Economic Analysis

Executive summary:

Economic analysis can be defined as the process in which an economic analyst determines and evaluates the factors that affect the operation and decision making of an organisation. Economic frameworks are the economic models or tools that are used by the economic analyst to recognise and evaluate the inter and external environmental factors that pose potential influence on the overall operation and decision-making process of any business. These frameworks are highly useful for businesses to analyse the economic risks on their clients and eliminate these risks by making a useful adjustment in the internal economic framework in relation to changes in the national and global economic environment. This report will conduct an economic analysis of the investment fund by using different economic frameworks and will discuss how these frameworks will assist the fund to set effective business strategies. The report will also make a suitable recommendation that will assist the manager of the investment fund to improve its economic framework by setting highly relevant business strategies that will help the fund to enhance its economic strength as well as its productivity.

Introduction:

Economic analysis can be defined as the process in which an economic analyst determines and evaluates the factors that affect the operation and decision making of an organisation. This report will conduct an economic analysis of an investment fund by using different economic frameworks and will discuss how these frameworks will assist the fund to set effective business strategies. Finally, the report will make a suitable recommendation that will assist the manager of the investment fund to improve its economic framework by setting highly relevant business strategies that will help the fund to enhance its economic strength as well as its productivity.

Economic analysis:

As mentioned by Turvey (2019), economic frameworks are the economic models or tools that are used by the economic analyst to recognise and evaluate the internal and external environmental factors that pose potential influence on the overall operation and decision-making process of any business. These economic frameworks are the Ansoff Growth Matrix process, Gap Analysis, Six Sigma Model, Porter’s Diamond model, Product life cycle stage, and PEST analysis.

Six Sigma framework:

This economic framework is widely used by today’s business leaders and managers in terms of identifying defects or risk in the organisational structure and functions and cut down the defects accordingly (Al Khamisi et al. 2018). This framework would be highly useful for the investment fund to determine and analyse the economic risk on its clients and eliminate these risk by making a useful adjustment in the internal economic framework in relation to changes in the national and global economic environment. The process that is involved in this framework are define, measure, analyse, improve and control (DMAIC). Through following these steps, the investment fund can be benefited in several ways such as reduce its operation cost by eliminating operation risks and defects, improve the efficiency of organisational processes, enhance the level of accuracy and improve the overall customer service. As argued by Myszewski (2017), while using six sigma model to cut down defect and eliminate risk it can enhance the overall risk-management cost that can enhance the overall spending of an organisation. For proper implementation of Six Sigma, the investment fund needs high-quality testing system, proper infrastructure, modern machineries and better equipment that can enhance the overall operation and management cost of the investment fund (Sodhi et al. 2019).

Ansoff growth framework:

This framework assists organisational leaders to analyse the market opportunities of their products and services in a new and existing market (Loredana, 2017). This framework represents four important market strategies such as market penetration, market development, product development and diversification strategy. This framework will assist the economic analyst of the investment fund to analyse which market strategies needs to be taken by this fund to improve its wealth portfolio and reduce the adverse impact of the national and global economy on fund's financial framework. As argued by Chintalapati (2020), although Ansoff matrix is useful for market analysis, it deals with only existing and new market rather than considering other important macro-environmental factors such rivalries, economic factors, social factors, demographic factors, political factors and technological factors. In this context, it would be better for the investment fund in the given scenario to use this framework along with other relevant economic frameworks such as PEST analysis, or porter five forces model to develop the appropriate business strategies that will be helpful for this fund to provide economic security to its clients and enhance the number of investment into this fund.

PEST analysis:

This economic analytical tool is highly useful for modern businesses for analysing and communicating economic and political issues in the external environment that pose a potential impact on overall decision-making and functions of organisations (Alava and Mu, 2018). The economic analyst of the investment fund can use this tool to analyse potential political factors that pose an important impact on the economic framework of this fund. These political factors are level of fairness in the political system in a foreign country, governmental approach towards foreign investment funds, the relevance of government policies (trade regulation, market obligations, wage regulation and labour regulation) and level of support from government to operate the smooth business. As argued by Sravanth et al. (2019), PEST analysis although assists marketers to conduct macro-environmental analysis, it is failed to consider many important facts such as market competition, competitive rivalries, substitute product and service, customers, clients and suppliers. Despite these limitations, this tool will assist the economic analyst to analyse the changes in the national and global economy that pose a potential impact on the operating and financial framework of the investment find

Gap analysis:

This process will assist the economic analyst to determine the business requirements that are important for the investment fund to grab a strong economic and business framework. This process will help the economic analyst to analyse that to what extent the investment fund can meet these requirements to ensure its business sustainability in relation to the changes in the national and global economy.

Porter’s diamond model:

This model will help the economic analyst how the financial market competition varies in different nations and what are its impact on the current financial condition of the investment fund. Here the investment fund will consider its structure, business strategies, competitive rivalries, demand condition and supporting industry in the global market.

Recommendation:

From the abovementioned economic analysis following recommendation can be made for the manager of investment fund to improve its economic stability and productivity:

Market penetration strategy:

Managers of the investment fund must apply a market penetration strategy that will be highly relevant to the type of business it operates. Market penetration strategy will assist the manager to improve the existing product or service of the investment fund in the existing market. This strategy will assist the manager to attract a large number of investors in London that will not only improve its economic position but also provides economic security to all its client. Market penetration is recommended over the other Ansoff growth strategies because it has low risk and high chances of market profit, as the marketers are aware the market, its current business trend and the preferences as well as the interest of its clients. On the other hand, due to changing economic factors in a national and global market that pose adverse impact on business, the market penetration strategy will assist marketers of this investment fund to improve its wealth portfolio and enhance the economic sustainability.

Cash flows management:

The manager must keep track of cash flows into the investment fund to analyse the current financial position of the fund. In this context, the manager needs to use innovative techniques such as cost reduction, infrastructure development and productivity enhancement that will assist the investment fund to attract investors thereby improving its cash flow. This process will assist the fund to improve its financial position that is important to deal with changes in the global economy.

Six Sigma tool for cost reduction:

Six sigma model is recommended to the manager of this investment fund that will assist the manager to develop strong crisis management framework that is highly useful for the fund to deal with the impact of the changing national and global economy on its overall business operation. Six sigma model will also help the manager to reduce operation and management cost by eliminating defect in its wealth portfolio and financial framework that is important for providing economic support and security to its clients. As Six Sigma model requires good infrastructure, modern machineries and better equipment for its perfect implementation into business operation, it will compel manager to modify as well as standardise the overall economic framework of the company that is expected to be highly useful to deal with economic ups and downs in the global and national market.

Consider political and socio-economic issues:

Managers of the investment fund must consider the political and socio-economic factors in the external market while operating its business in a national and global platform. The manager needs to analyse the current socio-economic trend such as national income, the purchasing power of customers, availability of investors and GDP rate, that assist the manager to make useful modification in the market strategies and financial framework of the investment fund to cope up with these factors. On the other hand, the manager needs to communicate the national and global political factors such as governmental approach towards foreign business, trade regulation, level of transparency in political system and fairness of governmental regulations that will help the fund to make useful changes in its internal environment to cope up with these factors.

Recognise economic characteristics:

Manager of the investment fund must identify the current economic characteristic of this fund such as its current profitability, management costs, operational cost and financial risk. This process will assist the manager to evaluate the current financial stability and business sustainability of this fund in relation to the changes in the global and national economy. For conducting this economic analysis, the manager can use PEST analysis and Porter’s Diamond Model that will help the manager to develop a useful wealth management system to deal with the current global economic situation.

Conclusion:

From eth overall discussion, it can be concluded that economic frameworks are the economic models or tools that are used by the economic analyst of any organisation to analyse the current economic characteristics of that organisation. By making useful economic analysis, an organisation can understand what strategies needed to be taken to improve its overall financial condition and enhance its ability to cope up with a current economic situation in the national and global market.

Bibliography:

• Al Khamisi, Y.N., Hernandez, E.M. and Khan, M.K., 2018. Developing a knowledge-based Lean Six Sigma model to improve leadership’s performance in healthcare environment. Proceedings SQM XXVI, pp.31-42.
• Alava, R.P. and Mu, J.M., 2018. PEST Analysis Based on A Case Study for. Neutrosophic Sets and Systems, p.84.
• Chintalapati, S., 2020. BankBuddy. ai—Business Expansion and Marketing Dilemma: A Case Study to Discuss the Ansoff Growth Matrix Concepts Combined with Business Expansion Strategies for Expanding into Emerging Markets. Emerging Economies Cases Journal, p.2516604220929994.
• Dawes, J., 2018. The Ansoff Matrix: A Legendary Tool, But with Two Logical Problems. But with Two Logical Problems (February 27, 2018).
• Gurcaylilar-Yenidogan, T. and Aksoy, S., 2018. Applying Ansoff’S Growth Strategy Matrix To Innovation Classification. International Journal of Innovation Management, 22(04), p.1850039.
• Loredana, E.M., 2017. The use of Ansoff Matrix in the Field of Business. Annals-Economy Series, 2, pp.141-149.
• Myszewski, J.M., 2017. Six Sigma model of transfer of development capability. Business Process Management Journal.
• Panina, Y.B., Stepanova, T.A. and Haustova, G.I., 2016. PEST analysis of factors influencing demographic situation in the Russian Federation. Wschodnioeuropejskie Czasopismo Naukowe, 8(1), pp.114-117.
• Sodhi, H.S., Singh, D. and Singh, B.J., 2019. Developing a Lean Six Sigma conceptual model and its implementation: a case study. Industrial Engineering Journal, 12(10), pp.1-19.
• Sravanth, K.R.S., Sundaram, N. and Kannaiah, D., 2019. PEST Analysis of Present Indian Telecom Sector. International Journal of Innovative Technology and Exploring Engineering, 9, pp.4938-4942.
• Turvey, R., 2019. Economic analysis and public enterprises. Routledge.

Appendices:

Appendix 1:

Ansoff matrix:

Appendix 2:

Porters diamond model:

Appendix 3:

PEST analysis: