3. The existence of competition manufacturers to produce quality goods. 4. Efficiency and effectiveness is high, because of his actions are always based on economic principles. The weakness of the free market economic: 1.
In socialism, people make collective decisions as to what the directions of the social and economic progress should be, and then empower their representatives to implement them. In capitalism, the sum of the actions of free individuals is considered the best for the society as a whole, and the government should accommodate these private actions and should not have any ideological agenda as to what the directions of the social and economic progress should be. The Marx quote that “The philosophers have only interpreted the world, in various ways; the point is to change it” is interpreted by socialists as the moral base for the organized society to identify the desired direction of progress and forcefully apply necessary policies to achieve this goal. Supporters of capitalism believe that philosophers should not go beyond interpreting the world, and that the organized society should not establish any policies shaping the future, that the progress should be whatever happens as a sum of the actions of
One of the major benefits is economic growth. Globalization plays a prominent role in immigration. Immigration brings innovative ideas and makes a good career. Moreover, global market appears only due to immigration. According to Dogra (2011), there are many benefits in terms of economic growth to a country.
Innovational models dies creative values and their products are generally cheaper than others like IKEA and are highly successful to innovative other existing models in the market. The key point is also that ZARA manage the strategy of distributions and vertical integrations also, while cutting cost as they do not out source. Also considering the fact that ZARA will not order new merchandise after a line is sold out , it forces the customers to purchase right away and do not wait for the discounts , is the leading way to generate the cash flow quickly. Also ZARA marketed research are interlinked and also inter dependent to each other in case of streamlining the product enhancements and product development through vertical and horizontal integrations. Also Zara business model is different from the others retailers as their each and every staff is fully motivated and enthusiastic , whilw giving them full out puts individually and Further zara’s factoties are based in europen regions so the time of new design to reach the customers are crossing the 2 weeks time , while other retailers are faced long time for the goods as the goods are coming from
In addition, economic freedom ensures to an extent where the market is influenced by the consumer demands and choices which make up the supply and demand trends that we view in a capitalist economy. Thus, a capitalist economy is where individuals purchase certain products that indicate the preference and demand for the public. Therefore, economic freedom in a free market, entrepreneurs and for a business would mean that there are no barriers in trade such as, the import and export, and also that customers would not be obliged to pay taxes on their purchases however, for some conditions that may be applied. As a result, just because economic freedom gives an individual the right to do whatever they desire, in a free market economy, economic freedom overall does not guarantee or result an individual to have an effective quality of life. For example, there can be certain situations where there can be economic disparity which is the difference or gap between the rich and the poor and this division can have a negative impact on those individuals who are less wealthier, because they can become even more poor whereas the richer class can become even more wealthy.
Systems under these categories such as traditionalism, communism and socialism all have indisputable advantages and disadvantages. Therefore, to design an almost perfect economic system each economic system’s strong, functioning points have to be united. A market economic system is a system where the government does not control essential resources, valuable goods or any other prime divisions of the economy. Through this organizations run by the people decide how supplies are generated, how the economy is run and what demands are vital. The biggest advantage of a market economy is the separation of the government and the market, because it prevents the state from becoming too controlling or oppressive.
Market and externality One of the general principles of economics is: Markets are usually a good way to organize economic activity . Indeed, in a perfect market, all resources in the society can be distributed efficiently without the intervention of government. P S P0 0 Q0 Q Diagram A While interacting with each other in the market, both sellers and buyers pursue their own benefits but, under the influence of market forces, their decisions unintentionally bring well-being to the whole society. Economists agree that when the market reaches it equilibrium, a point at which the demand curve intersect supply curve (as described in Diagram A), the sellers can sell all goods they want to sell and the buyers can purchase all the goods they want to purchase. The price paid
The assumptions of monopolistic competition are as follows: • The industry is build of large number of firms • Firms are free to enter or leave the industry • All firms produce slightly differentiated products • Price maker Like perfect competition, there are no barriers to entry or exit. Though unlike perfect competition the products are not identical, competitors sell products that are differentiated from one another. More like Monopoly, in Monopolistic Competition the firms are price makers thus the producers decide the products’ prices. Oligopoly is a market structure where its challenge is between monopoly and monopolistic competition. The market is dominated by a few firms; firms either sell identical or differentiated products.
This is also where price mechanism takes place because any changes in demand and supply, will affect the price, and eventually balancing the demand to be equal to supply. This is the reason why consumers and producers have no control over the price, and in this situation, everyone is considered as price takers. This causes a horizontal line in the demand curve for the firm’s product(s), as can be seen in Figure 1 (b). Figure 1 There are barely any barriers to enter this market, making it easy to enter and exit according to the firm’s capabilities. 2.2 Governments’
Reasons for the success of the system and the potential pitfalls involved Haier’s performance management system is effective in terms of boosting retail volume and profits. Below are some of the keys leading to the success of the system. Firstly, the system can create internal pressure through ongoing competitions. Unlike some of the traditional appraisal approaches, promotion is not permanent nor guaranteed in Haier. Workers and employees need to maintain high level of performance in order to receive rewards and get promoted.