Factors of Production and Economic Organization
Factors of Production and Economic Organization
The Role of Households and Businesses
Households are responsible for deciding how much to produce and consume. They own the factors of production and earn wages by working in companies. This income is then used to purchase goods and services or saved for future consumption. This trade-off between present and future consumption is called intertemporal substitution, and the reward for saving is called interest.
Companies organize production factors to
Read MoreProduct & Service Design and Brand Management
Chapter 8: Designing and Managing Products
Creating Customer Value
To achieve market leadership, firms must offer products and services of superior quality that provide unsurpassed customer value. Design relies on several key elements:
- Core Functionality
- Features
- Performance Quality
- Conformance Quality
- Durability
- Reliability
- Form
- Style
- Customization
In a crowded market, aesthetics can be a key differentiator.
Product Portfolio
A company’s product portfolio encompasses all products offered, including various product
Read MoreTypes of Companies and Internationalization: A Business Overview
Types of Company Classification Criteria
1. By the Nature of Economic Activities
Businesses develop in different sectors:
- Primary Sector: Focuses on natural resources (e.g., agriculture).
- Secondary Sector: Transforms goods into other goods (e.g., industry and construction).
- Tertiary Sector: Encompasses businesses that provide services.
2. By Size or Dimension
- Microenterprises: Less than 10 employees.
- Small Enterprises: Less than 50 employees.
- Medium Enterprises: 50-250 employees.
- Large Enterprises: More than
Power and Leadership in Organizations
Power and Leadership
Power was long viewed as an individual trait, enabling one to impose their will upon others. However, it is a characteristic of relationships between people. Max Weber defined power as the ability to influence someone’s actions, even against their will.
Power and Authority
Weber differentiated power from authority. Authority is legitimate power, socially recognized as valid, such as parental authority. Legitimacy signifies social acceptance of the power’s basis, not necessarily
Read MoreSystem Dynamics: Entropy, Synergy, and Homeostasis
System Dynamics
Entropy
Entropy is the tendency towards disorganization and uniform distribution within a system. This leads to a decrease in potential differences and, consequently, a reduced capacity for work, due to wear and tear caused by external factors or operational processes.
Highly entropic systems tend to degrade due to the wear generated by these processes.
Examples
- In manufacturing, consider a product with specific physical characteristics (material, shape, size, color) and design/manufacturing
Canary Islands Special Zone (ZEC)
What is the Canary Islands Special Zone (ZEC)?
The Canary Islands Special Zone (ZEC) is a low-taxation regime created under the Canary Islands Economic and Fiscal Regime (REF). Its aim is to promote the economic and social development of the archipelago and diversify its production structure.
The European Commission approved the ZEC in January 2000. Initially, the benefits of the ZEC were valid until December 31, 2019. However, the European Commission extended the authorization in January 2007 (it
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