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Roles of For-Profit and Nonprofit Organizations in Economy

Essay by   •  October 27, 2012  •  Research Paper  •  1,280 Words (6 Pages)  •  1,187 Views

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Business plays significant and important role in the growth of an economy. Small businesses are vital in today's economy, because many of the revenue obtained by the government are from business taxes (Androgen, 2009). For instance, a country's economy depends upon the employment provided by big and small businesses (Dunning & Lundan, 2008).

Apart from this, businesses pay taxes to the government and allow the government to function on the tax collected from them. Hence, business is the pivotal part of economy. In addition, business contributes to the society by selling their products to customers that people need. (Rundle & Steffen, 2011).

Additionally, business also provides employment opportunities to people and reduce the unemployment rate of a particular country. Business also plays a virtual role in the GDP (Gross domestic product) (Androgen, 2009). For instance, according to Dr. Chad Moutray (Chief Economist of the Office of Advocacy), small and large business drives the American economy. It is because; business creates the jobs to the people and increases the standard of living. For instance, in the American economy, small businesses create 60 to 80 percent of the net new jobs and also create more than half of the private non-farm gross domestic product. Additionally, in America, business makes up 97 percent of exporters and produces 29 percent of all export value. Hence, it is stated that business plays several important role in an economy (Dunning & Lundan, 2008).

Roles of For-Profit and Nonprofit Organizations in Economy

Profit organization also has a positive impact on the economy. For instance, profit organization gives the corporation tax on the company profit to the governments. In addition, profit organization provides several billion pound of tax revenue per year to the government. For example, in UK, profit organization gives the corporation tax rate to the government that is 20%. Additionally, profit organizations also provide insurance for an unexpected downturn, such as recession or rapid appreciation in the exchange rate. Apart from this, profit organization also attracts new firms into the industry for the growth of the economy (Powell & Steinberg, 2006).

In contrast, nonprofit organizations supply services that are considered good for the community as a whole or for specific community members (Jegers, 2008). In addition, they also provide goods and services that are considered to be universally desirable (such as national security or infrastructure). Nonprofit organization also develops different systems for the community service. So, it is estimated that for-profit and nonprofit organizations contribute economic growth in a country (Powell & Steinberg, 2006).

Impact of Fiscal and Monetary Policy on the Economy

Fiscal policy is a strategy or tool by which a government adjusts its levels of spending in order to monitor and influence a nation's economy (Jegers, 2008). The current fiscal policy of the US is also known as government spending policies that influence macroeconomic conditions of the economy. This policy also affects tax rates, interest rates and government spending in order to control the economy. In addition, the current US fiscal policy decisions have a widespread effect on everyday decisions and behavior of individual households and businesses (Langdana, 2009).

In addition, fiscal policy of the US has also microeconomic effects on the economy. For example, the fiscal policy influences the taxation and work incentives, pattern of demand, labor productivity and business investment decisions (Jegers, 2008). For example, the US government has introduced a lower starting rate of income tax for lower income earners to provide an incentive for people to work extra hours and keep more of what they earn. The changing tax structure and benefit system also reduce the risk of the 'poverty trap' - where households on low incomes see little net financial benefit from supplying extra hours of their labor.

Strategy for Accessing Global Markets

In order to access different global markets for the Fanta product, the company can use different types of strategies in the International market. For instance, the company can use exporting, licensing, joint venture, direct investment; merger & acquisition strategies to enter in to global market (Lowe, 2008). But, the company should focus and use merger and acquisition strategy, because Coca-Cola is one of the biggest and larger

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