The Business Cycle

Free «The Business Cycle» Essay Sample

This paper objectively analyzes the macroeconomic situation in the U.S.A and how these conditions have an impact on two identified monopolistic companies. The study will also attempt to outline how the companies try to deal with these challenges. The two companies identified are retail companies whose status can be categorized as monopolistic. They are the Starburks and the Wal-Mart, company Inc. Wal-Mart for instance has been identified as the largest retail company engaged in the production of end- user products. It is estimated that two-thirds of the state Gross Domestic products emanate from the retail companies. This means that the value that the retail companies have to the economy of the state cannot be taken for granted. Wal-mart has got a focus of intending to save the resources of its customers, to better their lives through fair trading. (Wal-mart, 2010) This slogan has faded overtime due to the nature of the environment it is operating. They are also in direct touch with their customers assisting them on product use. It however, operates on more than eight thousand locations, in not less than 15 states and carries more than 55 different banners

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Identified firms

The firms identified for this analysis are the Starbucks and Wal-mart. Both international corporations are in different industrial sectors.  They may be classified as two monopolistic firms on the basis of several characteristics. First, the facts got from the official websites of the two companies clearly reveal that the two companies do enjoy the same focus especially in the target of their markets. They a similar focus, single-market domination. They normally dominate the market in the regions that they are situated and eventually cause related companies in terms of products to go out of business.  In addition, they are said to operate at minimal costs, overtake their industries as well as hiring lowly paid workers. They are said to suffer from diverse opinions from the public. Starbucks for instance has relatively good public relations with the populace as compared to Wal-mart which the public assumes it to hold double standards. However, this may only be a public opinion since they may be lacking the necessary facts to prove the allegations.


Wal-mart Company has been recognized as one of the stable companies in the market. Over the recent period, their sales have been extremely better. This has been attributed to their relatively low prices of goods. There is also a platform of being linked with higher income earners. This trend has changed against and is against its focus. The sales of wal-mart seem to be decreasing as time passes by. The sales during the recent quarter were standing at -12.15%.  This has been a drastic decrease compared to the last quarter. The first decrease since the store was made public in 1969 was experienced during the fourth quarter of the previous year.

The chief executive and the president of the Wal-mart company said that the U.S sales in the quarter were expected to be challenging. He also proposed that the international business however was expected to grow strong. The sales are expected to go flat when compared to an increase of 3.6% and 4.2 % in the previous quarters simultaneously. The profits of the company are much lower compared to previous fiscal years. Their stock however seems strong and its current sale stands at $ 50.86. 52 week low reported was $ 47.57 while 52 week high $ 55.99 (Stock analysts, 2011).

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The benefit that the Wal-mart company faces is that it operates on very low labor costs. It has an estimate of over 2.1 million workers. The revenues are approximately 3% of the nations total turnover of the state’s Gross Domestic Product. The revenue earned in the end of the previous fiscal year was amounting to $ 408 billion. The company pays very minimal wages that to a greater extent calls for government intervention. The help that the government bestows to the people comes from the taxpayers which on the other end is difficult to get. Provision of services by the government such as health may turn out to be a difficult exercise.  The hiring process has improved as compared to other years which were marked by discrimination of both color and sexism. Men are no more preferred over females. Discrimination of African-American has also reduced significantly. (Norman, 2010).

On the other hand, Starbucks has a recognizable reputation for being a world class company in production of high quality coffee.  They also have an improved customer service schemes. They have faced tougher times in the previous years but enjoy a great deal of improvement in the recent years. The profits of the company are expected to increase over a period of time. The company has more than fifteen thousand stores in more than fifty countries. The current stock price stands at $ 27.15 per share, with the 52 weeks low at $ 12.76 and high at $ 27.93. There is a remarkable revenue increase of 4% over the current   fiscal first quarter. Customer services have improved very much  in the company.  It minimizes the labor costs by employing fewer employees and  requests them to work for more hours.( Starbucks, 2010). There is also a significant increase in the stock price. The hiring rate of the company was reported to have increased by almost 200% over the period of the previous fiscal year. The greater profits allow the company to hire more employees and reduce the employee’s turnover.( Starbucks official site, 2010). Hiring of the employees is normally informed by the profits accrued.


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