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This in turn leads to ROI Tint’s drop in profits by 18% for the first-half. To counteract the lower prices, ROI Tint as sold a large number of assets, totaling up to $12 billion, and cut $5 billion of costs. Because China is ROI Tint’s biggest customer, Iris’s economic outlook in the near future will remain volatile if the economic growth continues to decline.
Application of Concepts By reporting the reduction Of profits as a result Of the low demands Of the Chinese economy. This links to the economic environment, in particular the free market forces of supply and demand. According to Ye (2011) and Grelearn, Petersen and Poetesses (2009), the prices of raw materials are often determined by consumer demand, or the company’s ability to supply the product.
Due to the low demand of metals in China, this has a negative impact on ROI Tint as they are forced to lower the commodity prices, which inevitably reduce the overall profit of the company, A link is made between the excessive investments made by ROI Tint and the impact it has on the company as China’s economic growth declines, thus connecting ROI Tint to the effects of the economic environment, gore the last 3 decades, China’s economic growth has been driven by its investment interactions tit global businesses (Davies 2013).
However, according to Pettish (2013), consumers are unable to provide additional demand on goods unless wealth is redistributed to Chinese households. As a result, the economic growth must slow down so that the economy can rebalanced. In the process, companies with large investments in China also suffer consequences, as gains in the factory output slow down due to the reduced demand by the Chinese steel mills for raw materials (Bloomberg 2013). Analysis The medium-term outlook of ROI Tint remains unstable, as China, their largest customer, continues to decline in their economic growth.