Reference no: EM131296831
Gold Autoparts, Inc., produces automobile parts that are purchased by various automobile manufacturers that are building new cars. Gold has had some success in selling its parts to automobile manufacturers because they do not have to produce those parts if they can rely on Gold to do so. Gold has recently created a website that lists all of its parts and the prices charged for them.
The automobile manufacturers can order parts online, and Gold tries to fill these orders quickly. Gold attempts to anticipate when orders will increase so that it can produce enough parts to fill orders. It realizes that the demand for its auto parts is dependent on economic conditions that affect the demand for new cars. When demand for new cars increases, more new cars are produced, and there is greater demand for Gold's parts.
Tom Gold, president of Gold Autoparts, expects that economic growth will increase this year. He expects that interest rates will be relatively low over the next year. He also expects that foreign car manufacturers will introduce many new types of cars into the U.S. market. At this time, Gold Autoparts focuses its business on U.S. automobile manufacturers.
Questions
1. How will Gold Autoparts, Inc., be affected if economic growth increases as expected?
2. How will Gold Autoparts be affected if interest rates decline as expected?
3. How might the introduction of many new cars by foreign car manufacturers affect Gold's business?
4. Overall, do you think conditions will cause an increase or decrease in the demand for Gold's auto parts?
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