Question

43. You are to identify an industry or business in which you are interested.This could be a career interest area or even an organization that could serve as the context for your Capstone Project.

a). What economic principles and associated analytical perspectives/tools are most helpful in deeply understanding the changes that are occurring in the strategic context of the industry in question?

b). Provide a specific example of an economic insight that could be gained and subsequently leveraged to heighten the organization's competitive performance.

c). What are some of the kinds of macro-economic changes that will be difficult to predict with existing economic models?

Answer 1

ANSWER:

AGRICULTURE INDUSTRY
Agriculture is known as husbandry or farming is the science of cultivating plants, animals and other life forms for food, fiber, and fuel. The agricultural industry which includes enterprises in growing crops, raising fish and animals and logging wood, encompasses farms diaries, hatcheries, and ranches.

A) ECONOMIC PRINCIPLES USED IN FARM MANAGEMENT / AGRICULTURE

1) Principle 1 - Law of diminishing marginal returns
This law states that "An increase in the capital and labor applied to the cultivation of land causes, in general, a loss than the proportionate increase in the amount of produce raised unless it happens to coincide with an improvement in the art of agriculture."

2) Principle 2 - Law of Equimarginal returns
This law is concerned with the allocation of the limited amount of resource among different enterprise. The Law states that" profits are maximized by using a resource in such a way that the marginal returns from the resource are equal in all class."

3) Principle 3 - Law of substitution of the principle of least cost combination
The objective of profit maximization can be achieved in substitution of other resources. 2 ways, one by increasing output and other by minimizing cost. The minimization of cost can be possible by deciding on the use of more than one resources.

4) Principle 4 - Principle of combining enterprise
This principle is very important as it describes the product - product relationship. Here, instead of considering the allocation of inputs among enterprise we discuss enterprise combination of product mix involving product relationship.

5) Principle 5 - The Law of opportunity cost
The opportunity cost is called an alternative cost. It is the earning from the next best alternative sacrificed.

6) Principle 6 - Law of comparative advantage
The concept of comparative advantage is associated with :
Resource productivity
Cost of production enterprise.

ANALYTICAL TOOLS USED IN AGRICULTURE INDUSTRY

1) Accurate crop prediction
By using sophisticated computer algorithms to analyze decades and sometimes centuries of weather and crop data, Today's farmers can predict crop yield with shocking accuracy before planning a single seed. The insight provided by data analytics allows the farmer to start and harvest their crops at the optimum time which maximizes crop yield and minimizes stress.

2) Stronger seeds and lesser hunger
An increasing global population with rising temperature has led to massive famine in Africa which has left 20 million people at risk of a starvation Humanitarian group across the globe have geared up to offer assistance however they can but solution may lie in big data.

3) Automated agriculture
Automated farming is nothing new. For decades we have been using a different system to automate and keep track of as many agriculture processes as possible.

4) Environmental awareness
Big data is the reason we can say with certainty that humans have had a negative impact on the environment and it is the tool we are using to fix it. Saving environment sounds great from a human perspective but agriculture industry is just that a business, industry and all business decision live and die by a bottom line.

B) ECONOMIC INSIGHTS

1) Bitcoin Vs Bucks: Is currency competition a good thing?
One concern about digital currencies such as bitcoin as that they could lead to hyperinflation. Daniel Sanches examines whether issuers have any incentive to limit how much virtual money they pump into circulation.

2) Is higher capital requirement worth it?
Stricter limits on bank leverage are designed to prevent bailouts but may slow economic growth. Pablo D'Erasmo explains the challenge of obtaining better estimates of the impact so that policymakers can weigh the trade-off.

3) Non-traditional Insurance and risk to financial stability
what role, if any should the Fed play in regulating insurance companies? Yaron Leitner explores how insurer's expansion into non-traditional activities might affect financial stability.