Menu

Measurements of Unemployment and Inflation

0 Comment

The output and the productivity of a business organization are significantly dependent on the employment as well as unemployment rates. This is because of Productivity = Output/Employment and therefore, Employment = Output/Productivity. Hence, it can be stated that the productivity of a business organization is directly proportional to employment. Therefore, it is quite important for the organizations to measure the unemployment rates in order to determine their productivity. These measurements further facilitate the organizations to prepare for the fluctuations that generally take place in the economy (Blanchard, Solow, amp. Wilson, 2012). Apart from unemployment, the business organizations need to measure the inflation as well. This is because of the reason that consumers’ spending and investment activities are chiefly dependent upon the rate of inflation. A high inflation rate discourages the investors and consequently reduces the amount of investment in the economy. Moreover, high inflation rates are likely to reduce the return on investment and further can result in a downfall in terms of demand in the economy. These reasons make it quite imperative for the management of an organization to carry out timely measurements of the inflation rates (National Grid for Learning, 2009). Furthermore, it is quite essential for business organizations to manipulate the price of their goods which is likely to be valuable when there is a high inflation rate in the economy. Re-pricing is a quite expensive process and in order to avoid frequent re-pricing of the products, the management of the organizations needs to measure the inflation rates. In addition, inflation causes the prices of the raw materials to grow high as well as the prices of other components to rise. These factors compel the business organizations to explore for contemptible raw materials and subsequently increase the cost for the organization. Owing to this, the management of the business needs to measure the inflation rate to minimize these costs. Moreover, with an increase in inflation rates, the business organizations face the demands for increasing the wage rates. This further leads to negotiation activities with the employees as well as the labor unions causing chaos in the management system. Therefore, in order to mitigate these threats, the management of the organizations are required to measure the inflation rates (National Grid for Learning, 2009). 2. What Analyses Might A Manager Do To Learn More About A Specific Company Or Industry? In order to learn more about a specific company or industry, a manager can carry out various analysis strategies such as the value chain analysis, Porter’s five forces’ model analysis, and SWOT analysis among others.