Notesale: Turn your study into money

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Business Notes On Economics And Market
Economies
Subject Business
These Business notes are my own work that I wrote during my
undergraduate study
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They focus on market economies
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3
Pros of a Market Economy
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It provides a society with the right goods or services at the right time
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A market economy promotes entrepreneurship
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It creates competition
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It reduces the need to store products
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Market economies tend to provide more jobs
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Prices are usually kept down in a market economy
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10
1
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10
The goal of a market economy is to find balance between cost and profit
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It harms the environment
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Outsourcing is frequent in a market economy
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Commodity prices typically rise in a market economy
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Economy imbalances occur frequently within a market economy
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12
References
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Economics

The main reason for the establishment of many organizations is to
minimize its costs while maximizing its output
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An organization should manage its supply chain to best suit their
needs
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It is important to determine the best supply channels required for every kind
of products
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Proper supply chain management for tire industry positively influences the
prices charged thus attracting more customers which in turn increases the
sales of the products hence translating into high profits
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According to Alfinaet al (60), proper supply chain in the tire industry
reduces the costs involved in the whole distribution process
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The financial gains by all the intermediaries translates to the increase in the
costs of production and distribution thus affecting the final price of the tires
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When

the

customers’

expectations

are

not

effectively

met,

the

organization’s sales and profits may decrease
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A short supply chain involving the producer and the consumer may be
effective when selected and properly tailored to meet the customers’ needs

and give the company a competitive advantage over its competitors
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producer

consumer

Additionally, effective and efficient supply chain in the tire industry
enhances timely delivery of the products to the customers (Goodyear Tire
& Rubber and Cooper Tires)
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It means that the supply of the products will be reliable to
the customers and thus their usage schedules will not be disrupted
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In other words, proper chain selection for tires enhances
customers’ satisfaction whichacts as a measure of the quality of products
being offered by an organization (Amin et al, 100)
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Better quality
products and services is essential in enhancing the competitiveness of a
company in the tire industry
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Reduction in prices due to the proper management of production and
distribution costs increases the sales of the organization thus resulting to
the improvement of profit margin
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Therefore, for an organization to
perform effectively in the tire industry, it should utilize the most effective
chain, which in most cases turns out to be the short one
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It provides a society with the right goods or services at the right
time
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Although the quality of these goods may vary based on who
manufacturers them, different socioeconomic classes can access
specific goods within their price range that they wish to own
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2
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Because the emphasis within a market economy is on innovation, it
creates an environment where entrepreneurship can thrive
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It is a structure that

provides profits for businesses of any size while creating satisfied
customers at the same time
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It creates competition
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Businesses that refuse to innovate will be left behind
because there will always be someone willing to look at things in a different
way
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4
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Because the laws of supply and demand are enforced in a market
economy, manufacturers produce goods based on the demands that the
society requires
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The
goal is to find a balance between society’s demands and the number of
goods that are produced
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Market economies tend to provide more jobs
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7% of all businesses
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6% of the workforce
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Although larger companies may outsource jobs to save money, local jobs
come from individuals and partnerships that exploit a good idea they may
have
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Prices are usually kept down in a market economy
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It is this element that is a core philosophy in the Republican
health care proposals that circulated in 2017
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Cons of a Market Economy
1
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The goal of a market economy is to find balance between cost
and profit
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That usually means skilled workers who demand high wages will
be replaced by low or average-skill workers who can still
produce a reasonably good product, but at a cheaper price
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2
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A market economy places an emphasis on the cost of good produced over
any other factor
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When it costs less to dump
waste in nature than it does to properly dispose of it, the lack of
governmental interference or a central authority would allow such an action
to occur
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Outsourcing is frequent in a market economy
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Outside of the developed world, wages are much lower
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If a local worker needs
$10 per hour for their needs and a worker elsewhere will work for $10
per day, outsourcing allows a business to create better profits
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Commodity prices typically rise in a market economy
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Coffee is a commodity, as is copper
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Without them, a business cannot create goods or services for sale
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5
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The Great Recession in 2007-2009 occurred because of a lack of
regulation in several sectors, including housing, around the world
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When more businesses attempt to maximize profits without regard to
risk, eventually a negative event occurs and the consumers tend to
be the hardest hit by the fallout
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