DISCUSSION RESPONSE WITH REFERENCES

3 RESPONSES

1. Reflecting on the course material and our discussions, one macroeconomic variable that corporate financial managers should prepare for over the next 5 to 10 years is global economic interconnection. As we’ve seen via case studies and assessments, the global economy is becoming more intertwined, with events in one location having far-reaching consequences. International trade agreements, geopolitical concerns, and major economies’ economic policies all have a substantial impact on enterprises around the world.

The concepts and skills learned in this course will be critical in managing the ramifications of global economic interdependence (3). Understanding macroeconomic data and their interactions with financial markets will be critical. For example, tracking indicators like GDP growth rates, inflation, and exchange rates can aid predict changes in consumer behavior, interest rates, and currency values, all of which can have an impact on corporate operations and financial decisions.

The risk management approaches learned in the course will be extremely useful for limiting the effects of global economic swings (1). To protect against geopolitical risks, currency volatility, and supply chain disruptions caused by global events, financial managers must use tactics such as diversification, hedging, and scenario planning.

Plus, skills in financial analysis and forecasting will allow financial managers to efficiently respond to changing economic conditions (1). They may examine the resilience of their business models and investment strategies to various macroeconomic scenarios by conducting scenario assessments and sensitivity testing, allowing them to make educated decisions to improve performance and reduce risk exposure.

Strategic financial planning and capital budgeting abilities will be needed for effectively distributing resources in response to macroeconomic shifts. Fiscal management, for example, may need to reassess investment goals, capital allocation techniques, and funding sources considering changing economic conditions to keep the company’s long-term sustainability and growth.

Case Study:

In 2020, the COVID-19 (2) pandemic caused severe disruptions in global supply chains, affecting firms in a variety of industries around the world. Lockdowns and travel restrictions enforced by nations to hold the virus resulted in industry closures, transit bottlenecks, and labor shortages, affecting global trade flows. This example shows how a global event, such as the COVID-19 pandemic, can have a significant impact on the interconnectedness of economies and supply chains, emphasizing the importance of corporate financial managers preparing for such macroeconomic variables in their organizational decision-making processes.

To summarize, understanding, predicting, and responding to global future interconnection will be critical for business fiscal management in the future years. Using concepts and abilities gained in this course, such as macroeconomic analysis, risk management, financial forecasting, and strategic planning, I will be able to negotiate the intricacies of the global economy and create value in their professional activities.

2. This was an amazing class and I learned so much that’s going to help me both in my current position and my future business I hope to own. Currently I’m in a position in my new job where I have the opportunity to run a position of leadership and data/financial management and I already think I can use a lot of what I’ve learned from this class to get a head start in what my head manager will expect from me in the next few months. In all honesty this will be my first leadership position and my first opportunity to use what I’ve learned from my collective education here at SNHU, but this post is about what I can use from this class in particular.

Macroeconomic variables are definitely something I’ve learned that need to be surveyed closely by companies that are looking to succeed. They are definitely a challenge to overcome but also they are worth the reward if handled properly. While change is something that people can be avoidant of, knowing what to change and when the right time is for that change can make a company skyrocket over their competition.

Within the timespan of the next 5-10 years, one of the biggest things that can change and require the most amount of attention to is varying interest rates. Interest is something that can rise or fall depending on the changes that the economy go through, whether locally or globally. Higher interest rates mean adjusting prices for the company to make up for the higher costs, but a lower interest rate means more options for a stimulated economy. Forecasting how interest rates can change and being able to make quick decisions on how to change accordingly are very important skills for leaders and managers to have. From this class I better understand varying interest rates and have better means of tracking the changes to make more informed decisions in my future leader/business owner role.

3. I believe the macroeconomic variables that we have discussed will always be a challenge, but again, there are always changes, and with those changes come challenges. Several external factors affect business, as well as internal factors. An external factor comes from outside the corporation and affects the business. Examples of these factors include but are not limited to, major worldwide events, competition, technological advances, etc. The six main external factors affecting businesses are:

1. Political

2. Economic

3. Social

4. Technological

5. Environmental

6. Competitive

These external factors can affect the company either positively or negatively, sometimes both. “Sometimes failure is due to the internal environment – the company’s finances, personnel or equipment. Sometimes it’s the environment surrounding the company” (Sherman, 2019). Management knowing the impacts of both internal and external factors and how they affect the business is crucial for the business to succeed.

I believe all the external factors should be prepared for by management, as all will have changes and impacts on how business is conducted to continue bringing in profits. To remain prepared, corporate financial managers need to be aware of all patterns, characteristics, and conditions that focus on the economy, and not just one population. “The characteristic may be a significant economic, environmental, or geopolitical event that widely influences a regional or national economy” (CFI Team, 2022). Any financial aspect of the economy, the stock market, and how consumers react and make purchases is imperative for financial management to always be aware of.

The knowledge I acquired through this course about interest rates and the effects it has on present value is very valuable. How to use certain equations or an excel spreadsheet with formulas to determine the outcome of whatever is being calculated (mortgage payments, present