Eco/561 Alternative Economic Futures

Scenario-1 Recession in USA and Germany-Both these country is facing a high unemployment rate of 9.9 and 10 respectively. This shows that there will be a drop in the purchase of battery as if the recession deepens then the purchasing power of the population will fall and there will be severe demand crunch. The major effect of recession is the fall in the demand and thus making the industry drop their sale. Larson Inc is not expected to shield from the clutches of recession. The effect of recession mainly falls in two parts the shrinking of demand and increase in cost per unit with cost of labour remaining constant. Margin starts to decrease and there is brakes on the cashflow of the companies. However, though we cannot stop recession but we can change our strategy to overcome recession. In order to protect margin Larson should decrease the cost.this can be done by getting rid off unprofitable product line and services which might not be having enough margin. This saves the advertising cost as well as the operational cost of the company. The manufacturing expenses can be reduced if company shift to a low cost destination like Latin America. This helps