Question

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Quesiton 2: Apply business economic analysis techniques in solving industrial organization issues regarding to prices, products and polices.

NOTE: Plagirism is Prohibited

Answer 1

Business economic analysis is a process of identifying strengths and weaknesses of particular industry / unit / organisation / an economy as a whole.

Industrial organisational structures include various problems / issues depending on the type of products / class of items being produced / manufactured.

Techniques used to figure out various issues :

1. Product related issues and counter techniques used.

* deciding the product feasibility i.e whether production of specific product enables / generates cash inflow in excess to the cash outflow - Technique that would be useful here is

• opt products with minimal production cost in initial stages of forming industry. Thus results in less cost per unit production. Strength here is return of investment reaches back in less time.

Eg : semi finished products / low cost products.

* use machinery / equipment to produce initial stages of production. Thus future investment depends on income generated abd loss of money risk is less observed here.

Eg : decide to produce semi finished goods and supply them as raw materials in other industries. Thus whole production can be sold completely.

2. Price related issues techniques :

* cost incurred for production and benifit obtained from it to a end user such that they will definately pay the price which you quoted is to be analised.

Eg : pen produced for 2 dollars and sold at 5 dollars since it writes with smooth flow and no clogs of ink.

* produce those kind of items whose price is not a big deal to its user since he / she has much more expenses higher to this.

Eg : tic tac pins / safety pins

3. Policies being faced and how to technically solve the issues :

* government policy to price neccesity goods to end users at reasonable price / cut off price is a policy. Now that is hindering our industrial working because the cist of production is nearing the cut off sale price. So now

• creat just in purchase deals with suppliers to reduce storage cost.

• use those options of raw material eadily available or purchase from the areas where their price is less. However transportation cost has to be counter verified here.

* reduce packing cost by wrapping with basic material and reasonable identification of product.

* reduce advertising costs since they are how ever included in necessary goods list specified by government.

What ever the technique may used in various situations but care is to be taken that

* The opted technique enhances the existing strengths of industry.

* technique is formulated only after ensuring that specific weekness of industry will remain neutral / minimised but not maximised.