The Role of Business in the Economy

The cornerstone and prosperity of any society depends on business. Through business, companies create resources that enable social development and welfare. This part will describe the role of business in the society.

Businesses provide goods and services that our daily lives depend on and also create employment. It is through business that the government is paid taxes from, to make it function. This means that business is a very important part of the economy. Business helps to develop, produce and supply goods and services to people (customers) who need it. This is done with a view of creating profit. Business helps people to fend for themselves by focusing on producing one product or by expertise. Business also helps the society to create jobs for customers, distributors and suppliers. Business helps to develop new goods and services and supply goods and services that customers may not produce.

Other roles that business plays in the economy will be to address the urbanization. Urbanization has been growing rather fast, but only being poorly managed. As such, the role of a business is to provide suitable solutions for emerging problems. All these problems will, thus, be taken by businesses in our society (Kropp, 2010).

Businesses play a crucial role in the economy by driving innovation, creating jobs, and contributing to overall economic growth. Here are some key aspects of their role:

• Production of Goods and Services: Businesses produce a wide range of goods and services to meet the needs and wants of consumers. This production is essential for maintaining and improving the standard of living.
• Job Creation: By establishing and expanding operations, businesses create employment opportunities. This not only provides income for individuals but also stimulates economic activity through increased consumer spending.
• Innovation and Technology: Businesses invest in research and development to innovate and improve products and services. This technological advancement drives productivity and economic growth.
• Economic Value and Wealth Creation: Businesses generate economic value by creating wealth for owners, shareholders, and employees. This wealth creation is fundamental to economic development and prosperity.
• Market Coordination: Businesses facilitate trade and commerce by coordinating markets. They help in the efficient allocation of resources through the price mechanism, ensuring that goods and services are distributed where they are most needed.
• Social Responsibility: Modern businesses are increasingly expected to address social, economic, and environmental challenges. This includes sustainable practices, ethical operations, and contributing to community development.
• Partnership with Government: Businesses often collaborate with governments to solve social problems and drive economic policies. This partnership can lead to improved infrastructure, education, and healthcare systems.

Overall, businesses are integral to the functioning and growth of the economy, impacting various aspects of society and contributing to overall well-being.

Roles of For-Profit and Nonprofit Organizations in the Economy

For-profit organizations are those organizations established mainly for profit purposes. These organizations are important in the economy for they involve in research and development. This leads to better and dynamic efficiency. Such organizations like oil exploration are for-profit and without them the economy can stagnate. They also contribute to tax revenues from the government while result in profits getting saved to provide for during unexpected downturns. They also result into awards of shareholders leading to people buying shares (Entrepreneurs and Economic Profit).

Nonprofit organizations are those organizations that in the course of their business can generate income but are restricted on the amount of income that is distributed in comparison to generated. Non-profits organizations are those firms that provide essential goods and services, but not for profit purposes. Thus, they are organizations for mutual benefits or for charities. Organizations like health centres supported by the government are not for-profit as they provide essential services to all people regardless of their status. Nonprofit organizations have a role to play in efficiency to meet client’s needs at the lowest possible price. Through nonprofits organizations, the government can correct failures in the stock market. 

Discussion on the impact of current fiscal and monetary policy on the economy. Every major market trend has some underlying economic factors like declining employment, rising GDP or inflation. Fiscal policy is an economic policy instigated by the congress or the president through taxation and government spending. Increase of taxes means less disposable income for consumers, thus, little money to spend. Turning to the U.S., there has been a slow economic recovery from 2008 and, thus, we have a weak job creation, although expansionary fiscal policy seems to have averted a deeper recession in 2010 (Lipsky, 2010).

Monetary policy means that the Federal Reserve of the U.S. controls the supply of money within the country’s economy. Thus, by affecting the cost of money, it affects the amount of money spent on businesses by consumers or by businesses. Maintaining a supportive monetary policy should be encouraged to help the slow pace that has been experienced during the recovery (Lipsky, 2010).

Wal-Mart Global Strategy

Wal-Mart is a U.S. leading retail store chain that has a global presence serving more than 200 times a week at more than its 8,000 retail outlets in 15 countries under different banners.  First established in 1962, the retail chain has grown to be one of the biggest employers in the world. The company’s retail stores are operated in diverse designs dividing the business into 3 main segments, namely: Sam’s club, Wal-Mart Stores and International stores.

Wal-Mart was focused on establishing large discount stores within small towns during its early years of operation; this ensures that low prices are guaranteed for each transaction and attract potential customers. Consumers always expect Wal-Mart to sell lower than its competitors and, as always, Wal-Mart delivers, thus, making the business highly recognizable. This interaction between the business and the customers gets established through trust. The potential strategy has seen Wal-Mart grow in its global businesses (Shah and Phipps, 2002).  

Coca Cola CSR

Corporate Social Responsibility (CSR) involves the acts that are undertaken by corporate organizations in addressing a wide array of stakeholder concerns. Thus, the organization expands its business activities to a new and different dimension by involving the society as a whole. CSR, therefore, enhances its value from few community members to the whole world.  

Coca cola believes that it has a duty not only to contribute to the community but to target initiatives that will have a maximum impact on the environment. In Great Britain, Coca Cola has identified to cooperate with the public, NGO and government to seek solution to the environment problems.  The environmental management system called eKOsystem that “conducts its business to protect, preserve and enhance the environment” (1). Coca Cola is committed to take actions that result in minimizing negative environmental impact and it strives for constant improvement that seeks to provide leadership in energy and water efficiency and eliminate solid waste. And that is why Coca Cola has been supporting Tidy Britain group that supports local authorities to keep the environment clean by reducing graffiti, litter and dispose abandoned vehicles (The importance of social responsibility).