Jul 8, 2020 in Economics Essays

International Economics Essay Example

The organization that has both the U.S. and international presence is Coca-Cola. It is a multinational company with headquarters in Atlanta, Georgia, in the USA, being a leader in the manufacturing, retailing and selling of non-alcoholic beverages. It was branded in the late eighteenth century. The company has a significant influence on the economy of nations around the globe. At the same time, the strength of different economies in various countries affects its performance.

The economy of a country shows its wealth and riches derived from the production of goods and services, as well as the proper utilization of factors of production. To be successful in its development, the nation needs to protect the status of its economy. The latter process requires many players, such as policymakers, government, and taxpayers. The economy of the USA is protected by the president, Congress, policymakers, and members of the public. When the economy is not performing well or struggling, the president and the Congress come to revive by using the trial-and-error technique, which involves reviewing strategies in the past. The Congress always sets up some policies that concentrate on investors (internal and external) and workers to focus on improving factors that stimulate economic growth. These economic decisions revolve around the following sectors: tax, energy and expenditures. The review of policies can raise the level of economic growth.

To stimulate the economy, the Congress can reduce taxes on capital gains, because when the latter increase, it leads to lower investment returns (Arnold et al., 2011). Due to this, investors and workers, including the ones of Coca-Cola, find it difficult to predict the financial situation and uncertainties in the future. In 2011, when the state of the U.S. economy was not pleasing, the Congress took the following actions on tax policy: fully adopting the Tax Reductions Policy of 2001 and 2003, accelerating tax depreciation and lowering the corporate profit tax (Arnold et al., 2011). When these fiscal policies had been implemented, the business environment became favorable to investors and businesses, which led to the creation of million jobs, increased the level of national income, and made the economy healthier for the benefit of households.

As for energy policy, the Congress can decide to reduce prices for diesel and petroleum products. A reduction of the cost of fuel leads to a decrease in the cost of production and more quality goods and services (Yépez-García & Dana, 2012). As a result of such an effect, more jobs are created, and gross domestic product increases improving the economy. The influence of the Congress on the tax, energy, and spending spheres enables Coca-Cola, investors and businesspeople to predict and assure their workers of getting better wages through increased production. Higher productivity is a recipe for economic growth.

The president and the Congress attempt to expand job opportunities and to increase the volume of production through offering specialized education that embraces practical aspects of industries. They go extra miles to create jobs that cannot be created even by domestic industries. The rise in business activities aids in expanding the market for the Coca-Cola Company. The flow of goods enables it to continue engaging in more projects and to generate profit. The education and stimulation of the workforce provides the company with skilled personnel, which increases its production processes. 

The president and the Congress are not only responsible for economic growth but also collapse. They do this by contracting the economy and reducing money supply, creating a recession. It increases unemployment since businesses have less money to hire workers, and buyers have less money to spend on goods and services. Though this act is positive reducing inflation, it can cause businesses and the Coca-Cola Company to lower their prices leading to a reduction of wages of workers. It is how the government and the Congress can lead to the fall of the economy.

Many stakeholders aim to ensure that policies are fully implemented by the government of the day. The role of policymakers is critical for the nation pursuing economic growth. Their motivation to stimulate the economy includes appreciation, good rewards, control, consultation, and involvement in policy adoption. Policies that bear fruits are good motivating factors. They include the Tax Reduction Policy, which was permanently adopted by the Congress in 2011 to stabilize the economy (Arnold et al., 2011). People behind the policy have left a legacy that economists are really proud of. Most of these policymakers are investors and businesspeople, who contribute immensely through creating employment and paying taxes for the growth of the economy. The role of policymakers is crucial, and if neglected, they become demoralized and feel demotivated. It can make them do the opposite and stop coming up with policies and work against the growth of the economy.

The Federal Reserve is the most powerful body in the USA in terms of control over the economy, ensuring its balance and mainly controlling the size of money supply in the nation by influencing business cycles. The Federal Reserve has a board with a powerful chairperson who is responsible for expanding and contracting money supply. The latter has both positive and adverse effects. A powerful role of the Federal Reserve can be seen during the Second World War when the Great Depression occurred (Arnold et al., 2011). The Chairman of the Board created a recession in a very short period. It eliminated depression in the USA. Policy goals above conform to the regulation of the Federal Reserve Board that approves policies influencing the state of the economy in the country, including reducing taxes, increasing employment and spending, and attaining higher economic growth. The Federal Reserve can accept policies entirely without dissenting opinions considering alternatives in their implementation and providing guidelines in making them successful.

The Federal Reserve stipulates that the American economy is continuously expanding, and at the moment, it is growing faster as compared to the previous years. Expansion is characterized by a rise in business activities, which is favorable for Coca-Cola. The outsourcing of jobs, which is done by most companies, generates more profit to the economy, and this makes the entire United States become strong economically. 

The Coca-Cola Company is affected by so many factors ranging from environmental to economic. They include the strength of different economies over the world. Inflation is a big problem for the company because it increases the cost of production. It makes Coca-Cola respond by increasing prices for products. Thus, it risks losing customers and becomes subject to high competition (Rangan, Quelch, Herrero, & Barton, 2007). When the number of buyers is reduced, it affects company’s revenues and makes it close some of its branches. Tax policies of different economies also influence Coca-Cola, since high tax on capital gains and the cost of production have a negative impact on investment returns. Furthermore, governmental regulations and political temperatures in some countries can lower economic growth, which makes the company incur losses instead of profits, forcing it to close some branches.

To gain competitive advantage in economies outside the USA, the Coca-Cola Company has to focus on the control of its prices through cost leadership, whereby prices are fixed for a long period. Product differentiation is also advisable for the company, whereby changes are made in marketing strategies directed at customers so that products differ from others and are safe from competition in the market. The company should ensure that consumers get products of high quality and standards through monitoring that retailers do not to interfere with their quality. The Coca-Cola Company should focus on a high level of advertising, and increasing shares in the bottling company can enhance service delivery.

In conclusion, for the Coca-Cola Company to continue surviving in the USA and other economies, it should adopt the following solutions, namely, abiding by government rules and regulations (to avoid political influence), consulting policymakers for an economic advice, complying with tax policies of different economies and providing more employment to help in economic growth. Finally, the company should aim at improving the economy of the state instead of concentrating on the mission of profit-making leaving economic development at a low level.

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