Labor, GDP and the Firm Labor Is Essay

Open, View, and/or
Download this Document

Total Length: 838 words ( 3 double-spaced pages)

Total Sources: 2

Page 1 of 3

Labor, GDP and the Firm

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 Wal Mart? Explain.

Fractional unemployment would have a major impact on Wal Mart. This is because the majority of Wal Mart's employees will receive salaries at minimum wage levels. In the event that someone quits, these individuals can easily be replaced (thanks in part to the high unemployment rate). The real danger is when the unemployment rate begins to decrease and more people are working in career orientated fields. This will make it difficult for Wal Mart to maintain their lowest cost structure. It is at this point that the company could be forced to pay higher forms of compensation for attracting and retaining employees. This is when the firm's profit margins will decrease from the tight labor markets. (Rampwell, 2010)

Moreover, structural unemployment is a secondary challenge that could have an impact on Wal Mart. This is because the introduction of technology will reduce the total number of employees working at each location. Over the course of time, this can result in a decrease in the workforce. (Rampwell, 2010)

Think about other employment issues such as outsourcing.

Stuck Writing Your "Labor, GDP and the Firm Labor Is" Essay?

View All Our Example Labor, GDP and the Firm Labor Is Essay

Have A Custom Example Essay Written

Do you think Wal Mart would benefit from outsourcing? If you chose a firm which outsourcing is not feasible, you can still discuss the advantages (or disadvantages) of outsourcing.

Yes, outsourcing will provide Wal Mart with tremendous benefits. The way that this takes place, is they have a number of important functions performed in locations where the labor costs are cheap. This will reduce the total amounts of labor related expenses at the firm. When this happens, Wal Mart can then pass these savings on to their customers in the form of lower prices (which helps to improve their competitive position). (Mishra, 2009)

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?

No, the reason why is because the product was physically manufactured in another location. This would be applied to the GDP for that country, as the total amount of products they are exporting every single year. In the case of Wal Mart, they will purchase these products from whole sellers (once it has reached the U.S.). This allows them negotiate the lowest rates possible and increase their profit margins.

At….....

Show More ⇣

     Open the full completed essay and source list


OR

     Order a one-of-a-kind custom essay on this topic


sample essay writing service

Cite This Resource:

Latest APA Format (6th edition)

Copy Reference
"Labor GDP And The Firm Labor Is" (2012, April 18) Retrieved May 12, 2025, from
https://www.aceyourpaper.com/essays/labor-gdp-firm-labor-79342

Latest MLA Format (8th edition)

Copy Reference
"Labor GDP And The Firm Labor Is" 18 April 2012. Web.12 May. 2025. <
https://www.aceyourpaper.com/essays/labor-gdp-firm-labor-79342>

Latest Chicago Format (16th edition)

Copy Reference
"Labor GDP And The Firm Labor Is", 18 April 2012, Accessed.12 May. 2025,
https://www.aceyourpaper.com/essays/labor-gdp-firm-labor-79342
   

Open, View, and/or
Download this Document
order custom essay example