

One of the ways I would recommend positioning the company at the present time to monopolize on current conditions is through effective pricing strategies. More specifically, this is with regard to the presentation of prices. In particular, during periods of recessions, consumers require reassurance that they are attaining value for their money and the company will need to pursue new ways of making their consumer products all the more appealing. Being in the insurance sector, it is imperative for the company to set effective and reasonable prices. In this case, the company can employ pricing through lifetime cost of coverage as a tool to indicate that over the lifecycle of the product, the straight payment made signifies only a lesser percentage of the entire cost to the consumer. Therefore, in this case, the company can persuade and convince that life-time expenses be minimalized simply by buying a costlier product, which means a higher premium (B2B International, 2016). In this manner, the company will be able to have monopoly in the sense that it will be difficult for companies to enter into the industry, and therefore not just sustain, but also appeal to majority, if not all of the consumers.

What Specific Economic Indicators Do You Recommend Continuing to Monitor closely and Why