Economic Environment of Business

Catalog description

Analysis of the regulatory and global economic environment within which the firm operates and its implications for business strategy. BUSEC 503BUSEC 503 Economic Environment of Business (2) Most courses in the School's M.B.A. program focus on managing the individual firm. However, business firms operate within an economic environment that provides opportunities, constraints, and threats. This course enables the firm's decision-makers to assess this environment and to design strategies that are appropriate for conditions in the firm's global, domestic, or regional spheres of operation.The path of changes in the economic environment over time is generally described as the business cycle. The course begins with consideration of business cycle indicators, such as growth of real GDP, unemployment rates and inflation. Students employ simple models of the business cycle to explain recessions, inflation, and other environmental conditions. Class discussions will include consideration of appropriate managerial decisions under each of a variety of these conditions.Financial markets are important in determining economic conditions. Students learn how the interest rate yield curve and other financial market indicators give insight into expectations about credit conditions and economic change. Financial markets also play important roles in determining availability and costs of funds.Economic policy is the effort of government to change the economic environment. An important part of the course is the study of these policies. Fiscal policies consist of the use of taxation and government spending to shape the environment. Monetary policy is the effort to influence credit conditions and interest rates for the purpose of achieving a specific environmental change.Domestic economic conditions are increasing shaped by global conditions. Therefore, a significant part of the course is devoted to analysis of foreign exchange rates, interest rates, and monetary policies of other nations. In addition, students will analyze the impacts of barriers to international trade (primarily quotas and tariffs and foreign exchange controls) and investment.The course concludes with examination of government regulation and its effect on business. Many regulations are designed to counter-act negative external effects of decisions made by private profit-pursuing firms, especially with regard to pollution of the natural environment. Anti-trust policies, patent and copyright laws. These regulations provide constraints and opportunities for business managers.Students demonstrate achievement through completion of short cases, class discussions, and an examination.