Macro-Economic Indicators of Performance and How Recent Essay

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Macro-economic Indicators of Performance and How Recent Changes in Indicators Have Affected Performance of Organization

To grow and profit despite a ruthless recession, PetSmart follows and consults certain macroeconomic indicators that regulate and direct its objectives and performance.

One of these is the Consumer confidence Index (CCI) . The CCI helps PetSmart gauge spending patterns of the market and assess how the economy is growing in general and if it is predicted to pick up soon, as well as the economic situation in six months time. The CCI, a monthly release from the Conference Board is a highly regarded measure and reliable in that it surveys a huge demographic sample of 5000 households. Split into three sections: Index of Consumer sentiment (how people currently feel), Current Economic Conditions, and Index of Consumer Expectations (how people predict that their spending will be in 6-month's time), the CCI can help PetSmart decide how to best allocate its resources and use its money: whether to expand and open new branches or to cut down and stick up on cheaper pet goods rather than experimenting with new services and goods.

The CCI, too, can help PetSmart determine whether and how it should stock up for the next six months and how it should best use its budget as well s whether it should better save or invest its money in new opportunities. The CCI, in short, provides PetSmart with an outlook on what it can expect in service sales. This tehn enables Robert Moran; CEO of PetSmart to predict that consumer spending will continue to grow despite recession within reasonable bounds (PetSmart CEO on consumer spending- CNBC, 2011.)

Employee cost index

PetSmart provides its employees with competitive wages, but in order to maintain its business through and despite the rescission, it has to both motivate its employees to stay whilst, somehow to other, cutting down business expenses so that it can afford to continue making a profit.

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PetSmart can do that in at least two ways: firstly, by cutting down on wages, or by reducing its workforce.

One way that PetSmart can decide whether or not to garnish its wages and, if so, by which amount can be done by consulting the Employment Cost Index (ECI). This is a quarterly report of compensation costs that is released in the final month of the quarter, with details of payroll periods that end the twelfth of the month that the report is released. Using and reviewing this report, PetSmart can evaluate wages that competitors pay to their employees and decide how much to rationally compensate their workers: Enough o retain them, yet not too liberal in order that PetSmart retain money to make business.

The ECI is broken down into industry group, occupation and union vs. union-union worker and consists of about 4,500 samples. PetSmart can gain inflationary insights from the report, particularly since it is a lagging indicator telling PetSmart whether it can expect compensation costs in its industry to rise or drop and, accordingly, how to structure its own compensation costs.

Money Supply

The Money supply is a helpful gauge to business like PetSmart, particularly since these industries deal with discretionary spending. Wanting to know the amount of money that is currently liquid in the economy and whether their will be growth in the money supply may not necessarily mean that PetSmart will have peaks of consumers flooding its stores, but it may tell them something of whether or not inflation is predicted. This helps PetSmart not only decide on how and whether to spend its money and also in which countries to dedicate its business expenses to, but also whether to invest or save in the near future.

The Money Supply, than in its literal sense, is the measure that helps industries know the amount….....

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