Big Picture Economics: How to Navigate the New Global Economy

Chapter 6

How Is a Can of Tuna Like a Smartphone? Yes, Context!

The corporate world can be like a pressure cooker. Shareholders want higher returns. The workers grumble about their pay increases. CEOs have to make critical decisions on where or whether to build a new factory. To understand new regulations a company may need legions of lawyers.

How does the company get all this done? Part of the answer is through assessing the context around decisions it has to make.

In this chapter, we look at factors such as corporate taxation and regulation. How much do they influence CEOs when it comes to important decisions? We examine the rationale for taxes on small business.

We also take a closer look at how a company, in the middle of the recession, made a decision to build a major new factory that will be producing the computer chips that power our tablets and smartphones and whatever else Silicon Valley types can invent in the future.

Another important fact of life for a company is that corporate life can be Darwinian. In others words, acquire a competitor or be swallowed up yourself. To better understand the context around the decision to buy and sell companies we talk to a deal maker who tries to find creative ways to merge companies.

A Company Decides to Build Chips

A recession can scare a company away from making big investments. Lenders may turn down loans to anyone but the most creditworthy. Stock market analysts may clamor for cuts, not investments. And boards of directors may ...