Consumer Reaction and Income Level
Consumer reaction is a standout among assets for enhancing an association’s quality control and customer satisfaction. While it is customary to receive feedback from unhappy customers, every department of an organization creates an opportunity for customer reaction. As a result, weak links within each department aid the decision-making process to improve customer satisfaction. Thus, consumer satisfaction is vital for organizations in their endeavors to enhance quality in the aggressive commercial center. Customer satisfaction is considered to influence customer retention, profitability, and competitiveness (Gans and Ryall 30). Researchers emphasize that consumer satisfaction improves customer loyalty while supporting financial performance (Solomon et al. 152). Consumers are satisfied when the perceived quality is more noteworthy than the measurement standard. Dissatisfaction occurs when the product misses the mark regarding its quality. Dissatisfied consumers find it simple to switch providers when a superior offer is produced. Thus, consumer reaction creates the opportunity to assess a firm’s product quality and service performance.In only 3 hours we’ll deliver a custom Consumer Reaction and Income Level in the Economics essay written 100% from scratch Get help
It has been noticed that customers buying behavior is based on the benefit of value satisfaction (Baye and Prince 125). Quality adds significance to product benefits and serves as a mediator in many customer decision circumstances (Gans and Ryall 33). A comprehension of the connection between internalized quality measurement and the way of life is critical. The link between value measurement and psychographic factors empowers an effective market decision-making process. Thus, successful managers focus on purchasers willing to engage with their products and services. As a result, managers collect vital information on customer’s demographics. If the target market has limited income, then products and services advertised should be reasonable. Items targeted at affluent consumers are priced to reflect their income level.
Alternatives to Employment Downsizing
One question that associations solve as they consider the market and economic instability is whether the current workforce can improve development important to their prosperity. Firms attempt layoffs with the desire to accomplish financial benefits. Managers believe layoffs helps the organization to reduce wage expenses and product cost (Martin and Davis 21). Salary expenditures are fixed costs, by downsizing and “other things remaining constant” organizations can reduce cost. Reduced costs convert into expanded profit. Consequently, expanded profit and income drive stock costs higher and this makes investors happy. It is important to define a firm’s workforce by the value they create. Thus, other things remaining constant during downsizing cannot be accurate.
There are alternatives to employee layoffs, however, managers cannot ascertain if the economic downturn in business is brief or permanent. The alternatives to employee downsizing include redeployment, pay cuts, furlough, delay promotions, and create opportunities with limited resources to mention a few. For example, the hypothesis behind unpaid entitlements or salary costs unlike layoffs is that by sharing the pain of economic downturn among the workforce, associations will keep capable employees, win extra reliability, and position them for recuperation. Employment layoff during economic downturns is not an effective cost-cutting strategy and cannot guarantee that transient investment funds will surpass long-term expenditures (Martin and Davis 24). Money flow is a lifeline of every investment and employee layoffs is important to safeguard it. Before settling on the choice to downsize, administrators should consider the assortment of successful options accessible (Baye and Prince 167).
Work-Related Challenges between Managers and Employees
Work-related problems between managers and employees affect business performance and productivity (Baye and Prince 230). Management succession and employee exclusion are one of the most frequently encountered issues business environment. Employee management poses a problem for managers and departmental head of operations. Most employees are encouraged by an inclusive leadership strategy. Some employees feel cheated when organizational decisions are made without their input. As a result, they create resistance to management, which affects their productivity. Thus, the chain of command becomes a problem for managers. To avoid such issues, managers must be transparent and fair to all members of staff. An effective leadership strategy would encourage workers to be efficient and dedicated to their work. The ideal approach to managing employees is to check their execution of assigned duties. Managers can dedicate a specific time of the week for such undertaking to evaluate their performance. This approach creates discipline within the organization.
While work-related challenges are inescapable, unchecked conflict can cause irreversible harm to the organization. Conflict can have a few causes, including identity contrast, social desires, malevolent badgering, and the failure of managers to understand workers limitations and needs (Rožman et al. 19). Workers believe performance is a combination of strategies and team play. Thus, their input creates a channel for improvement. Managers who rely on its board of directors in the decision-making process encourage employee resistance. An individual’s perception towards his or her exclusion from decision-making process creates a negative attitude towards the management. Thus, employee inclusion in decision-making process creates harmony between the management and staff.
A market structure where a single firm supplies the yield of the industry is called a monopolistic market (Baye and Prince 260). Thus, monopoly power creates additional benefits for the supplier who decides the profit margin. From the customer perspective, monopoly power is negative since buyers consider the cost of items and the measure of surplus demand. Imposing business power implies that a higher cost will be charged and the yield will be low. From a financial and economic perspective, monopoly power is influences innovation. As a result, high profit margin motivates the organization to invest in business models and new products. Such development could reduce the cost of products. In specific situations, this may not happen because there is no assurance that the monopolist will advance. New entrants or competitors do not threaten the security and sustainability of the monopolist. Thus, the monopolist is not obliged by pressure to reduce the cost of goods or find innovative strategies to lower the cost of production.Academic experts
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The monopolist may not develop its brand because the cost of production would be higher in the short-run (Fielding and Rogers 400). The negative effect of monopoly power makes it not suitable in a fair and equitable market. Consequently, the limitations of monopoly power overwhelm the favorable circumstances of restraining infrastructure control while considering financial profit. The monopolist should establish an innovative strategy to reduce the cost of production. This strategy can encourage the organization to reduce the cost of products. Thus, the advantages of monopoly power will outweigh its disadvantages.
Argument for Mergers
A merger is an economic term that describes the agreement between two or more organizations (Arena and Dewally 90). While some mergers can be successful, others have recorded massive failure. Regardless of the failures in acquisition, mergers have its positive sides. Mergers create cost-saving capacities for the organization. By implication, the merged entity reserves funds from purchasing products using its size as a bargaining leverage. The merged entity divides resources based on its individual strength. As a result, the cost of production is a competitive advantage for the merged entity. When organizations with different input merge, they combine resources and technical capacity to manufacture quality goods. The accumulated data and technical strength would cause new items being delivered or existing items being created more efficiently, to the advantage of purchasers, which will inspire a good reaction from investors and shareholders (Arena and Dewally 95).
The merger of two extensive firms causes management changes, which supplant wasteful administration with a productive and effective one (Arena and Dewally 91). Changes in administration are unavoidably accompanied by rebuilding of the work drive. This strategy encourages retrenchment and employee layoffs. Mergers build a strong and independent entity that can compete with other conglomerates. It builds a talent pool of resources needed to create wealth (Baye and Prince 300). Mergers can create a comparative advantage of nations, as it supports manufacturing firms. The availability of raw materials is a comparative advantage for a firm as it lowers the cost of production and increase revenue generation. Another advantage of mergers is the diversification of products and services. Mergers create new product line of business because it encourages diversification. It is also a shield for tax benefits. Such agreement creates a financial leverage and tax benefits for both organizations. This benefit lowers the operating cost and increases profit after tax.
The Challenges of OPEC
The Organization of Petroleum Exporting Countries (OPEC) is a regulatory body that manages the demand and supply of crude oil (Colgan 600). Based on its definition, the first major challenge of OPEC identifies with its capacity and viability in managing emergencies of supply intrusions and the resumption of supplies. The historical backdrop of the association is brimming with cases in managing with such emergencies. The capacity of the association to manage this issue is identified with the accessibility of production limit in some countries. There are contrasts among nations concerning the accessible generation limit contingent on the extent of their stores and the level of production (Colgan 602). The challenge of managing oil disruptions and resumption of supplies has fallen on few counties such as Saudi Arabia and Kuwait. Thus, given the maneuvers and sourcing strategy, OPEC can monitor and change the global oil supply. The capacity to manage the demand and supply of oil can be personal, political, or economical. To mitigate this challenge, OPEC must act as a fair arbiter in regulating the production limits of its members.
Another challenge facing OPEC is the capacity to achieve stability and equilibrium in the oil supply (Baye and Prince 330). It is evident that oil demand changes, particularly in the Northern Hemisphere whereby the first and fourth quarters request is higher than the second and third quarters. Consequently, such demands are not matched with non-OPEC members and this situation creates a huge oil deficit. This implies the association needs to alter its generation, maybe by expanding yield. To manage this situation, OPEC must have a valid report on crude oil supply and demand. This assessment provides an accurate estimation for oil demand in the third and fourth quarters.
Bargaining Labor Contracts
Collective bargaining is the procedure of the transactions between the organization and unions (Paolucci 340). Collective bargaining settles wage disputes, establish employee rights, negotiate workers welfare, and ensure safe workplace. This encourages employee retention and productivity. Collective bargaining enables individuals to pursue their objectives while providing quality service. The objective is for administration and the association to agree, which is instituted for a predetermined timeframe. The parties will undoubtedly deal in compliance with common decency. This implies they have a common commitment to reach an agreement based on collective bargaining. Wages, wellbeing, security, administrative rights, work conditions, and advantages fall into the obligatory classification. It is advisable to use the best bargaining option.
To enhance these angles, the organization could offer a non-negotiable contract to guarantee fairness and a variable part that would be made accessible to employees that convey extra value in the organization. This encourages employee retention and productivity. Collective bargaining enables individuals to pursue their objectives while providing quality service. The Nash equilibrium can be clear and prescriptive. As a result, it is a capable idea as it enables individuals to make forecasts that can be scientifically dismissed. There are rewards for individuals who distinguish themselves in performance. Based on this premise, a take-it-or-leave-it offer is the best bargaining option because it removes the challenges of personal interest from union members. This option relies on the Nash bargaining, which resolves a conflict between the organization and union members (Baye and Prince 390). It is important to note the take-it-or-leave-it offer covers the mandatory categories such as job security, health benefits, and wages.15% OFF Get your very first custom-written academic paper with 15% off Get discount
Price discrimination is a pricing method that charges client different costs for goods and services. Under this strategy, the merchant charges every client the maximum value he or she will pay. Consequently, the merchant classifies clients in categories in view of certain properties and charges each group an alternate cost. Economic experts believe this strategy is valuable when income accrued from isolating the business sectors is more noteworthy than keeping the groups consolidated. The Price discrimination strategy relies on the elasticity of demand. Purchasers in the moderately inelastic market are charged a higher cost, while those in the moderately elastic market are charged a lower cost (Baye and Prince 430). It is important to note that price discrimination will be beneficial when revenues in various markets similar. As a result, the monopolist can expand his aggregate income by exchanging his item from the market with lower marginal revenue to an environment with higher market income. Price discrimination is profitable when the commodity transfer creates equilibrium in marginal revenue (Kim and Shin 792).
Thus, the elasticity of product demand varies in different market environments. The elasticity of demand influences price discrimination (Kim and Shin 790). Thus, the varying elasticity of demand influences price discrimination in a market environment.
Based on this assumption, the proximity of online auction destinations makes price discrimination troublesome for traditional retailers and wholesalers. It is appealing and less demanding for shoppers confronting lower costs to purchase more than they require from online sale destinations, and thereafter resell the remaining goods to customers confronting higher costs. Thus, online markets pose a challenge for traditional retailers and suppliers.
Asymmetric information exists where the groups engaged with monetary trade are not equally advised about the product quality. As a result, customer cannot recognize the concealed features of the items. If the exchange is completed, the buyer becomes the victim of the hidden activities of the group with privileged information. In the current market environment where investors hire a manager, the chief executives have more privileged information than its owners. This creates the principal-agent problem where managers withhold certain information during the decision-making process. For example, people do not acquire premium health insurance when they are sound. They are forced to buy medical coverage when they fall ill and can afford premium insurance rates. Consequently, these companies sell their packages to individuals compelled to purchase health coverage. This strategy generates profit for the insurance organization.
Moral hazards are circumstances where one party of the market cannot watch the activities of the other because of hidden actions (Baye and Prince 430). The consequence of moral hazard is an expanded likelihood of undesired results in one group and the market. For instance, it is observed that individuals drive carelessly when their automobiles are completely insured (Nguyen 305). The stock market and automobile industries are examples of organizations with asymmetric information. The stock market investor relies on information provided by the seller. Hence, the seller provides information that encourages the buyer to pay for his or her stocks. When such stocks fail, the investor is at a loss because of the hidden information before purchase. Insurance Auto Auctions, Inc. is an organization that markets used car in North America. Automobiles sold by the organization as considered being in good condition. The car dealer uses asymmetric information to persuade clients to buy their products. As a result, a customer relies on the likelihood of buying a good or bad automobile.
The Cost of Practice
Quality is a measurement tool used to evaluate a product or service as perceived by customers through conformance to detail and excellence (Solomon et al. 156). Quality is a property or feature identifiable through experience. This noteworthy emphasis on quality makes performance an effective instrument for consumer satisfaction, product differentiation, and improvement (Baye and Prince 460). Hospitals offer a decent interpretation of how unique perspectives of quality can influence a patient recovery process. A preternatural meaning of quality applies to the healing facility’s desire to advance a picture of perfection by guaranteeing the competency of its staff, accessibility of medications for emergencies and the nearness of therapeutic innovation (Solomon et al. 151). Thus, patients make subjective conclusions about the service provided. Consequently, people who review clinical proficiency characterize quality using the product-based approach. The patient’s opinion on quality healthcare is centered on product-based and client-based criteria. As interest in quality healthcare expands, physicians must swing to manufacturing-based approach for ensuring that determination of service followed (Solomon et al. 149).
Enhancing quality through enhancing structures and procedures prompts a decrease of waste, revamp, and delays, cost reduction, and a positive organization picture (Solomon et al. 155).Thus, it is important to characterize and measure the quality of healthcare services. This makes quality control troublesome because patients cannot pass judgment on quality healthcare before treatment. Based on this assumption, the cost of practice cannot affect the quality of healthcare services. Although the cost of practice can increase the cost of treatment, quality is a product of individual excellence and the contributing factor of the health facility. Thus, quality health care delivery depends on the doctor’s experience, the intervention procedure, and the patient’s recovery plan. Patients will have to pay higher rates for quality health care schemes.Get your customised and 100% plagiarism-free paper on any subject done for only $16.00 $11/page Let us help you
The Economic Basis of Government Intervention
Government policies and regulations address more than the target of rationalizing trade, which encourages market agents to use modern models (Besley 100). A market intervention considers all aspects of the economy to provide a balanced environment. Thus, laws are prepared to support the current framework, not at supplanting it. Government endeavors to supplant the market frameworks have regularly raised the expenses of goods, harming purchasers, and mutilating asset designations and destroying the economy. It is critical that policy regulators see trading as an important and attractive action conducted in a domain of risk. In conditions where the market is fair, it may not be equitable. Thus, fairness is not only the economic basis for government intervention in policies and regulations (Baye and Prince 530).
One contention for government contribution is to accommodate a more equitable distribution of merchandise and services. From this viewpoint, the assumption that people need medical coverage and quality healthcare is likewise a reason for government intervention. The other economical basis for government laws and regulations includes securing financial investors, guaranteeing that business sectors are reasonable, efficient, transparent, and lessening systemic hazard. Thus, government intervention centers on building fair and efficient administrative frameworks grounded in the standards of market honesty and financial insurance to direct business investments.
A market failure is a circumstance where the distribution of merchandise and enterprise in a free market is not proficient, prompting social welfare misfortune. Market failure can be seen as situations where people’s quest for self-premium prompt inefficiencies that can be enhanced from the economic perspective. Laws against internal trading are enforced to mitigate market failure. If investors believe agents with favored information command the market, they will leave the market. This scenario influences government intervention to create a fair and equitable market.
Baye, Michael, and Jeffrey Prince. Managerial Economics and Business Strategy. 8th ed., McGraw-Hill, 2013.
Besley, Timothy. “Law, Regulation, and the Business Climate: The Nature and Influence of the World Bank Doing Business Project.” Journal of Economic Perspectives, vol. 29, no. 3, 2015, pp. 99-120.