MACROECONOMICS is the study of economy in general. They say that if the economy is down then it affects all the businesses, well sometimes it might not be true. Following is an example that demonstrates that fact.
SPECIALTY ITALIAN RESTAURANT : Let us say that there are 10 specialty italian restaurants in the town. Each caters to around 1,000 customers per week. Assuming each person spends around $20.00 So that means the total market for Italian food is $20,000 / week. Revenues / restaurant is $2,000 / week.
If the economy of the town goes down and unemployent increases then let us say that the number of people visiting Italian restaurants is half now and each spends just $10.00. So that means the total market for italian food now is $5,000 / week,
But if 8 of those 10 restaurants go out of business then that means this $5,000 is shared by the remaining two restaurants .Making Revenues / restaurant is $2,500 / week.So we saw that in the down economy the top businesses infact could increase their revenues, this could happen if the competition decreases in faster rate than the total market. The challenge is to identify such top businesses.
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