Fiscal and Monetary Policy

Fiscal and Monetary Policy

1. Digital Technologies

   • Data Mining
     • Continues to grow as delivery networks and collection of lockers become more effective and accessible
     • The growth of mobile devices means online lockers become more effective and accessible
     • Prices are transparent
     • There is a greater access to suppliers
     • It is not suitable for all products where the customers need to touch and experience the product
     • Delivery costs can be expensive
     • Lots of fraud is committed through e-commerce
   • Data Mining
     • Data mining is a process of analysing business data to identify patterns and relationships between a number of variables
     • Businesses are able to profile customers and better understand their needs
     • It uses analytics to effectively target customers with offers and products they will want
     • It accurately forecasts sales numbers based on a wide variety of data, including economic and social trends
     • It may only be valuable to large firms where a large quantity of data is available
     • Correlation of data does not necessarily mean there is a relationship
   • Big Data
     • Big data refers to the vast quantities of info that businesses are now able to collect through sources such as GPS data, bar code readers and social media
   • Enterprise Resource Planning
     • ERP is the data management software that links the functional areas of a business together such as stock ordering, customer relationship management
     • ERP improves flexibility and efficiency by coordinating the functions of a business
     • It provides managers and employees with useful info on a number of business processes
     • ERP improves customer service
     • There is the cost of developing the system for businesses' specific needs
     • There has to be investment in training staff to effectively use the system

2. Benefits

   • Offers new ways of doing business
   • Better communication between employees and functions
   • Faster access to information
   • Knowledge management systems can replace the need for a moderate level of expertise

3. Pressures

   • Technology can remove barriers to entry increasing the level of competition in markets
   • Technology creates transparency in markets-customers can easily compare prices and find online reviews
   • Constant change-the pace of technology is fast and very difficult for businesses to keep up
   • Disruptive technology, technology becoming obsolete

4. Impact on Business Functions

   • Marketing- Big data gives businesses access to vast amounts of info on their customers. Can improve products and customer service
   • Finance- Digital technologies provides businesses with the ability to monitor financial transactions and closely monitor business costs, thus leading to greater efficiency
   • Operations- ERP systems can integrate all aspects of production, leading to greater efficiency and reduced waste
   • Human Resources- A modern day workforce must be computer literate and have the skills to work with data management software

5. Fiscal Policy

   • Expansionary Fiscal
     • Reduces direct and indirect tax to increase disposable income. Increases borrowing
       • Increases spending in areas such as health and education. Spending stimulates demand for businesses and creates jpbs
   • Involves government spending and taxation as a means of controlling economic activity
   • Contractionary Fiscal
     • Reduces spending in areas such as health and education. Pressure on inflation slows
       • Increases direct and indirect taxes to slow down growth and reduce the budget deficit

6. Monetary Policy

   • This is the policy to adjust the amount of money in circulation and therefore influence on spending and economic activity. The main form of monetary policy is interest rates
   • Manipulating interest rates
   • Quantitative easing
   • Forward guidance