Final Business Recommendation, Based on Economic Projections

Final Business Recommendation, Based on Economic Projections

ECO/561

12 May 2010

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Review the Larson Inc. Data

The data related to U.S., is that there is growing level of unemployment at 9.9%, however, the inflation rate is 2.3%, and GDP growth rate are $14.6 trillion, which is low. In addition, the GDP per capita output is declining from $46,800 in 2007 to $32,560 in 2008 (University of Phoenix Material Larson Inc). In addition, the Federal Funds Rate and Discount rate are at relatively low rates at 0.25 and 0.50 compared to Germany at 82.3 million, versus the U.S. population of 305 million. Future, production machinery, equipment, and industrial supplies add up to 58.9% of the exports in 2008. In the U.S. market, the cost of producing battery is $110 whereas the present markup is 35%, in the German market the cost of producing battery is $135 whereas the present markup is 25%.

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The current account balance of U.S. is $568.8 billion deficit whereas, the current account balances of Germany is much more favorable $267.1 billion, which makes exporting Larson products much easier. In Germany, the unemployment rate is higher at 10.8%, the inflation is low at 1.7%, the GDP is 2.8 trillion, and the main industries include steel, cars, electronics, chemicals, cement, textiles, and food.

Three Alternative Futures

There are three possible economic futures for Larson, Inc. to follow. The first reflects a "U" shape, in which the market faces prolonged uncertainty. It is slow to recover; the bottom of the "U" indicates the length of the recession. The second future is a "V" shape, in which the market has hit the bottom and is on the upturn of recovery. The last one is the most...