Key points of the Article
The influx of information on the possibility of a fiscal cliff hangs at the fiduciary duties owed by the directors to the company, as the economy threatens to fall into a recession unless negotiations are made resulting in successful offsetting of the federal deficit.
We will write a custom Essay on “Firms Hit Brakes Before Fiscal Cliff” by Scott Thurm specifically for you
301 certified writers online
The indispensability of Information
Without this insight into the future of the US economy, firms are likely to immerse themselves into business ventures that are not profitable or even fraudulent by mistake. Therefore, to avoid this scenario, the executive branch of any organization ought to appreciate the significance of market information, which would then encourage the engagement of the services of market analysts.
Analysis of the Article
“Fiscal cliff” is defined as a fear for the looming tax increases and spending cuts predetermined and legislated by Congress in a bid to assist and offset the federal budget deficit. The borrowing limit of the US government is going to decline after 1 January 2013 regardless of who wins the elections, and this gloomy forecast is hanging over investors’ heads, which is forcing them to refrain from making new orders and in extreme cases, even cancellation of existing orders. In previous times at the onset of such a crisis that could easily see the US into another recession, chief executives have often come together to present a united front a push for the agenda that is most amenable to their businesses. This aspect already occurred when more than 80 CEOs signed a memorandum in view of persuading Congress to offset the federal deficit through tax increases and spending cuts. Nevertheless, logistics show that this move by Congress may yet be insufficient in dealing with this conundrum finally. Instead, it would inhibit economic growth and subject the US to a recession.
However, opinion is divided as to the accuracy of all these predictions as whereas the majority of companies look to the future with a lot of fear and uncertainty, others continue to thrive and forge on optimistically. A case in point is Union Pacific Corp whose shipments increased by over 25 percent in the compound sense, meaning that their consumers are not backing out anytime soon. This element highlights the importance of market research as a precursor to investment decisions precluding alleged crises because despite the allegations of a fiscal cliff, consumer loyalty and confidence are recording a five-year high this year and so buyers continue to pay fortunes for products and services. The importance of the right information in a specific industry where one has stakes cannot be overemphasized. This assertion justifies the encroachment of strategic planning and researching firms that specialize in market trends.
The significance of relevant information for any business’s success cannot be overlooked. The knowledge of what to buy and the exercise of discipline in enforcing well-thought decisions allow CEOs to churn out billions in profits. In the US, the environment is somewhat volatile presently, especially due to the political situation of the 6 November elections. However, businesses enjoy perpetuity and thus have been through rough times like the recession, but they still exist. At such times, directors and managers alike ought to be extra careful not to let the company get into debt, as that would mean lifting the corporate veil due to so much information available within the public domain that makes ignorance an impossible defense.
Thurm, Scott. “Firms Hit Brakes Before Fiscal Cliff.” The Wall Street Journal, 2012, Web.