Essential of Economics part IV

My examination and assignments are over already. Those questions are really less competitive and boring due to their simple words. But it is good that i made myself more competitive. However, I found the notes may be different some from the textbook due to different theories from different economists and different countries. I started to notice the economics textbook are labelled in selected countries and realised that the economists’ theories are different in different countries. If you find my post has something different from your knowledge, then don’t get confused!! In additional, I learnt new about “Porter’s Five Forces” when i was researching for the assignment. I like to introduce about the Porter’s Five Forces. Thank you. Mere reading

Next issue is Four Environments that affect on an organisation

Competitive Environment ( It is another similar theory of Porter Five Forces)

 

 

1) Power of Consumers

– To affect the consumers’ responsiveness and sensitivity to the price changes: market of the outputs.

2) Power of Suppliers

– To depend on supports and contributions of the supplier : market of the inputs.

3) Threat of substitutes

– To affect other products for accomplishing the customers’ demand and satisfaction

4) Degree of Competitive Rivalry

– To depend on the competitiveness of the organization against others.

  • Number of substitutes and level of leadership

 – For instance, Coffee Cafe A and Coffee B are selling same type of the coffee cup. But the Cafe A is selling more various types of Latte such as green tea latte, chocolate latter and coffee latte while the Cafe B does not sell these types.

 – If the organisation hire many talent and skilled workers, they will contribute more resources to the organisation.

  • High storage /perishability

 – Some firms own a few warehouse. Example: Gardenia Co has 2 warehouses. (you never hear of it before. Then google for it)

  • Cross-subsidization

  –  To transfer the profit deposit from the division to another division in order to secure a financial status of the latter.

  • Capacity Changes

 – To replace some unwanted/low provision raw material which is rare to be consummated with competitive raw materials. For instance, the soy bean stall try to reduce stock of grass jelly products.

5) Threat of Entrants

  •  Advertisement

A new entrant put more efforts in creating an advertisement against the existing firm.

  •  Availability of Distribution Channels

  Similarity to Vertical Integration. For instance, different national airports park the shared lots. If the parking lots are fully occupied

  – a new entrant put many efforts in improvement of the service and reduction of the selling price for the customers” expecting.

  •  Expected Entry Wars

A new entrant’s joining reacts other existing firms and they become more competitive against the new firm.

  •  Natural Monopoly Condition

A firm is a monopoly and does not need to be more competitive against other firms because that firm’s product is only unique or impossible to copy/substitutes. For instance, Newater Company (this organisation in my country) is also a monopoly. It’s special machinery is able to remove dirt from containment water and cleanse the water. After that, the cleaned water becomes drinkable.

  •  Product Differentiation

  – a firm creates a better product to compete against the existing firms.

Political Environment

  • Government Report

 – A useful guide to support either legal policy or laws.

  • Party’s Policy
  • Changes in Law

– For instance, the Government bans the importation of anthesis which contains eighty percentage. It affects the selling companies/ pubs’ marketing.

Interest/Specialisation Group

– To influence the organisations with their special interest/identity. In situation, the activists encourage many chinese restaurants to reduce selling shark fin soups because the extinction of sharks are nearly coming.

Technical Environment

  • Communication Access

  – To improve the communication system in some organisations to serve the customers better

  • Improvement/Quality of Product and Service

 – To improve the quality of service/product.

  • Cost Reduction

 – To help the organisation to reduce the wastage cost and the labour costs.

Sociocultural Environment

Population

  •  Rate of Growth

It is to measure the numbers of birth against the number of death or to measure the number of various age group or ethnic group for the macroeconomics. For example, an economist reports that the high rate of the population in the selected area affects the rate of consumptions and natural resources in the same area.

Lifestyle, Attitude and Culture

  • Examples: Inter-racial, single professional women who care about their career and leisure time. Thus, they are consummating more services or products on the leisure organisation.
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Essential of Economic Issue part III

Two Types of Sectors

-Public Sector is an organisation which is owned by the government. It has 3 types of organisations:

National Government Organisation is run by its  management which controls everything as a law agreement is passed and Government Department which its minister handles an action at Parliament. Its source of fund is to gain the taxes from public and the trading income from the company’s profitability. It shows 3 types of that organisation:

Public Corporation aka nationalised Industry supply goods or/and service to public.  Its missions are to provide resourceful and cheap services to public and to gain the trading income. Its example is Singtel Telecommunication.

Government Department performs an executive role on behalf of the government. Its aim is to monitor the localisation’s movement and to amend a law policy. Its example is Minister of Manpower.

Government agencies serve with special interests as a low rank in government body. Its example is Community Centre.

Local Government Organisation is run by its management which handle decisions and Selected and Resourceful Committee who carry main responsibilities. Its purposes are to serve cheaply public who is paying taxes, to be different from other parties, political groups’ supports (such as pressure group and local press) and depend on demand and supply is various. For its finance, they gain funds from the charges, taxes, government’s grants, shareholders, public bank (DBS). Examples of that organisation are national library and public museums.

Private Sector is an organisation which is owned by individual (non government). It has 2 types of organisation:

Non Profit Marking Organisation is to serve for special interest groups such as Cat Welfare, professional association, clubs, societies. Its purposes are to preserve the special interests, awareness, supports of goods and services.  

Profit Making Organsiation is to gain profits from markets. It has 2 types:

Unlimited Liability which allows a firm to contribute unlimited and had low chance to be in heavy debt. It’s source of finance, capital contribution, gain net profit and bank loan. To benefited the firm, they can run independently, are ambitious and flexible. On other hand, it will face the heavy liability, has shortage of capital and has workforce difficulties.  

Limited Liability which allows legal identity separation, limitation of liability and fixed investments. Its source of finance are shares, dentures and stock market.  

Both are owned by SME and corporation.

Essential of Economic part II

I realised that i enjoy writing what i understand instead of studying these over-detailed notes. Thus, i pick next topic is “Market Structures”.

Market Structures

Monopoly is one firm that sells a unique product. Its demand curve will be inelastic perfectly. Also, it is price maker. However, it has limitation of entry. If World Cup is launched, selling the tickets will get higher profits. Examples of water plant company, F1 tickets. 

Oligopoly is a price shaper and few firms which sell either differentiated or identical products. It is allowed to few freedom of entry Examples are shoes manufacturer

 

Monopolistic Competition: Many firms sell identical and differentiated products. It is allowed to some freedom of entry and also price shaper. Examples are restaurants , hotels

Perfect Competition. Many firms sell identical product. it is unlimitation of entry. Its demand curve is elastic easily.  Examples wet market sells vegetables.

 

Price discrimination is the practice of charging different customers different price. It is more likely for oligopoltistic and monopolistic markets.

Essential of Economic part I

I decided to write what i am studying the theory of economic here because it may help me to understand more and memories them well during my busy schedule. in additional, i treat this as my journal which i can keep and will revive it after many years and read . I find that the economic theories are very interesting than i thought. I used to be an officer in a trading industry and an insurance industry for more than 2 years. It is quite useful for me to understand the theories better. Also, i had studied Principal of Account and Human factors of Geography. Some of their theories are almost similar to the economics. I still remember them since i was in secondary school.   Many of my peers think the economics is just a boring subject to talk. i will not write these topics in ordering arrangement. I just pick interesting topics of economics to write only.

Economies Of Scale

Internal Economies of Scale has 6 factors which affect a development of  firms/organisations. “Internal” means that these factors affect inside the companies.

Factor I – Commercial ( buying and selling): The firm will purchase stocks in a bulk and it will helps to decrease the input costs and will get a good profit from the output price. A gap between the input and output costs is quite big if goods in bulk are purchased commercially.

Factor II – Specialisation/Managerial: A firm hires right people who can give more benefits and more resources to the companies. For small firm, one officer will do multitask. For large firm, an officer will do on one task which will contribute more amounts of  benefit to the large companies.

Factor III – Technical: A firm improves technology in plant and it will reduce a labour cost and will reduce the wastage

Factor IV – Financial: A firm ia able to meet bank requirements to take on loan. In additional, shareholders will invest on the firm to help it to improve better or maximize a profit.

Factor V – Risk Bearing: A firm is able to cover losses with its backup assets during bad time.

Factor VI – Social Economies: A firm will promote a good discount to consumers. The consumers will become regular buyers and it is easy for the firm to have good cash flow. The firm give benefits to employees. The employees will work hard and receive good bonus.

External Economies of Scale has few factors only. It is outside the firm/organisation.

Economies of Information: Publication, Technical Journal and Central Research

Economies of Convention: Assembly of localisation

Diseconomies of Scale

Internal Disecnomies of Scale shows that how the firms are affected negatively inside.

Management Capacity – The mergers of 2 firms will have human  and political clashes due to miscommunication and different systems.

External Diseconomies of Scale shows it affects negatively on the firm.

The location of the firm is overcrowded and it may affect on the market.

The firm makes pollution and the pollution will affect it.