Macroceconmics

As with any company many macroeconomic variables that affect all industries.

Currently, I am employed at AAI Corporation which is operates as a defense contractor

through not only the governmental customers but commercially as well. AAI Corporation is a

global engineering and manufacturing company, providing a diversified range of products and

services. AAI Corporation operates in the US but does business within the US and

internationally. One macro economical variable that affects defense industries is that of supply

and demand. , supply and demand in a market in which a company is operating determine the

price of each firms stock (McConnel & Brue, 2004, p 149). Supply and demand in the stock

market determines the price of each firm's stock, with individual stock prices generally rising

and falling in concert with the collective expectations for each firm's profits. Greater profits

normally result in higher dividends to the stock owners, and in anticipation of higher dividends,

people are willing to pay a higher price for the stock. If a company is growing and the supply and

demand is doing well the price per share continues to increase making the company more a

profitable. To give one an example, AAI Corporation when I started with the company was at

about 29.00 per share. Presently, AAI Corporation stock per share is currently trading at 83.00

per share. There were many reports written about how well the company was doing and because

of this, the company was acquired as of December by Textron. This said

AAI Corporation is an operating system of Textron Inc, also known as Textron Defense Systems.

Like AAI Corporation, Textron provides advanced technology solutions to meet the needs of the

global defense and aerospace industries. Collectively, with its various operating units, including

Textron Defense Systems (AAI Corporation), HR Textron, Lycoming Engines, Textron Marine

& Land and Overwatch, Textron Systems delivers innovative solutions in several product areas:

Air-Launched Weapons; Intelligent Battlefield Systems; Sensor & Surveillance Systems;

Aircraft Products, Piston Aircraft Engines, Specialty Marine Craft; Armored Vehicles, and

Integrated Software and Communications Systems. Textron Systems is headquartered in

Wilmington, Massachusetts, U.S.A.

Another macroeconomic variable to consider with that of defense industries is

defense spending. According to David McClatchy of McClatchy newspaper (2007), According

to the US Department of Labor & Bureau of Labor Statistics (2007), under President Bush,

grown on average by 5.7 percent a year (McClatchy, 2007, p1) Including costs for fighting in

Iraq and Afghanistan, defense spending under Bush has gone up 86% since 2001, according to

Chris Hellman of the Center for Arms Control and Non-Proliferation (McClatchy, 2007, p1).

Since 9-11 America has seen a huge increase in military spending. According to Anup Shah

World Military Spending (2008), military spending has increased from 1998-2007 accordingly.

Year

$ billions

At 2007 prices

Change from previous year (%)

Ð'*

2007 626.1 626.1 7.46%

2006 571.6 582.66 -0.05%