Macroeconomics and Microeconomics in Organizational Success
XYZ Company is aware that macroeconomics and microeconomics play a general role in its organization's success. The significance of macroeconomics and microeconomics in organizational success is attributable to the fact businesses makes decisions through complex processes. The multifaceted nature of business decision making process is brought by the complexity of consumer decision-making. Moreover, business organizations utilize macroeconomic and microeconomic data to make critical decisions that determine their success or failure. Therefore, it's important for XYZ Company to understand the role of macroeconomics and microeconomics in order for the management to make appropriate decisions that contribute to success. Some of the most important concepts in this process include supply and demand, consumer choice, aggregate supply and aggregate demand, and elasticity.
Overview of Macroeconomics and Microeconomics
Macroeconomics and microeconomics are two components that relate to economic activity and processes. Microeconomics is a concept that relates to how individual units i.e. consumers or organizations make decisions on resource allocation and the suitability of those decisions (Goodwin et al., 2015, p.25). In this case, macroeconomic focuses on aggregate outcomes whereas microeconomics examines individual markets, households or business organizations (companies). This implies that microeconomics relates to how businesses and consumers allocate resources whereas macroeconomics relates to aggregate variables like consumption, prices, output levels, and employment. In order to effectively examine aggregate variables, macroeconomics looks at economic activities based on outcomes of decisions made by individual consumers, companies, and the government.
Macroeconomics seeks to provide explanation of economic activities based on the phenomenon that these activities take place at a national or global level. However, these activities continue to occur despite the fact that individual consumers or business organizations don't intend or want them to take place. For instance, high inflation and unemployment continue to occur despite the fact that individual consumers and business firms don't intend or want them to do so. With regards to pricing, microeconomics focuses on the price of a specific product of a company whereas macroeconomics looks at the exchange rate or interest rate of the product.
Role of Microeconomics and Macroeconomics in XYZ's Success
Microeconomics and macroeconomics are crucial for organizational success because they have theoretical...
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