Economics

Exploring the Factors of Operation Decisions

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Acme Construction is a company that produces drywall for use in residential and commercial buildings. The firm began its operations during 2005 in the midst of a US housing boom. Presently, Acme Construction is located in Americus, Georgia, which is rich in gypsum used in the manufacture of sheetrock. With 100 employees, Acme Construction is the third largest employer in Americus. Unfortunately, Acme Construction is now experiencing financial difficulties which could lead to the closure of the business.

The first thing Acme Construction must do is evaluate the environment in which it is operating. For a big picture examination, Acme Construction must consider current, relevant Political, Economic, Social, and Technological factors, also known as PEST Analysis. The constituents of PEST can be considered as macro-environmental factors and its usefulness lies in the assumption that the success of a particular organization or management solution cannot be understood without having the information relevant to the specific business environment (Remenyi, 2007). The largest political factors in play are the Affordable Health Care Act and potential increase of the minimum wage. If either is implanted by the Federal Government, Acme Construction would see an increase in production costs resulting in less revenue. The overall health of the US economy and housing market are important economic factors to consider. High unemployment has kept inflation lower than expected, but could also lead to deflation. Deflation entails spiraling declines in prices and wages and is difficult for policymakers to combat (Lange, 2007). Also, new home construction fell by 16 percent in April. This will result in decreased demand for sheetrock, negatively impacting Acme Construction. Health concerns are the leading social factor impacting the firm. In the years 2004 through 2006, the housing boom and the...