Background
Company Green is an up and coming auto manufacturer. They have many good ideas for new green technologies in auto manufacturing. They are trying to determine whether or not it will be sensible for them to go into mass production of their new lines of vehicles including an all electric car (Green 9-Volt) and a hybrid electric-gas car (Green Mix-N-Match). They are worried that the price to sustain profits long term in such a competitive market will cost too much currently to benefit them for the long run. Company Green wants to figure out how to allocate their resources to the 9-Volt, Mix-N-Match, both, or neither to allow them to have continuous growth for years to come and be able to compete.
They already have good brand recognition in the industry from their sporty styling and superior gas mileage. The only drawback is that their price is slightly above what the competitors can offer. They also use a lot of the same suppliers that the big name auto manufacturers use, so input costs are relatively similar to GM, Toyota, etc., with the exception of bulk discounts that the other companies receive. Their inability to mass produce is holding them back, but they figure if they can produce a superior car with more stylistic appeal and MPG that they would be able to grow their business, and eventually expand operations to more factories, thus being able to lower their suggested retail price to the consumers.
They have had a steady stream of sales through their niche market of eco-friendly consumers who are looking for more style in their green automobile. For those who are looking for a better price, Company Green still has to work on other factors that could get costs down to enable a broader base of consumers to purchase their cars.
There are Five Forces as designed by Michael Porter to think about when setting a company up for long-term growth. To sustain profits a company must look at the entry barriers and costs, power of input suppliers and their bargaining power, the power of buyers in the market, rivals in the industry, and substitutes and compliments for the product. (Baye, 2010)
Entry
In Company Green’s circumstance, they already have entered the market, but they have to worry about a few factors such as sunk costs in machinery that they have already purchased and may not use, and the speed at which they can adjust to the market demands because of their smaller scale operation and lack of industry knowledge as compared to the likes of GM and Toyota.
Input suppliers
Already having a good relationship with the suppliers, they have little to worry about except maintaining this relationship and hoping that government regulations do not come up that will hinder them from competing because of increase tax or safety costs.
Buyer’s power
What is it that the buyer really wants? Are they weary of trying the new totally electric technologies? The resale value for an electric vehicle is quite lower than that of a comparable gas-powered, and that is making a lot of buyers hesitant to make the switch. (WFMJ) For instance would the battery used for a 2012 model be obsolete by the end of 2015? Also, will consumers want to keep brand loyalty? If their first hybrid vehicle was a Toyota Prius and were happy with their purchase, then possibly they will want to stay with them and try the new plug in version of the Prius instead of venturing out to try a new company. Being risk adverse is something that producers have to deal with consumers. According to Baye, being risk adverse is “preferring a sure amount of $M to a risky prospect with an expected value of $M.” (Baye, 2010) This aligns well with Company Green’s situation because they have to entice buyers to try something new and risky.
Hybrid vehicles as a broad category can reduce fuel expenditures up to 40% for gasoline-hybrid and virtually all cost for plug in electric vehicles, but they can cost thousands of dollars more. (Faaij, 2010) One thing that Company Green will have to consider with their whole business plan is if the price of gasoline would dramatically decrease because of external factors, such as government intervention, the desire for non-gasoline powered cars could decrease and substantially hurt their revenue streams.
Industry rivalry
The automotive manufacturing industry is extremely competitive today, and with the closing of many long-term auto manufacturers such as Oldsmobile and Pontiac in the American automotive industry, it seems risky to try and upstart company, but the idea of thinking forwardly about green technology and devoting your whole business strategy on solely those products is how Company Green feels that they can get a competitive advantage. Investopedia states that competitive advantage is “An advantage that a firm has over its competitors, allowing it to generate greater sales or margins and/or retain more customers than its competition.” (Investopedia)
For the companies that are still trying to push their gas powered vehicles, they may have a competitive advantage for the short term at least because a hybrid vehicle is not for everyone. If you are in need of a “new” car that will be driven under 15,000 miles a year is a hybrid something that you should not consider. (Stern, 2008) Consumer car experts from Edmunds.com seem to think that compact cars will have similar fuel efficiency and will cost thousands less if you are not the type of person who drives their car until “until the wheels fall off.” (Stern, 2008)
Substitutes and compliments
The most obvious substitute for a “green” automobile is not as obvious of a choice as most would think. The trend of hybrid-electric and all electric vehicles have become a substitute for the typical gas-powered cars, but most people don’t think about what could be substitutable even more for non-gas powered cars. The choices are quite simple with either using mass public transportation (bus, subway, carpooling, etc) or to give up dependence on gas powered machines and ride a bike or walk to wherever it is that you want to go. Decreasing automobile traffic has many benefits including lower emissions, less road congestion, and developing a better and healthier lifestyle. (eHow) One has to think that the true meaning of being a substitute is that its intrinsic value is substitutable for another, but the other is equally substitutable for yours, as well. (De Jeahear)
Company Green is currently on the other end of this part of the 5 Forces diagram because they are becoming the substitute for gasoline; the resource society has so long depended on for transportation. They still must be vigilant for new entrants in the market even though they are just an upstart company because someone may find what you are doing well and improve upon it before you get the chance to.
Resolution
Company Green has to decide if their future is dependent on the success of the others in the industry or strives that they can make to improve and innovate. The automobile industry, when it comes to “green” vehicles, acts very much like a monopolistically competitive market. There are only a few companies producing a similar product with slight variations between them. There is not as much necessity to keep prices as competitive when dealing exclusively with consumers wanting hybrid vehicles because consumers may stay brand loyal even with a price increase just because they may be afraid of the change. (Baye, 2010) This could be a problem for Company Green because companies like Toyota have the first mover advantage in this niche market.
If Company Green is able to make enough market penetration, they will be able to increase the cars sold and be able to reduce the cost per vehicle, as shown in the graph below.
(Kaplan, 1999)
When this happens, they will allow more entrants into their market because the people who were holding out because of the higher price will now have the incentive to try something different without the same amount of risk.
Given the market for electric and hybrid cars respectively, there is much debate about what technology makes the most sense going forward. Honda CEO Takeo Fukui, says that long term the “plug-in” hybrid cars have an unnecessary gas engine that will make little significant changes in carbon emissions. (Green.Autoblog) Company Green would possibly benefit by spreading their costs on both product lines because the future of this industry is still uncertain, and consumer tastes may be different in different regions of the world at the same time period. Company Green should pursue both vehicles because of the uncertainty of the gasoline market to try and spread risk. With effective marketing and superior quality of product, they should be able to stay afloat and target this niche market well.
Which is one of the parts of the Five Forces framework? A. Entry B. Competitive advantage C. Price D. China
What is not an example of a substitute for a car? A. Bus B. Train C. Bicycle D. None of the above
As input prices go down on a good, the price will? A. Rise B. Fall C. Stay the same D. None of the above
What category are sunk costs associated with in the Five Forces framework? A. Substitutes B. Industry Rivalry C. Entry D. None of the above
If the price of gas goes down significantly over an extended period of time in the future, what will possibly happen to the sales of hybrid vehicles? A. Go down because less emphasis will be placed on MPG until the price of gas rises again B. Stay the same because gas price has no effect on the demand of hybrid vehicles C. Go up because the less gas costs, the more hybrid vehicles are purchased. D. None of the above
WORKS CITED
André P.C. Faaij, et al. "Techno-Economic Comparison Of Series Hybrid, Plug-In Hybrid, Fuel Cell And Regular Cars." Journal Of Power Sources 195.19 (2010): 6570-6585. Academic Search Premier. Web. 6 Dec. 2011.
Baye, M. Managerial economics and business strategy. 7 ed. McGraw-Hill/Irwin, 2010.
Stern, Linda. "When To Go Hybrid." Newsweek 152.13 (2008): 66. Academic Search Premier. Web. 6 Dec. 2011.
SUMMARIES
Supply and Demand
Topic is on a lot of the basics of economics such as laws of supply and demand, normal/inferior goods, and supply shifters. The author also tries to tie in real world examples of how these can be used in everyday life
Comparative Advantage
This article reviews the topic of comparitive advantage. Comparative advantage can be displayed profoundly with Apple. They have a very strong comparative advantage over the competition and really do not live by the rule that it takes three times to get something right. They have quality products and they get it right the first time.
Create and answer a case study similar to Memo 11 from Time Warner (Most Relevant Chapters 5, 7, and 14) that looks at the economics of a divestiture.
This article comes close to home to me because I just recently went through a bank that divested many branches and was ultimately closed by the FDIC, but he brings up a lot of the key points to why divestitures must happen. Poor performance, lack of a going concern, and not meeting governemnt regulations can really hinder the performance of a company. If your company does not end in ultimate failure, a divestiture can be a good way to "trim the fat" of a company so they can be successful in the future.
Create and answer a case study similar to Memo 12 from Time Warner (Most Relevant Chapters 1, 8, and 11) that uses a cost-benefit analysis in determining what products or programs to keep. In this article, she comes up with a person who is debating whether or not to produce dog beds for additional income since she is a stay at home mom. This is something that a lot of women in America try and do. I know of one television show that takes this to a more cost cutting perspective rather than increasing income, which is Extreme Couponers. I think that this is a bit on the extreme side, but it is a good way to weigh the costs and benefits of staying home watching the kids and spending time trying to save money versus going out and getting a job to make money. She uses a lot of examples of how the dog bed market is a strong industry to get in and ultimately if her person should go into the business or not.
Five Forces Analysis (Also include game theory, complements, comparative advantage (from Science of Success), and government (Fed, State, and Local))
The five forces model includes all the different aspects of how a company can measure competitive advantage. They use aspects such as start up entry costs, competition, input prices, and competitive advatages. Rivalry can play a big role in the whole scheme of things, as well. This is really the basis of a lot of economic literature and theory.
___
Create and answer a case study loosely based on Memo 5 on Time Warner (Most relevant chapters 1 and 7) on how a company can strategically position itself for long-term profitability growth. - James Casteel
Baye's responses to the questions at the end of the textbook include a lot of ideas of how to help long term growth for a company. One topic that I found interesting was that of HDTV. When this book was published, HDTV wasn't as widespread as it is today. Almost every household has an HD capable tv, so I feel like this was an aspect of their business plan that they needed to invest a lot into. Acquisitions are another topic that can help foster long term growth, but it can also be a huge hinderence such as the AOL merger. You have to watch for a lot of environmental factors (in their case, the amount and type of internet service provided in certain regions). To build a company, you have to think strategically, and taking a chance on an acquisition can be the right move, but you have to also be prepared for the consequences of what may happen if you do not succeed in this venture.
This article is based on the idea of developing a suitable infrastructure in these unsettling economic times to aid in the long term growth of nation. This is evident in Southeast Asia and Austrailia. A good development of proper infrastructure is an investment in the people of a nation, and will help sustain long term economic growth. There is an abundance of costs associated with developing roads and highways from the ground up, but it is a necessary cost.
I found this to be a truthful article if there ever was one. I feel that the American government is trying too many tactics to fix our problems in the short run, or at least that is what people think that they want. They feel if they can get ahead now, it will give them the stability to continue this progress in the months/years forward. This is just not the case. The American Jobs Act that is being proposed will throw $450 billion into the already failing recovery for jobs in America. People want to get that little extra help for the time being and then they figure they will be alright. Americans need to get the idea that their behaviors and wants and desires must change for at least the short term. Consumer spending is down, people just don't want to spend any money anymore because they are afraid of what will happen in the future. This makes sense for those on unemployment or who can get little above a minimum wage job; they are just not able to go beyond their means enough to cause a big fluctuation in the overall GDP, but for those who are just being overly tight, they need to realize to fix problems they need to spend wisely, but still spend.
GE is a major industry leader in America, and has had sustainable long term growth for quite awhile now. A lot can be learned from the way that they have done business over the years, through the good times and the bad. Some of the progress that GE has made according to a recent article speaks about medical advances as well as solar panel sales. They are forecasting to increase significatnly molecular medical sales by 2016. They also plan to be over the $1 billion mark by 2020 in solar panel sales. They use strategic joint ventures with already significant leaders in their particular industry and try to grow from that. One thing that they will have to watch out for is that a lot of their growth strategy is based on debt. With a high debt ratio, it causes a lot of concern for investors. What if they aren't able to pay back their loans, or their forecasting models are inaccurate? Will they be able to sustain this project growth? Those are just a few quetions that will always come up in a troubled economy.
This article talks about how Saudi Arabia's auto industry is setting itself up for long term growth. I believe that many countries will be able to learn from how the US has failed to set up their operations to develop long term growth beyond that of 3-5 years. A lot of manufactures had a decade or so to their hay-day, but few have been able to last 30, 40, 50 years with constant returns to investment. http://www.albawaba.com/business/saudi-arabias-automotive-sector-sustain-long-term-growth-reach-over-sar-806-billion-2014
This is an interesting article that I found about cities and suburbs being compliments and substitutes for each other. They argue that you could either choose to live in a city or a suburb, but the impact that it makes on the economy can be grand. If more people wish to live in the city, then the automobile industry could be hurt because less people will be buying cars to commute. If more people live in the suburbs, then the sustainability of downtown niche coffee shops may diminish because people just aren't there as much as they would be living in a penthouse loft or something similar. It doesn't exactly relate to long term growth, but I feel it is an interesting article nontheless. http://www.phil.frb.org/research-and-data/publications/business-review/1992/brso92rv.pdf
Case Study
Company Green
Background
Company Green is an up and coming auto manufacturer. They have many good ideas for new green technologies in auto manufacturing. They are trying to determine whether or not it will be sensible for them to go into mass production of their new lines of vehicles including an all electric car (Green 9-Volt) and a hybrid electric-gas car (Green Mix-N-Match). They are worried that the price to sustain profits long term in such a competitive market will cost too much currently to benefit them for the long run. Company Green wants to figure out how to allocate their resources to the 9-Volt, Mix-N-Match, both, or neither to allow them to have continuous growth for years to come and be able to compete.
They already have good brand recognition in the industry from their sporty styling and superior gas mileage. The only drawback is that their price is slightly above what the competitors can offer. They also use a lot of the same suppliers that the big name auto manufacturers use, so input costs are relatively similar to GM, Toyota, etc., with the exception of bulk discounts that the other companies receive. Their inability to mass produce is holding them back, but they figure if they can produce a superior car with more stylistic appeal and MPG that they would be able to grow their business, and eventually expand operations to more factories, thus being able to lower their suggested retail price to the consumers.
They have had a steady stream of sales through their niche market of eco-friendly consumers who are looking for more style in their green automobile. For those who are looking for a better price, Company Green still has to work on other factors that could get costs down to enable a broader base of consumers to purchase their cars.
There are Five Forces as designed by Michael Porter to think about when setting a company up for long-term growth. To sustain profits a company must look at the entry barriers and costs, power of input suppliers and their bargaining power, the power of buyers in the market, rivals in the industry, and substitutes and compliments for the product. (Baye, 2010)
Entry
In Company Green’s circumstance, they already have entered the market, but they have to worry about a few factors such as sunk costs in machinery that they have already purchased and may not use, and the speed at which they can adjust to the market demands because of their smaller scale operation and lack of industry knowledge as compared to the likes of GM and Toyota.
Input suppliers
Already having a good relationship with the suppliers, they have little to worry about except maintaining this relationship and hoping that government regulations do not come up that will hinder them from competing because of increase tax or safety costs.
Buyer’s power
What is it that the buyer really wants? Are they weary of trying the new totally electric technologies? The resale value for an electric vehicle is quite lower than that of a comparable gas-powered, and that is making a lot of buyers hesitant to make the switch. (WFMJ) For instance would the battery used for a 2012 model be obsolete by the end of 2015? Also, will consumers want to keep brand loyalty? If their first hybrid vehicle was a Toyota Prius and were happy with their purchase, then possibly they will want to stay with them and try the new plug in version of the Prius instead of venturing out to try a new company. Being risk adverse is something that producers have to deal with consumers. According to Baye, being risk adverse is “preferring a sure amount of $M to a risky prospect with an expected value of $M.” (Baye, 2010) This aligns well with Company Green’s situation because they have to entice buyers to try something new and risky.
Hybrid vehicles as a broad category can reduce fuel expenditures up to 40% for gasoline-hybrid and virtually all cost for plug in electric vehicles, but they can cost thousands of dollars more. (Faaij, 2010) One thing that Company Green will have to consider with their whole business plan is if the price of gasoline would dramatically decrease because of external factors, such as government intervention, the desire for non-gasoline powered cars could decrease and substantially hurt their revenue streams.
Industry rivalry
The automotive manufacturing industry is extremely competitive today, and with the closing of many long-term auto manufacturers such as Oldsmobile and Pontiac in the American automotive industry, it seems risky to try and upstart company, but the idea of thinking forwardly about green technology and devoting your whole business strategy on solely those products is how Company Green feels that they can get a competitive advantage. Investopedia states that competitive advantage is “An advantage that a firm has over its competitors, allowing it to generate greater sales or margins and/or retain more customers than its competition.” (Investopedia)
For the companies that are still trying to push their gas powered vehicles, they may have a competitive advantage for the short term at least because a hybrid vehicle is not for everyone. If you are in need of a “new” car that will be driven under 15,000 miles a year is a hybrid something that you should not consider. (Stern, 2008) Consumer car experts from Edmunds.com seem to think that compact cars will have similar fuel efficiency and will cost thousands less if you are not the type of person who drives their car until “until the wheels fall off.” (Stern, 2008)
Substitutes and compliments
The most obvious substitute for a “green” automobile is not as obvious of a choice as most would think. The trend of hybrid-electric and all electric vehicles have become a substitute for the typical gas-powered cars, but most people don’t think about what could be substitutable even more for non-gas powered cars. The choices are quite simple with either using mass public transportation (bus, subway, carpooling, etc) or to give up dependence on gas powered machines and ride a bike or walk to wherever it is that you want to go. Decreasing automobile traffic has many benefits including lower emissions, less road congestion, and developing a better and healthier lifestyle. (eHow) One has to think that the true meaning of being a substitute is that its intrinsic value is substitutable for another, but the other is equally substitutable for yours, as well. (De Jeahear)
Company Green is currently on the other end of this part of the 5 Forces diagram because they are becoming the substitute for gasoline; the resource society has so long depended on for transportation. They still must be vigilant for new entrants in the market even though they are just an upstart company because someone may find what you are doing well and improve upon it before you get the chance to.
Resolution
Company Green has to decide if their future is dependent on the success of the others in the industry or strives that they can make to improve and innovate. The automobile industry, when it comes to “green” vehicles, acts very much like a monopolistically competitive market. There are only a few companies producing a similar product with slight variations between them. There is not as much necessity to keep prices as competitive when dealing exclusively with consumers wanting hybrid vehicles because consumers may stay brand loyal even with a price increase just because they may be afraid of the change. (Baye, 2010) This could be a problem for Company Green because companies like Toyota have the first mover advantage in this niche market.
If Company Green is able to make enough market penetration, they will be able to increase the cars sold and be able to reduce the cost per vehicle, as shown in the graph below.
When this happens, they will allow more entrants into their market because the people who were holding out because of the higher price will now have the incentive to try something different without the same amount of risk.
Given the market for electric and hybrid cars respectively, there is much debate about what technology makes the most sense going forward. Honda CEO Takeo Fukui, says that long term the “plug-in” hybrid cars have an unnecessary gas engine that will make little significant changes in carbon emissions. (Green.Autoblog) Company Green would possibly benefit by spreading their costs on both product lines because the future of this industry is still uncertain, and consumer tastes may be different in different regions of the world at the same time period. Company Green should pursue both vehicles because of the uncertainty of the gasoline market to try and spread risk. With effective marketing and superior quality of product, they should be able to stay afloat and target this niche market well.
Which is one of the parts of the Five Forces framework?
A. Entry
B. Competitive advantage
C. Price
D. China
What is not an example of a substitute for a car?
A. Bus
B. Train
C. Bicycle
D. None of the above
As input prices go down on a good, the price will?
A. Rise
B. Fall
C. Stay the same
D. None of the above
What category are sunk costs associated with in the Five Forces framework?
A. Substitutes
B. Industry Rivalry
C. Entry
D. None of the above
If the price of gas goes down significantly over an extended period of time in the future, what will possibly happen to the sales of hybrid vehicles?
A. Go down because less emphasis will be placed on MPG until the price of gas rises again
B. Stay the same because gas price has no effect on the demand of hybrid vehicles
C. Go up because the less gas costs, the more hybrid vehicles are purchased.
D. None of the above
WORKS CITED
André P.C. Faaij, et al. "Techno-Economic Comparison Of Series Hybrid, Plug-In Hybrid, Fuel Cell And Regular Cars." Journal Of Power Sources 195.19 (2010): 6570-6585. Academic Search Premier. Web. 6 Dec. 2011.
Baye, M. Managerial economics and business strategy. 7 ed. McGraw-Hill/Irwin, 2010.
"Conference addresses the long-term growth of electric vehicles ." WFMJ. N.p., n.d. Web. 4 Dec 2011. http://www.wfmj.com/story/15681155/conference-addresses-the-long-term-growth-of-electric-vehicles.
DE JAEGHER, KRIS. "Asymmetric Substitutability: Theory And Some Applications." Economic Inquiry 47.4 (2009): 838-855. Academic Search Premier. Web. 6 Dec. 2011.
Kaplan, J.. Unit 9 - the perfectly competitive market. N.p., 1999. Web. 6 Dec 2011. http://spot.colorado.edu/~kaplan/econ2010/section9/section9-main.html.
Linton, Lacelles. "Honda president, CEO: plug-in hybrids "unnecessary," don." . N.p., n.d. Web. 5 Dec 2011. <http://green.autoblog.com/2007/10/23/honda-president-ceo-plug-in-hybrids-unnecessary-dont-reduc/>.
Porter, M. E.. "The five competitive forces that shape strategy." . Harvard Business Review, 2008. Web. 4 Dec 2011. <http://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy/ar/1>.
Silverburg, Tiffany. "Auto Transportation Substitutes." Ehow. N.p., 04/1. Web. 3 Dec 2011. http://www.ehow.com/list_6163719_auto-transportation-substitutes.html.
Stern, Linda. "When To Go Hybrid." Newsweek 152.13 (2008): 66. Academic Search Premier. Web. 6 Dec. 2011.
SUMMARIES
Supply and Demand
Topic is on a lot of the basics of economics such as laws of supply and demand, normal/inferior goods, and supply shifters. The author also tries to tie in real world examples of how these can be used in everyday life
Comparative Advantage
This article reviews the topic of comparitive advantage. Comparative advantage can be displayed profoundly with Apple. They have a very strong comparative advantage over the competition and really do not live by the rule that it takes three times to get something right. They have quality products and they get it right the first time.
Create and answer a case study similar to Memo 11 from Time Warner (Most Relevant Chapters 5, 7, and 14) that looks at the economics of a divestiture.
This article comes close to home to me because I just recently went through a bank that divested many branches and was ultimately closed by the FDIC, but he brings up a lot of the key points to why divestitures must happen. Poor performance, lack of a going concern, and not meeting governemnt regulations can really hinder the performance of a company. If your company does not end in ultimate failure, a divestiture can be a good way to "trim the fat" of a company so they can be successful in the future.
Create and answer a case study similar to Memo 12 from Time Warner (Most Relevant Chapters 1, 8, and 11) that uses a cost-benefit analysis in determining what products or programs to keep.
In this article, she comes up with a person who is debating whether or not to produce dog beds for additional income since she is a stay at home mom. This is something that a lot of women in America try and do. I know of one television show that takes this to a more cost cutting perspective rather than increasing income, which is Extreme Couponers. I think that this is a bit on the extreme side, but it is a good way to weigh the costs and benefits of staying home watching the kids and spending time trying to save money versus going out and getting a job to make money. She uses a lot of examples of how the dog bed market is a strong industry to get in and ultimately if her person should go into the business or not.
Five Forces Analysis (Also include game theory, complements, comparative advantage (from Science of Success), and government (Fed, State, and Local))
The five forces model includes all the different aspects of how a company can measure competitive advantage. They use aspects such as start up entry costs, competition, input prices, and competitive advatages. Rivalry can play a big role in the whole scheme of things, as well. This is really the basis of a lot of economic literature and theory.
___
Create and answer a case study loosely based on Memo 5 on Time Warner (Most relevant chapters 1 and 7) on how a company can strategically position itself for long-term profitability growth.
- James Casteel
Baye's responses to the questions at the end of the textbook include a lot of ideas of how to help long term growth for a company. One topic that I found interesting was that of HDTV. When this book was published, HDTV wasn't as widespread as it is today. Almost every household has an HD capable tv, so I feel like this was an aspect of their business plan that they needed to invest a lot into. Acquisitions are another topic that can help foster long term growth, but it can also be a huge hinderence such as the AOL merger. You have to watch for a lot of environmental factors (in their case, the amount and type of internet service provided in certain regions). To build a company, you have to think strategically, and taking a chance on an acquisition can be the right move, but you have to also be prepared for the consequences of what may happen if you do not succeed in this venture.
http://www.greenbiz.com/blog/2011/04/05/long-term-focus-key-sustainable-growth
This article is based on the idea of developing a suitable infrastructure in these unsettling economic times to aid in the long term growth of nation. This is evident in Southeast Asia and Austrailia. A good development of proper infrastructure is an investment in the people of a nation, and will help sustain long term economic growth. There is an abundance of costs associated with developing roads and highways from the ground up, but it is a necessary cost.
http://thestar.com.my/news/story.asp?file=/2011/10/28/nation/9788930&sec=nation
I found this to be a truthful article if there ever was one. I feel that the American government is trying too many tactics to fix our problems in the short run, or at least that is what people think that they want. They feel if they can get ahead now, it will give them the stability to continue this progress in the months/years forward. This is just not the case. The American Jobs Act that is being proposed will throw $450 billion into the already failing recovery for jobs in America. People want to get that little extra help for the time being and then they figure they will be alright. Americans need to get the idea that their behaviors and wants and desires must change for at least the short term. Consumer spending is down, people just don't want to spend any money anymore because they are afraid of what will happen in the future. This makes sense for those on unemployment or who can get little above a minimum wage job; they are just not able to go beyond their means enough to cause a big fluctuation in the overall GDP, but for those who are just being overly tight, they need to realize to fix problems they need to spend wisely, but still spend.
http://www.pennlive.com/editorials/index.ssf/2011/10/how_to_grow_the_economy_long-t.html
GE is a major industry leader in America, and has had sustainable long term growth for quite awhile now. A lot can be learned from the way that they have done business over the years, through the good times and the bad. Some of the progress that GE has made according to a recent article speaks about medical advances as well as solar panel sales. They are forecasting to increase significatnly molecular medical sales by 2016. They also plan to be over the $1 billion mark by 2020 in solar panel sales. They use strategic joint ventures with already significant leaders in their particular industry and try to grow from that. One thing that they will have to watch out for is that a lot of their growth strategy is based on debt. With a high debt ratio, it causes a lot of concern for investors. What if they aren't able to pay back their loans, or their forecasting models are inaccurate? Will they be able to sustain this project growth? Those are just a few quetions that will always come up in a troubled economy.
http://seekingalpha.com/article/305666-general-electric-steady-growth-makes-a-nice-long-term-investment
This article talks about how Saudi Arabia's auto industry is setting itself up for long term growth. I believe that many countries will be able to learn from how the US has failed to set up their operations to develop long term growth beyond that of 3-5 years. A lot of manufactures had a decade or so to their hay-day, but few have been able to last 30, 40, 50 years with constant returns to investment.
http://www.albawaba.com/business/saudi-arabias-automotive-sector-sustain-long-term-growth-reach-over-sar-806-billion-2014
This is an interesting article that I found about cities and suburbs being compliments and substitutes for each other. They argue that you could either choose to live in a city or a suburb, but the impact that it makes on the economy can be grand. If more people wish to live in the city, then the automobile industry could be hurt because less people will be buying cars to commute. If more people live in the suburbs, then the sustainability of downtown niche coffee shops may diminish because people just aren't there as much as they would be living in a penthouse loft or something similar. It doesn't exactly relate to long term growth, but I feel it is an interesting article nontheless.
http://www.phil.frb.org/research-and-data/publications/business-review/1992/brso92rv.pdf