Phase 1 Individual Project
Global Managerial Economics
Professor Art Vaughn
Colorado Technical University Online
25 August 2014

The World Bank and the International Monetary Fund were brought into existence at a formal meeting in Bretton Woods, New Hampshire in 1944. The World Bank and the IMF is a group of companies that can assist countries with the means of advancement in the form of a loan, guidance and exploration into a better, more successful economy after World War II this was a big help with capital. Supply and Demand drives the cost of goods lower as countries make more products thus the regional businesses lose money, assuring a supply of cheaper products to overseas markets. Expanding internationally may also drive other companies out of business. Gross Domestic Product (GDP) means the monetary value of all finished goods and services created inside the country's confines in a given time period even though GDP is almost always determined once a year. This is the government spending, exports minus imports transpire inside a distinct area and investments, utilization both public and private. Net exports that can be either negative or positive will change the Gross Domestic Product, by showing an increase in GDP if net exports are positive and shows a decrease in the GDP net exports are negative. The higher the Gross Domestic Product the better. A business owner knows that the Gross Domestic Product is going the biggest part of the company's income. As an organization functioning in a number of countries yet governed by a solitary country multinational corporations divided into four areas known as a Multinational, decentralized (the passing on the control from the dominant authority to the local international company) A Global, centralized company also called "command and Control" (chron.com) gains price lead by means of combined manufacturing in a place where everything is cheaply obtainable. An International company can expand on the parent corporation (Business Dictionary) expertise or Research and Development and lastly a transnational organization which joins the first three preceding methods. Multinational companies have to go maintain a rate to keep up with supply and demand not only in their country but in whatever other country they deal with. Business owners can take advantage of the multinational organizations by opening such a business themselves and hire people to run them in other countries while the owner stays in the United States. Foreign Direct Investment and capital flow is an investment that an organization in one country will put into another organization that is situated in a different county. The organization making the direct investment will then have a great deal of power and persuasion over the organization in which it invested in. Organizations with a larger numbers of employees and a respectable increase in future consumers are more likely to entice greater sums of Foreign Direct Investment over the more restricted organizations. This type in investment does not have anything to do with supply and demand really, since they are just a type of investment and cash flowing from one organization to another. An owner should only have to worry about capital flow rather than the Foreign Direct Investment because if they don't have a lot of investors they won't have to deal with low to high interest rates in a short amount of time. In the Foreign Exchange Market monies are traded, Money exchanging is the biggest market in the world that is made up of nearly a trillion dollars in day to day amounts and when the backers become more familiar and much more attracted the market will expand at a great pace. Traders are able to decide among several different sellers to trade with because it lets them price shop. The Foreign Exchange Market will rise and fall depending on the supply and demand, if the demand is there the supply is needed which in turn lowers the exchange rate. If an owner wishes to move to the country, he will need to know what the exchange rate is and will it be worth it in the long run. Adam Smith (1723-1790) who is founder of modern economics was the first to suggest for consideration that the Labor Theory of Value was the value of either goods or services being decided by how much labor and effort was put into the creation of a product and that all goods produced should be priced the same if it took the same amount of time to make them. Adversaries of Labor theory of value claim that the supply and demand of a particular good or service should be what is the determining price rather than the labor. Owners must be aware of the costs to create and supply and demand, they need to make sure they want to do business in that country. A rate that manufacturers can replace a little bit of one good in order to make one more of another same size good. This amount points to the opportunity expense of the good in relation to the other. The Production Possibility Frontier shows the production possibilities of both goods using the exact means. Business owners that are thinking of moving to another country need to be ready and able to use the exact same resources as the country it is moving to, this is the Marginal Rate of Transformation. Free trade can give you a great amount of gains when it comes to cost effective success. The country in its entirety will gain from trade. Trade can put a rush on the high tech advances and inventions. Buyers will have many more options to pick from. One can always get supplies from other countries in a more cost effective way and produce products a lot cheaper. Supply must meet the demand when it comes to production since the cost can be much lower to produce a product and consumers will be buying more. Business owners need to take advantage of any and all comparative advantages they come across. Producing more goods or services on a much bigger scale but with far fewer costs, economics of scale have been achieved. Efficiently increasing production is allowing the organization to grow and in time the organization will have increased possibilities of lessoning their costs. Supply and demand are not all that involved with economics of scale is more about producing more products and if a business owner is wanting to move to another country they need to be aware of this and be quicker at producing their product.

References

Foreign Direct Investment
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