Organizations face many challenges when considering expanding their business globally. Each country got its own economical and legal rules and regulations that a business needs to conform to. Not only do they need to consider the opportunity cost and benefits that may be comes with operating in an international market, they need to understand the risk as well. It is important for ABC Complete Kitchen Inc. executive team to assess and all economic and legal factors that can influence its new plant, then incorporate economic and legal considerations into its operations plan to avoid any risk of obtaining credit, reliable market conditions, or product liability issues.
In order for one to understand economics they need to know the meaning and the type of questions that economists attempt to supply answers too. Economics “is the social science that studies the choices that we make as we cope with scarcity and the incentives that influence and reconcile our choices” (Edition, 2011, 949). Scarcity is when our wants exceeds our ability to satisfy them. Time, income, and the cost of products or services we purchase are the limiting factor that may stop us from being able to satisfy our wants. For example, a student wants a doctorate but only has enough to pay for a lesser degree. The student is facing scarcity and will need to make an alternative choice. There are to questions that economists attempt to answer: “How do choices end up determining what, how, and for whom goods and services get produced and when do choices made in the pursuit of self-interest also promote the social interest?” (Edition, 2011, p. 931) The items and assistance that individual appreciate are goods and services. The item is a good, and the assistance they receive is a service. What is the quantity of the goods or service, how is the way they are produced, and for whom depends on how much a person earns and the amount of money they are will to pay to purchase the goods and service (Edition,2011). When a person does something that benefits them, they are doing it in self-interest, when it benefits society it is a social interest. Sometimes intentionally or not, when people plan on doing something in self-interest they promote social-interest. For example, an individual wants a new coat. He/she uses their time and money to go to the store to purchase the coat. A person sales them the coat will earn a paycheck, the store you bought the coat from earns a profit. The choices that individual made not only benefit them but also others. There economic factors that influence how a company obtains credit, such a financial crisis and global slump.
Financial Crisis and Global Slump
For decades production was up and the standard of living was high. However, due to 2009 recession, all of that changed. Company’s production decreased, people lost their employment, and means of support. Not only did production drop in the United States it dropped across the world. As a result of...