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Economic Indicators for Walmart

The most important resource for all firms is labor. In this SLP, we will look at the labor decisions of the firm. Please address the following:

1. Labor is an important factor of production for all firms. The most recent unemployment rate is estimated at 9% (January 2011). Economists have identified three types of unemployment. Which type would affect your firm. Explain. Be sure to review section 3 of Chapter 20 in the background readings.

2. Think about other employment issues such as outsourcing. Do you think your firm would benefit from outsourcing? If you chose a firm in which outsourcing is not feasible, you can still discuss the advantages (or disadvantages) of outsourcing.

3. If a U.S. firm hires foreign workers abroad, would these wages count in the U.S. GDP? (i.e. a Chinese citizen working in a Nike factory in China) Why or why not?

4. Based on the economic indicators studied in this module, what are your forecasts for your firm in terms of profit, employment, and production

Solution Preview

1. The three types of unemployment are structural unemployment, frictional unemployment and cyclical unemployment. The employment type that would affect our firm would be cyclical unemployment. This is because when economy is in recession, the retailer's sales goes down and thus, there is less requirement for workers in the retail outlets. Hence, companies like Walmart which are considered bellwether of the economy would be affected by cyclical unemployment. Thus, when the economy is in boom and the retail outlets are full of customers, Walmart has higher need for workers to work in retail outlets and other positions. However, as demand slows down, the retailers have to lay off workers to reduce cost of operations in a recessionary time frame.

Another type of unemployment that affects Walmart is structural unemployment. As seasonal demands vary from one season to another, Walmart may need to increase or decrease its ...

Solution Summary

The solution will look into labor, GDP, and the firm in 613 words with a reference.