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Market Environment |
Description |
Examples |
Frameworks |
Frameworks |
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Business takes place within different markets that shape supply, demand, and price. Globalization frequently requires that a business be adept at operating across different markets |
Laissez Faire : Each economic unit makes choice based on rational (enlightened) self-interest. (Private ownership of goods.) |
Assumptions of a Free Market System : (a) Individual decisions are aggregated. (b) Information flows through price structure. |
Recent economic studies of the limits of laissez faire markets : |
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Liberal use made here of notes from Economics class taught by CR Winegardner, University of Toledo, 1971-1972 |
Liberal Democratic Socialism : Limited government intervention is needed to improve upon the choice of individual economic units. (Mixture of private and public ownership) |
(c) Free association. (d) Absence of force or fraud. (e) Individual agents are rational utility maximizer |
(a)
Information Asymmetries (as studied by Stiegliz). (b)
Monopolies which, in the absence of competition, can dictate standards of price, product and service. |
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Materials also take from Natural Capitalism from Lovins and Hawkings. |
Communist, Authoritarian Socialism : The state is in the best position to know what choices and policies are beneficial for the economy as a whole and its component parts. (Public ownership of goods and services) |
(f) Governments should adopt a hands-off stance because interference disrupts the ability of markets to produce utility-maximizing conditions.(4,4) |
Animal spirits deflect economic decision-making away from perfect utility maximizing. They include confidence, fairness, corruption, money illusion, and stories.(4,5) |
| (5,1) |
(5,2) |
(5,3) |
(5,4) |
Ghoshal: bad management theories are destroying good mangement practices as they become self-fulfilling prophecies. Ghoshal is especially critical of agency theory, compliance/punitive approaches to corporate governance, and the theory of human nature he calls "Homo Economicus."(5,5) |
