Economic and Labor Issues

2404 Words Sep 14th, 2010 10 Pages
Barbara A. Nooney
Northcentral University


XYZ Construction, Inc. (XYZ) is expanding into Canada, Mexico and Asia prior to its initial public offering, which it would like to make in twelve months. Considering microeconomic and macroeconomic factors, legal and contractual issues, and employment and labor issues will assist XYZ in developing a strategic plan to successfully launch its IPO.

Microeconomics is basically the study of supply and demand in the marketplace (Wikipedia, 2010). Being a horizontal construction company, XYZ needs to consider its competition, the demand for its services and the amount of those services that they can supply utilizing their current capacity and resources. My research
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Exchange rates will affect the cost of raw materials, transportation of goods, and labor costs.

These costs also affected by government budget deficits, trade policies and political instability (Cengage, 2009). Government budget deficits have a direct effect on interest rates (Cengage, 2009). Interest rates affect the amount of loanable funds and the costs of these funds (Cengage, 2009). XYZ will need to consider the cost of various government deficits on the financing costs of equipment and facilities when expanding into different foreign and domestic markets. Another effect of government policies is trade policy.

Trade policies are developed by foreign and domestic governments in an effort to influence net imports or net exports (Cengage, 2009). Two common policies are the use of tariffs and import quotas. As XYZ expands into Asia, Mexico and Canada it will want to factor the costs of tariffs and the possible effects of the limitations of import quotas. What is interesting is that the basic premises of supply and demand, imports and exports, equilibriums and trade balances are all meant to lead to an efficient market place (Cengage, 2009). Tariffs, wage restrictions, quotas and other such policies can create inefficient markets. So XYZ will have to take the basic study of economics and then apply the effects of various trade policies and restrictions. Another factor of government that influences the economy is its political

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