Understanding Market Failures and the Role of Government Intervention
Keynesian Economics
Keynes argued that during widespread unemployment, natural market mechanisms are insufficient for recovery. He proposed that the state should intervene through spending or actions to stimulate business and consumer activity.
Externalities
Externalities occur when a company’s or consumer’s activity affects third parties, either positively or negatively. Negative externalities arise when those responsible do not bear the consequences or costs. Market prices may not reflect all the
Read MoreMastering International Pricing: Strategies, Variables, and Methods
Pricing Determinants
Price is the economic compensation received for the effort and resources used to produce and distribute a product or service. Market characteristics, company objectives, product policy, distribution, promotion, and market entry methods (e.g., export) all influence pricing. Setting the right price is crucial; an incorrect pricing policy can damage a company’s image and financial results. Price determination involves considering internal, external, and product-related variables.
Read MoreOil Crises and Soviet Collapse: Economic Shifts
Oil Crises (1973 & 1979-80)
The first crisis wasn’t solely due to rising oil prices. It resulted from overlapping issues: rising oil prices, speculative currency exchange, the collapse of the Bretton Woods system, supply shortages of raw materials, agricultural crises, and strained political relations between Europe and the US. Sociological factors, like the French May 1968 protests and anti-Vietnam War movements, also played a role.
Main Indicators
- Sharp rise in oil prices, causing distortions
Market Structures: Competition, Monopoly, and Oligopoly
Competition
Rivalry among several companies trying to sell the same kind of goods or services to the plaintiffs in that market.
Perfect Competition
Characteristics
In this market, there are very few barriers to entry and exit. There are a lot of small producers who make an insignificant portion of the total market. The good exchanged is homogeneous; i.e., there is no difference between the products. Producers and consumers are familiar with the product characteristics and price. The producer has no
Read MoreUnderstanding Business Environments: Growth, Globalization, and SMEs
External Environment
The environment encompasses external events (policy, technology, etc.) affecting a company’s activities, results, objectives, and decisions. Understanding this environment is crucial for identifying opportunities and threats and making necessary internal adjustments.
General Environment
The general environment impacts all companies similarly, regardless of their specific activity. Key factors include:
- Legal and Political: Legal frameworks, political ideologies, stability, and legislation.
Human Resource Management: Motivation, Leadership, and Employment Contracts
Functions of Human Resource Management
It is important to analyze how to motivate employees to achieve goals. Assessment systems of rewards and incentives should be established. Motivation is necessary for the study of leadership (formal and informal levels) and the development of appropriate communication processes. Human capital is a competitive advantage, with components of competence including knowledge, skills, interests, motivation, and willingness to use resources. People make different organizations;
Read More