Macroeconomic Policy

Favorable macroeconomic policies increase the demand for goods in the markets. However, the unemployment rate negatively affects the Comcast Corporation’s business in relatively the same way decreasing disposable income impacts it. Since the unemployment rate is falling, more consumers are able to pay the price for premium products and buy advanced cable and broadband services. Consequently, the falling unemployment rate means more disposable personal income; thus the drivers are promoting the growth of the cable and broadband industry. However, the economy cannot generate enough spending to meet full employment since productivity slowdowns and growth in the labor force have lowered the natural interest rate (Wallsten, 2014).

A major macroeconomic policy of the United States government encourages the domestic cable manufacturers, such as Comcast, to retain their major technology in the country but establish subsidiaries in Asian countries for cheap labor and resources while marketing locally. Such policy is intended to provide survival to the domestic labor-intensive industry thus promoting growth in the industry (Wallsten, 2014). Restrictive monetary policy causes the interest rates to go up, while stimulative fiscal policy is as a result of tax cuts, increases in government spending and tight money policies. However, increases in money supply in the economy leads to inflation. The general prices of commodities in the cable industry will shoot up, resulting into low purchases from the household and the businesses.

The current government policies, such as purchasing of government securities affects the GDP greatly, especially in cases of high required reserve ratio, thus impacting the government spending due to the effect of interest rates leading to slower growth in demand. However, as banks are deprived of the loanable funds, the required reserve ratio goes up. Money supply as a result goes down due to the sale of government bonds, thus higher interest rates for borrowers. This hampers the growth of the cable industry as businesses and household have little money at their disposal to spend. Spending is thus diverted to essential commodities and basic needs (Barigozzi & Hallin, 2014).

The forces of demand and supply are spurring competition in the cable and broadband industry. The supply-side policies are promoting the build-out of the network infrastructure over which Comcast can offer its services and applications. Conversely, the demand-side policies have fostered the awareness and adoption of these services and applications, leading to more usage by the markets. Therefore, the interaction of supply and demand factors have aided Comcast, to realize increased market penetration (Bernath, 2015). However, market failures may hinder the development of the interaction of supply and demand forces. It is through macroeconomic policies that the market is able to reach the required critical mass, thus leading to sustainable growth cycle (Awan & Akhtar, 2014).

The Existing Home Sales is a vital indicator of the demand for Comcast products whose turnaround will result into a positive growth in the demand for the Corporation’s services and applications, albeit at a slow pace. The previous decline led to a fall in the number of units sold before picking up at the end of 2010. Currently, the housing prices are returning to normal levels, though they have to become subnormal for some time to eradicate the excess supply. Moreover, the looming predictor is holding a downward pressure on valuation multiples. Since the housing prices are getting attractive, more consumers are jumping on bargains, hence helping Comcast Corporation to get more potential customers (Wallsten, 2014).

Moreover, the government is policies that have spurred competition in the cable and broadband industry, thus allowing recommendations that are beneficial to the consumer through data driven competition policies. Through the provision of information to the consumers, firms such as Comcast Corporation have bettered their service value delivery, thus increasing the demand for their products. However, austerity measures by the government have undermined growth with attempts to sustain demand through monetary rather than fiscal policy becoming ineffectual (Barigozzi & Hallin, 2014).
In a bid to reduce the deficit in the economy, the government has employed monetary policy. This includes aggressive cuts in interest rates, negative short-term policy rates, and quantitative easing have been used to stimulate demand and economic activity through exchange rate depreciation and low long-term interest rates. The result has been a preferable effect in the cost of commodities in the general market.

The current macro policies have affected the cable and broadband industry by fostering effective competition and encouraging investment. This has been done through stimulation of sharing of physical networks by multiple providers. Moreover, there has been a facilitation of access to rights-of-way, thus easing the construction of both wide area and local connections. Policies have also been developed that foster open access to government-sponsored and dominant operator networks for enhanced competition. Further, the policies have led to an open access to critical infrastructure, thus increasing competition in the market, a factor that has seen Comcast Corporation’s profits increase steadily (Bernath, 2015).

However, as the policies are implemented by the government, businesses view broadband supply as a problem of demand and supply, thus they are being forced to employ broadband development strategies and policies to facilitate demand. To benefit from the macro policies the government imposes on the industry, firms such as Comcast Corporation, should take advantage of their competitiveness in the market to counter the adverse effects of the policies. On the other hand, high unemployment, reduced economic activity and falling incomes affect the industry heavily. For the firms to adapt in the depressed consumer spending, they have to cut production as well as the cost of research and development (Awan & Akhtar, 2014).






Leave a Reply