Why have Contracts?


Contracts are probably a necessary device in any kind of market economy where goods and services are exchanged by people acting in their own interest. People might not enter into agreements that call for some future performance unless they know some means exist to force other people to honor their promises.

It is also true that it would probably be impossible to have an industrialized, market economy without contracts. A manufacturer would be unable to do the kind of planning necessary to run a business if he could not rely on agreements with suppliers to finish the raw materials he needs to make the products. Similarly a manufacturer might not be willing to commit herself to buy raw materials or hire employees if she could not rely on buyers’ promises to buy her products.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

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Going Global


Besides generating additional revenue, firms are expanding their operations outside their home country to gain other benefits, including new insights into consumer behavior, alternative distribution strategies, and advance notice of new products. By setting up foreign offices and production facilities, marketers may learn new marketing techniques and gain invaluable experience. Global marketers are typically well-positioned to compete effectively with foreign competitors.

A method used by international marketers before entering foreign markets is to conduct transcontinental product testing. Since firms must perform the marketing functions of buying, selling, transporting, storing, standardizing and grading, financing, risk taking, and obtaining market information in both domestic and global markets, some may question the wisdom of treating international marketing as a distinct subject. After all, international marketing is marketing; a firm performs the same functions and works toward the same objectives in domestic or international marketing.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

 

The Importance of Motivation


One of the manager’s primary tasks is to motivate people in the organization to perform at high levels. This means getting them to work hard, come to work regularly, and make positive contributions to the organization’s mission. But job performance depends on ability and environment as well as on motivation.

To each high levels of performance, an employee must want to 1) do the motivation, 2) be able to demonstrate ability, and 3) have the materials and equipment needed to maintain the environment. A deficiency in any one of these areas will hurt performance. A manager thus should strive to enter that all three conditions are met.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

 

Pure Competition


The term competition is used ambiguously not only in ordinary conversation but in economic literature as well. Its common meaning is rivalry, but in economics when used along with the word pure, it carries a different meaning. Following are necessary conditions for pure competition:

  1. Homogeneity of the product: For competition to exist in a market all sellers of the product being exchanged sell homogeneous units of the product, or at least the buyers of that product believe that this is so.
  2. Smallness of each buyer or seller relative to the market: Each buyer and each seller of the product under consideration is too small in relation to the entire market for the product to influence significantly the price of the product that is being bought or sold.
  3. Absence of artificial restraints: There are no artificial restrictions on the demands for, the supplies of, and the prices of whatever is being exchanged. No government price fixing nor any institutional fixing or administering of price by producers’ associations, labor unions, or other private agencies. There is no supply restriction enforced by the government or by organized producer groups. Control of demand through governmental rationing is nonexistent.
  4. Mobility: There is mobility of goods and services of resources in the economy. New firms are free to enter any desired industry, and resources are free to move among alternative uses to those where they desire employment. Sellers are able to dispose of their goods and services where the price is highest. Resources are able to secure employment in their highest paid uses.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

The Essence of Competition


Competition, the rivalry among businesses for consumers’ dollars, is a vital element in free enterprise. Competition fosters efficiency and low prices by forcing producers to offer the best products at the most reasonable price; those who fail to do so are not able to stay in business. Thus, competition should improve the quality of the goods and services available.

Within a free enterprise system, there are four types of competitive environments:

  1. Pure competition exists when there are many businesses selling one standardized product. No one business sells enough of the product to influence the product’s price. And, because there is no difference in the products, prices are determined solely by the forces of supply and demand.
  2. Monopolistic competition exists when there are fewer businesses than in a pure-competition environment and the differences among the goods they sell is small. The products differ slightly in packaging, warranty, name, and other characteristics, but all satisfy the same consumer need. Businesses have some power over the price they change in monopolistic competition because they can make consumers aware of product differences through advertising. Consumers value some features more than others and are often willing to pay higher prices for a product with the features they want.
  3. Oligopoly exists when there are very few businesses selling a product. individual businesses have control over their products’ price because each business implies a large portion of  the products sold in the marketplace. Nonetheless, the prices charged by different firms stay fairly close because a price cut or increase by one company will trigger a similar response from another company. Oligopoly exists when it is expensive for new firms to enter the marketplace.
  4. Monopoly exists when there is one business providing a product in a given market. Utility companies are monopolies. The government permits such monopolies because the cost of creating the good or supplying the service is so great that new producers cannot compete for sales. Government-granted monopolies are subject to government-regulated prices.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Oligopoly


An oligopoly exists when there are very few businesses selling a product. In an oligopoly, individual businesses have control over their products’ price because each business supplies a large portion of the products sold in the marketplace. Nonetheless, the prices charged by different firms stay fairly close because a price cut or increase by one company will trigger a similar response from another company. In the airline industry, for example, when one airline cuts fares to boost sales, other airlines quickly follow with rate decreases to remain competitive. Oligopolies exist when it is expensive for new firms to enter the marketplace. Not just anyone can acquire enough financial capital to build an automobile production facility or purchase enough airplanes and related resources to build an airline.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Private Enterprise


Private or free, enterprise is the economic system. It means that most of the country’s goods and services are provided by privately owned firms that compete with a minimum of government controls. The private enterprise system has six key characteristics:

  1. Private Ownership of Property: most businesses, land, minerals, buildings, machinery, and personal goods are owned by people, not by governments. This ownership is the right of people. It is an incentive to work hard to acquire and care for our own property. This sort of incentive contributes to the economic growth of the country.
  2. Freedom of choice and limited government: Freedom of choice allows businesses to select the products they produce, hire and fire employees, compete for customers and supplies, and make and dispose of profits. Freedom of choice also allows consumers to buy whatever products and services they are willing and able to buy from whichever firms they choose. Freedom of choice implies a limited amount of government intervention in the area of private enterprise. In a free enterprise system, government sets the” economic rules of the game” by establishing basic laws and regulations that ensure society’s welfare. But within the context, individuals and organizations are left largely free to pursue their own interests and inclinations.
  3. Consumer sovereignty: Consumers rule; the more carefully they make their decisions, the more clearly the economy will reflect their needs. The more money you spend in the marketplace, the greater your influence.
  4. Profits: Profits make businesses responsive to consumer wants. Profits are also a good indicator of where to expand and how to compete better. As a shop owner you can also compare the overall profits with past results or with profits of other businesses to gauge how well your shop is doing. Profits are the clearest standard of performance available to a business. But consumers often misinterpret business profits. They also don’t always understand how profits direct a business’ efforts. And consumers usually substantially overstate how high business profits actually are.
  5. Competition: Most business leaders believe their industries are highly competitive. But the term “competitive” has many meanings. Pure, or perfect, competition exists in an industry when 1) there are many firms of about equal size, 2) all firms produce the same product, 3) each firm can enter or leave the industry when it wants, and 4) all firms and customers are well-informed about prices and availability of products. No industry completely satisfies all these conditions, although some come close. Most industries operate under conditions of imperfect competition. This means they satisfy some but not all the conditions of pure competition.
  6. Productivity: Productivity is essential to the economy, whether it means designing faster microcomputers or better-testing toothpaste. Increased productivity helps offset inflation and keep prices down. Productivity is defined as real output (the value of the product independent of price changes) per working hour, and it is usually written as a percentage.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

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