Fiscal Policy in Macy’s Department Stores Essay

Introduction

Macy’s association is a major operator of department stores in the United States of America. It has more than 850 stores in forty-five states. Macy’s department stores provide a diversity of products like apparel for men, women, and children. Other products are shopper goods such as accessories, makeup, and home equipment (Plunkett, 2008). Hence, there are myriad economic ideas that can be applied in this organization. This is because the success of the business depends on customers’ preferences and the demand for the products. Hence, the focus should be based on fiscal and monetary policy as outlined by the government. The organization should consider this factor while looking forward to satisfying their customers by offering a good price.

Main body

I have chosen Idea one and four. These two ideas have a great impact on this organization, mostly on department stores. The first idea posits that choices involve tradeoffs. This means giving an offer is usually for the sole purpose of gaining positive returns. The department stores provide competitive products to draw more customers. The latter quite often wish to spend their finances on a variety of products without moving from one place to another. If they find a shopping location from which they can buy all their preferences, they are likely to be retained as long-term customers. The reason why departmental stores have many visiting customers is a variety of products.

Macy’s organization has used this first idea for the past few years. It has retained its customers while getting more from different countries which sell its products. They give these products to get more profits in return. If when they sell products at a lower price, it is to gain more from clients. Therefore, the result of better pricing in departmental stores is a wide base of customers. This will demand more workers who have to be paid at higher rates. When there are more customers, then the company will accrue higher returns. Therefore, the advantage of the first idea is profit maximization.

The fourth idea underscores that ‘the market does not always work efficiently; government action may be needed”. This is the condition whereby markets do not flourish whether the organization has employed sound strategic plans to expand its business or not. This is whereby government intervenes and controls the economy. Schiff (2010) explains how inflation affects the growth of an economy. When an economy is under recession, the market is greatly affected. It uses fiscal and monetary policy to put it under control. This fourth idea affects Macy’s organization in one way or another. The government may opt to increase the interest rate. The organization may tend to decrease the worker’s rate, their salaries and increase the price of products.

The financial situation of Macy’s organization is favorable when there is no high inflation rate. For the past few years, global economies have undergone a high inflation rate and this automatically affects international marketing. Moreover, the inflation rate has its side effects on the price of products, workers’ conditions, and the sale of products (Weil, 2008). This is because more customers will spend their money on products that are of low prices. On the other hand, the organization will spend less on production and therefore import low quantities of raw materials.

Another situation in the organization is that due to financial status, workers were laid off. The government raised interest rates and this caused the organization to increase the pricing of its products. This implies that there are few buyers and quantities of the products are not large. Few buyers and lower quantities translate to fewer employees. Negative signs of financial performance in the organization include the creation of unemployment, high prices of products, few products in the stores and low customer turn up. These indicators have affected the organization in its marketing. On the other hand, positive signs include improved profits of products sold due to few workers and high prices.

Conclusion

The core purpose of this fiscal policy is to stabilize the economy of the country and work hard towards increasing the rate of economic growth (Honnungar, 2010). The fiscal policy has affected this department store. Therefore, the extent of its effects is enormous. When the government controls the performance of an economy, it affects different businesses through increased interest rates. This creates high prices of products. The departmental stores have in recent times; increased their prices in all stores across different locations. The latter is one of the measures taken to control the effects of increased interest rates. Additionally, the stores, these stores have also resorted to employing fewer workers while providing high-quality products. Products that meet the needs of customers will quite often experience higher sell volumes at any given time. Moreover, the cost of production becomes high as a result of the high inflation rate. Therefore, the fiscal policy on the other hand affects departmental stores through the high cost of production since they are compelled to produce goods at high costs. Needless to say, this hurts the overall profitability of such stores.

References

1. Honnungar, J. (2010). Generic Study on Monetary and Fiscal Policy: Norderstedt: GRIN Verlag
2. Plunkett, J. (2008). Plunkett’s Apparel & Textiles Industry Almanac. Texas: Plunkett Research Limited.
3. Schiff, P. (2010). How an Economy Grows and Why It Clashes. New York: John Wiley & Sons Inc.
4. Weil, D. (2008). Fiscal Policy: The Concise Encyclopedia of the Economics. New York: Liberty Fund Inc.