Question

Philip Roscoe argues that economic thinking has become very influential within modern society, and this is certainly true in the area of management and corporate strategy. What underlying assumptions stemming from economic theory can you identify in the article by Peter Cohan?  Describe why they are underlying and whether they are reality or value assumptions?  Finally, discuss whether you agree with the assumptions you identified.  Why or why not?

Dyer, L. (2006). Critical Thinking for Business Students. Captus Press. (Chapter 4: Underlying assumptions)

Roscoe, P. (2014). I Spend Therefore I Am: How Economics Has Changed the Way We Think and Feel. Random House Canada. (Chapter 2: From Truck and Barter to the Meaning of Life)

Sample paper

What are the Value and Assumptions of Business Strategy?

Economic thinking according to Roscoe (2014) has turned to be greatly influential in modern society, and this is undoubtedly true in the area of corporate strategy and management. Organization leaders are focusing on employing the best management and corporate strategies after weighing costs and benefits, with the intention of minimizing the cost and maximizing benefits. Evaluation of opportunity cost of business activity is being offered much attention in modern society than before, with the majority of enterprises focusing on enhancing their competitive advantage, which goes hand-in-hand with revenue growth and high profitability.

Fundamental Assumptions Caused By Economic Theory Identified in the Article by Peter Cohan

In his article, Cohan (2017) reflects on two companies; GE and Amazon, experiencing growth in opposite directions, at the same time and in the same region of operation. GE has been shrinking, experiencing a decline in profitability and share value in the market. On the contrary, Amazon is experiencing a high level of growth in its revenue, an increase in market value and expansion through acquisition. The fundamental assumption stemmed from the economic theory identified in Cohan’s article is that the adopted business strategy can break or build a company. The adopted business portfolio determines the company’s direction of growth. When the company employs modern unique portfolio, it experiences unimaginable growth and when it keeps on relying on an outdated portfolio, it ends up flopping and experiencing losses. A well-researched and calculated move in business can result in positive results, while moves that are not well evaluated can result in huge losses.

The Reason the Assumptions are important and whether they are Reality or Value Assumptions

The identified assumptions are important because they highly determine the future of a business. Poor decisions on the strategy to employ results to loss of company value and profitability, which right decisions result in a high level of growth and profitability. Moreover, world technology and ways of doing business are currently changing at a very high rate. Embracing new business perspectives create a better chance to win than clinging on old business portfolio and strategies. Normally, changes are made in business with anticipation for positive results. However, no one can be certain of the results. Business changes take a long period of time and their effect can sway the situation on any side of the balance. Therefore, the assumptions cannot be a reality as so many factors can influence the outcomes, but they are of high value as they are well evaluated and found to have a great impact on the possible direction of the company in terms of loss and profit in the future.

Whether I Agree with Identified Assumptions

I highly agree with the identified assumptions. This is because one can only expect different results by doing things differently. Moreover, the world in 21st century is highly dynamic and businesses can only manage improved its outcome if the dynamic nature of customers, the market, technology, and its competitors are well understood and considered in making changes. Being able to address loopholes in the above factors is likely to yield positive changes. However, making poorly researched or informed business decisions can be very costly. In addition, no single situation is permanent in business; new decisions need to be made frequently, to address changes taking place in the market. The inability to keep up with coming changes can make it hard for a business to stand the test of time.

References

Cohan, P. (2017, June 26). Wall & Main: GE, Amazon, and the future of corporations. Retrieved February 15, 2020. https://www.telegram.com/news/20170626/wall-amp-main-ge-amazon-and-future-of-corporations

Roscoe, P. (2014). I spend therefore I am: how economics has changed the way we think and feel. Random House Canada. (Chapter 2: From Truck and Barter to the Meaning of Life)

Leave a Reply

Your email address will not be published. Required fields are marked *