OUT TWO ECONOMIC SYSTEMS

Out Two Economic Systems (Free Market & Command Market)

Out Two Economic Systems (Free Market & Command Market)

Introduction

In conetxt of free market and command market, the private companies carry out such transactions for utilities; governments can not do the same in their transactions. (Calderon, 2007, 12) These operations are in sales, investment and transport. In these types of framework, it is important and necessary that the organizations should have complete awareness about the politics and diversity in the market which regard as whether the circumstances have an effect or not and if necessary engage in the binding. The purpose of this paper is to identify the implications of operating within two systems which if free market and command market in doing international business.

Implications of Free Market

A free market is a market where transactions (prices, quantities, measurements) between buyers and sellers are determined only by mutual consent. This excludes that one party gets the deal by duress or deception, it also excludes the intervention of a third party to force or prevent the market: notably, it limits government intervention in the application property rights, contract enforcement and verification of consent.

In reality, most markets are subject to regulations more or less strong, the simple setting of standards of Weights and Measures to the extreme of the planned economy and the war economy (when limited rations are distributed free of charge).

The price is a key market. It allows everyone, by comparison with other goods and services, whether it wishes to buy or sell the property in exchange for other goods. Conversely, adjustment upward or downward the price is a key parameter to facilitate the achievement of an exchange when we made ??the decision to buy or sell, especially in situations of competition where the supply of a lower price makes the conclusion (competition among sellers thus lower prices, while that between the buyers made up). At the aggregate level, the effect of the sum of these individual decisions is described by the law of supply and demand.

Negative

Following are some negative implications of operations in free market while doing international business

Unequal starting conditions, unfair competitive advantage

Large differences in income, huge gap between "poor" and "rich".

Wages and salaries are determined by supply and demand. There is no state-or collectively-guaranteed minimum wages. There are no trade unions and employer organizations.

Due to unequal starting conditions, individual companies have dominant positions. Turn off their competitors and restrict competition. It comes to cartels and corporate levels.

Profit motive and competition lead to selfish behaviour of the society

Economic fluctuations - the free market economy is essential, unstable

Operating in free market doing international business will develop free and unlimited individual freedoms (e.g. freedom of contract, freedom of choice of profession, trade, settlement, and association). The entrepreneurs are trying to production costs as low possible; we keep in order offering the goods as cheaply, pursuit of profit and performance pressure from competition, thus leading to the highest possible efficiency in the production of goods and technical progress (White, ...