A Macroeconomic Outlook for AutoEdge
Phase 1 Individual Project
ECON616-1402B-03 Applied Managerial Economics
Jenson Hagen, CPA, MFA
Colorado Technical University
May 25, 2014
After a task of completing the most important factors for the relocation of AutoEdge from their current location, there is further research required by Lester Scholl to identify additional aspects regarding the economy of both respective countries, United States and South Korea. The board was appreciative of the last presentation being performed and requires additional information to achieve the decision required for the success of the facility. This information required by the ...view middle of the document...
Within this article, these indicators will be discussed to assist in a better understanding of the concepts the organization will require to create the best decision for AutoEdge.
Comparison of Macroeconomic Indicators
To open the discussion of macroeconomic indicators, one must realize there are four significant areas to analyze and understand before placing a final decision on the locality of an additional organization for AutoEdge. They are listed in the order believed to be the most important to the least influential. These indicators will share the financial status of the country as well as the future promise of success for the organization. Furthermore, one must realize these are the most important aspects of the business surviving and achieving the competitive advantage required to continue business activities.
Gross Domestic Product (GDP)
As the gross domestic product is the most important indicator of economic activity, one must understand the concept regarding this measure in that it is described as the value of all final goods and services produced inside a nation within the current year being compared (CTU, 2014). To establish this measure, one can realize the GDP within a country regarding the official exchange rates (OER) displaying the residing currency in denomination of the annual GDP quantity divided by the bilateral average of the United States exchange rate in the current year of the country (CIA, 2014). Using this easy and precise calculation, one can establish the value of output, where the exchange rate displays the purchasing power of a country within the global marketplace. There are negatives to this approach, as the exchange rate may be controlled to cause the country to have under or overvalued money, where this will not be displayed or is not equivalent to the current determination of a market exchange rate. In the instance of it being equivalent, one must understand the market exchange rate is normally created by a minimal quantity of goods and services not requiring the value of larger quantities of goods or services manufactured. In addition, the conversion of GDP by OER will not be sufficient to compare trends being displayed over a period of time, since appreciation or depreciation in relation to two years will cause the value of OER /GDP to increase or decrease with no importance to the residing country currency denominated GPD being altered (CIA, 2014).
One can utilize the GDP PPP (Purchasing Power Parity) rates of exchange as this presents the gross value of all goods and services within the nation despite the quantity of goods or services manufactured with values corresponding to the prevailing prices displayed in the United States within the year analyzed. When utilizing this measure, one will observe the per-capita welfare to compare living conditions or the utilization of resources across countries, but one must understand the dollar value must be assessed in relation to all goods and...