ECO600 Economics and Finance for Business Assignment Sample

ECO600 ECONOMICS AND FINANCE FOR BUSINESS

Section 1: Ethical enterprises in the modern economic system: the circular economy

Background

You are hired as the sustainability manager of Manly Golf Club. It is in Sydney, not too far away from ICMS’s main campus.

Learn about the golf club, its facilities, and the services it provides here, in this website.

To distinguish itself from rival golf clubs in the area, this club is under pressure to demonstrate its circular economy credentials.

It has hired you to propose strategies that apply the circular economy principles to all aspects of its operations.

Question

1. Propose four (4) circular economy strategies, two for each of this golf club’s two services:
(i) golfing
(ii) weddings and functions

Where possible, demonstrate how each strategy could be good/profitable for the business.

Use a different R principle for each of your four strategies. Use any of the 9Rs below:
 
Section 2: International trade and development (10 marks; length: max. 500 words)

Background

Papua New Guinea is a large island country north of Australia. It has a largely underdeveloped economy: it mostly exports raw materials such as timber and copper.
It does not have a large manufacturing base, relying instead on importing manufactured goods from abroad.

To learn about the country, go here. To learn about its economy, go here.

To see its low and high complexity exports, use Harvard University’s Atlas of Economic Complexity (click here):

- Enter the country’s name and click ‘start exploring’
- Find the section called ‘Export basket’ (the products it exports).
- Lastly, click on ‘Export complexity’ near the bottom.

Question

1. Select one (1) export item from this country whose complexity is low.

Then, follow these three steps:

First: propose how this item’s complexity could be improved using creativity, innovation or value-adding. Provide interesting detail. Argue why your proposals might be beneficial for this country’s economy.

Second: which country or region would be good target markets for this export, and why?

Third: suggest any trade-related policy that could help this country in this project.

Section 3: Macroeconomic fundamentals (10 marks; length: max. 500 words)

Background

Maldives is an archipelagic country made up 1,200 islands of which only around 200 are inhabited. It has a population of 540,000 people. It is located to the south of India, in the Arabian Sea.

The economy is heavily reliant on tourism, which is its largest ‘export’ industry by far, followed by seafood exports (fish, prawns etc.)

Macroeconomic situation

Since 2012, Australia’s inflation rate was around 2% and falling, before rising sharply in 2022 to almost 4% as COVID-19 restrictions were largely removed (go here, click on ‘10Y’ button to see the last 10 years’ trend).

In contrast, Maldives inflation in 2012 was almost 20%, fell to 5% in 2018, and was mostly negative (between 0% and -5%) since then. Analyse Maldives inflation rate since 2018, by going here and clicking on the ‘10Y’ button. See how it look like, in contrast to Australia’s. Analyse Maldives unemployment rate, here (click on the ‘50Y’ button for a long historical perspective. Analyse its balance of trade, here (click on the ‘25Y’ button). Contrast that to Australia’s unemployment and balance of trade (see here and here, click the ‘25Y’ button). You may investigate these and other macroeconomic measures more on the Internet.

Question

1. By contrasting Maldives and Australia’s macroeconomic measures up to today in 2022, assess which phase of the business cycle Maldives is likely to be in (see here to learn about the business cycle). Justify your answer.

2. You are the general manager of the Four Seasons hotel chain in the Maldives. Given your analysis of the business cycle above:

(i) assess whether it might be a good idea for Four Seasons to invest in expanding its hotel operations in the Maldives

(ii) assess issues involved in hiring new hospitality managers and other workers for its hotels.

Section 4: Fiscal, monetary and supply-side policy (10 marks; max. 500 words)

Background

Country X is a developing country with a large government bureaucracy that is quite inefficient. The processing of applications to start new businesses are slow.
This country also has generous unemployment benefits: its unemployed citizens receive a generous payment that allows them to pay for rent and food such that there is little motivation for some of the unemployed to look for jobs.
The key macroeconomic measures of Country X over time– from two years ago to the present– are shown below. Examine them carefully. They are expressed in quarters (quarters means in chunks of three months):

(a) GDP growth: -2%, -1%, -2%, 14%, 5%, 3%, 2%, -1%
(b) Unemployment rate: 8%, 9%, 10%, 6%, 6%, 5%, 5%, 8%
(c) Inflation rate: 2%, 2%, 1%, 3%, 3%, 1%, 0.5%, 0.5%
(d) The purchasing managers’ index, PMI, in the manufacturing sector: 47, 48, 49, 49, 45, 48, 46, 45

The current official interest rate is 4%.

Question

Monetary policy

Given the macroeconomic information above about this country’s economy:

1. Would this country’s central bank be likely to increase or decrease its official interest rate or maintain it at the same level? Why do you say that?
Next, based on your answer above, assess how that action might affect or transmit to each
of these, with sufficient detail and discussion:

(a) consumer spending (C) and business investment (I)

(b) the unemployment rate

(c) the inflation rate

(d) the currency’s exchange rate, assuming all other things being equal (will the currency’s value tend to appreciate or depreciate, and why?)

(e) the exchange rate’s effect on the country’s exports, assuming all other things being equal (could the trade balance move towards a surplus or a deficit?)

Solution

Section 1 

Question 1

(i) Golfing

● With respect to Cao, L., 2020, the implementation of coordinating the circular value chains with the help of data which is a circular economic strategy supports the preparation of products for recycling for reusing the data. As per the MBA Assignment Expert, If the Manly golf club uses the data of different players and collects detailed information related to the style of playing the golf, creates an effective plan for the different golf games. The purpose of implementing this strategy helps the golf club to understand the gameplay of the players and create potential golf courses for adding challenges and providing a high level of satisfaction to the players or the customer of the golf club. Through this process, the Manly golf club increased the profitability of the business and also met the satisfaction requirements of the customers or the players.

Rethink: The principle of rethink is applicable in this strategy for creating an effective golf course for the player and also understanding the playing style of the player. It adds up value to the product and makes it a potential product.

●     

Figure 1: Coordinating the circular value chains
(Source: https://www.boardofinnovation.com/circular-economy-business-models)

●    Overview of the Kim, 2019, this strategy of circular product design of circular economic strategy helps for the preparation of different products to recycle for reusing the killed information of the players and game field. At any rate, the Manly golf club effectively uses the potential data of the different players and also it collects detailed information related to the different levels of players then it will create a potential golf course for the players. The purpose of implementing this strategy helps the golf club to understand the gameplay of the players and create potential golf courses for adding challenges and providing a high level of satisfaction to the players or the customer of the golf club.
Reduce: The above strategy helps to increase the efficiency level of the golf club and also provides various resources to the players. Providing a higher value of a product to the players creates a high level of satisfaction rate for the customers.

Figure 2: Circular product design
(Source: https://www.boardofinnovation.com/circular-economy-business-models)

(ii) Weddings and functions

● Based on the analysis of the Kimanzi, M.K. and Gamede, 2020, the strategy of collection and reserve logistics of the circular economic strategy creates a potential environment and complementary services for the customers. With the help of this strategy, the different occasions and wedding functions can be effectively operated in the hotel of the Manly golf club. It is based on the life cycle of the product and the method of reselling. This process implements appropriately in the function section of the golf club which helps to increase the value of reputation and profitability of the golf club. 
Repurpose The strategy is based on the method of re-selling which is the main purpose of the concept. The repurposing of the different products can be helpful for the golf club.

● With respect to Klopotan, I., Zoroja, J. and Meško, 2018, the application of the sorting and the pre-processing with the help of data which is a circular economic strategy supports the preparation of products to recycle for reusing the data. This process helps to optically use any alternative products and services during the wedding function and occasions for the creation of different products.
Recover: With the help of the above strategy, the golf club can effectively reuse the data for better purposes in the upcoming course of time. It will help the business of the golf club to increase in the upcoming course time.

Section 2 

Question 1

According to the website, the selected export item is timber from the country Papua New Guinea which is standing in the low category of the complexities. It is one of the large Islands on the Norton side of Australia. The economic level of the country is underdeveloped

● In respect to Lamperti, F., Monasterolo, I. and Roventini, 2019, improvement can be done by creating valuable exporting relationships with other countries by exporting the timber and also the products which are made out of the timber. At the time of harvesting the timber, the scrap material and waste timber materials can be used to create potential artefacts which increase the profitability of the country. The scrap or the waste timber which is going to be thrown away now creates valuable artefacts which have a higher rate than the value of timber in respect to the art. On the other hand, the country needs to create relationships with developed countries for exporting the timbers and artefacts. For instance, if the buyer country of the timbers and artefacts of the country is the USA then the underdeveloped country Papua New Guinea can sell the timbers and artefacts at a high price. This process will be highly beneficial to the country and help to increase the rate of GDP and profitability at the same time.

● Based on the analysis of the Mian, A. and Sufi, 2018, to increase the profitability and improve the business quality of the underdeveloped country Papua New Guinea, the selected country origin for effective targeting market will be the developed countries such as the US and UK. The purpose behind selling the product to the US or the UK is due to the higher rate of currency and also the quality market segment. If the buyer country of the timbers and artefacts of the country is the USA or the UK then the underdeveloped country Papua New Guinea can sell the timbers and artefacts at a high price. This process will be highly beneficial to the country and help to increase the rate of GDP and profitability at the same time. Therefore, the country will get a high level of benefits and also the potential market segment which increases the profitability of the country decently.

● Based on the overview of the Pillay, S., Rajaram, R. and Ramnanun, 2020, the multilateral trade policy will be helpful for the country Papua New Guinea to maintain an agreement of commerce between the two countries by signing the treaties for the import and export of timber and artefacts made out of the timber materials. It will help the country to maintain a decent level of trade with developed countries which increases the profitability and helps the country to grow and develop in the coming course of time.

Section 3 

Question 1

● According to the abstraction of the Rusydiana, A., Sanrego, Y. and Rahayu, 2021, after the investigation process, it is found that the business cycle of the 
Maldives is going towards a recession period. The forecasting range of the unemployment rate in the Maldives is going to be increased in the upcoming course of time which refers to the business cycle of recession. On the other hand, the macroeconomics level of the country is also going to decrease in the coming course of time due to safety and health reasons. The factor of safety and health reasons impact the entire business cycle of the country because the main occupation of the country is based on tourism which is going to be restricted in the upcoming course of time. The output level of revenue and GDP of the country is going to decrease due to the increasing unemployment rate in the country. It is also observed that the inflation rate of the country has been increasing for consecutive years which also impacts the profitability and the ability to generate revenue by tourism. Therefore, it is clear that the country is going forward into a recession period in the upcoming course of time.

Question 2

● According to the analysis of the Rusydiana, A.S., Sanrego, Y.D. and Pratomo, 2021, after evaluating the financial business cycle of the country, it is not the appropriate time to invest in the expansion of the operations of the hotel in the country because of the decision period in which the inflation did become higher than the normal level and also the rate of unemployment increased. If the value of unemployment rate increases it will create a flood of working employees in the hotel and after the decision period most of the working employees are going to leave the hotel which creates an operational gap in the business. It also negatively impacts the growth and development prospect of the hotel. Therefore, the four-season hotel in the Maldives does not need to increase the expansion of the operation factor of the business.

● With respect to the overview of the Vogel, H.A., 2019, if the four-season hotel appoints a new manager for operating the hospitality operation then it will be beneficial for the entire hotel. The hotel needs to understand the purpose and perspective behind hiring anywhere manager for the hospitality section. The hiding of a new hospitality section of the hotel is beneficial but on the other hand, the hiring of various workers will negatively impact the overall productivity and profitability of the hotel. Therefore, the hotel can hire a new manager for the hospital section but the hiding of new workers will create conflict in the financial activities and transactions of the hotel.

Section 4 

Question 1

Based on the analysis of Lamperti, 2019, the central bank of the country needs to increase the current official interest rate because of the negative rate of the GDP and the inflation rate. The country to maintain years’ financial value concerning the GDP rate. Therefore, the country needs to increase the interest rate for combating the financial environment. The central bank of the country needs money in their account rather than into the account of the customer.

(a) If the central bank of the country increases the interest rate then the consumer spending will become less because the citizens of the country will deposit their money into the bank and through this, the central bank will be able to fluctuate the level of inflation in the country. On the other hand, the business investment will remain the same or slightly decrease due to the increase in the interest rate which is comparatively safer than an investment in any other business organisation. Therefore, it helps to maintain the level of inflation in the country.

(b) The rate of unemployment in the country will decrease due to the higher interest value which provides courage to the people for finding a job and depositing their salary into the bank account through which the rate of interest is higher compared to the current situation of the time.

(c) If the central bank of the country increases the interest rate then it motivates the citizens of the country to deposit their money into the bank and through this, the central bank will be able to fluctuate the level of inflation in the country. Similarly, if the rate of inflation in the country is managed then the purchasing and consumption power of the citizens of the country increases. As the purchasing and consumption power of the customer increases in the country, it will provide a sustainable and lower inflation rate for the country.

(d) As it is discussed in the above section if the rate of interest of the country increases then the value of the currency of the country will also increase. This factor is the impact of the rate of interest if the citizens of the country deposit their money into the bank accounts which helps the country to manage the value of the currency. The exchange rate of the currency will also increase due to the sound base of the company.

(e) If the value of the currency of the country increases then it also impacts the process of import and export of the country. As the value of the currency of the country increases then it will provide a positive impact on the exporting of the products and goods to the different countries. The increased rate of interest provides a circular during the time of export of the goods and services to the different countries. This process will positively impact the process of export in the country in the appropriate method.

 
Reference 

Cao, L., 2020. AI in finance: a review. Available at SSRN 3647625. http://dx.doi.org/10.2139/ssrn.3647625 
Kim, J.H. and Robinson, A.P., 2019. Interval-based hypothesis testing and its applications to economics and finance. Econometrics, 7(2), p.21. https://doi.org/10.3390/econometrics7020021 

Kimanzi, M.K. and Gamede, V.W., 2020. Embracing the role of finance in sustainability for SMEs. International Journal of Economics and Finance, 12(2), pp.453-468. http://www.sobiad.org/eJOURNALS/journal_IJEF/archieves/IJEF-2020-2/mk-kimanzi.pdf 

Klopotan, I., Zoroja, J. and Meško, M., 2018. Early warning system in business, finance, and economics: Bibliometric and topic analysis. International Journal of Engineering Business Management, 10, p.1847979018797013. https://doi.org/10.1177%2F1847979018797013 

Lamperti, F., Monasterolo, I. and Roventini, A., 2019. Climate risks, economics and finance: Insights from complex systems. In The systemic turn in human and natural sciences (pp. 97-119). Springer, Cham. DOI: https://doi.org/10.1007/978-3-030-00725-6_6 

Mian, A. and Sufi, A., 2018. Finance and business cycles: The credit-driven household demand channel. Journal of Economic Perspectives, 32(3), pp.31-58. DOI: https://doi.org/10.1257/jep.32.3.31 

Pillay, S., Rajaram, R. and Ramnanun, K., 2020. Ascertaining the impact of post-commencement finance on business rescue in Kwazulu-Natal, South Africa. The Journal of Social Sciences Research, 6(3), pp.236-244. https://doi.org/10.32861/jssr.63.236.244 

Rusydiana, A., Sanrego, Y. and Rahayu, S., 2021. Modeling Islamic economics and finance research: a bibliometric analysis. International Journal of Islamic Economics and Finance (IJIEF), 4(1), pp.149-176. DOI: https://doi.org/10.18196/ijief.v4i1.8966 

Rusydiana, A.S., Sanrego, Y.D. and Pratomo, W.A., 2021. Mathematical modeling on Islamic economics and finance: A scientometric. Library Philosophy and Practice (e-journal), 4834. https://digitalcommons.unl.edu/cgi/viewcontent.cgi?article=9021&context=libphilprac 

Vogel, H.A., 2019. Foundations of airport economics and finance. Elsevier. https://books.google.co.in/books?hl=en&lr=&id=cx-ODwAAQBAJ&oi=fnd&pg=PP1&dq=Vogel,+H.A.,+2019.+Foundations+of+airport+economics+and+finance.+Elsevier.&ots=WpcugzUHh6&sig=WeNGTM3KwNbXymQjU_8GgDcLXzk&redir_esc=y#v=onepage&q=Vogel%2C%20H.A.%2C%202019.%20Foundations%20of%20airport%20economics%20and%20finance.%20Elsevier.&f=false