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Demand vs. Supply

Demand vs. Supply
Demand vs. Supply- Parameter deciding market equilibrium The success of economic freedom of a country is naturally reflected in the form of human prosperity. Countries like India are evidencing a consistent increase in their annual GDP rates which obviously must have reduced the population percentage living below poverty line; yet this has not been accomplished and the question is, is it really something to do with the economic model or is it the bureaucracy and inefficiency the root cause for the strain in the economy? Flow of Economic Activity: This discussion aims at shedding some light on the flow of economic activity in a free market economy. The elemental players or contributors in a free enterprise market economy are individuals and firms. Individuals who own or control resources (in the form of labor, capital or natural resources), sell these resources to firms and obtain money. These resources which serve as necessary inputs in the production process add value to firms. The money received by individuals is called factor payment which is utilized to fulfill their consumption demands of goods and services. Two distinct areas of interaction exist between the individuals and firms. One is the product market where the products are bought and sold and the other being a market for production factors, where the inputs such as labor, capital and natural resources are traded. What is the activity in a product market? Fundamentally business is all about demand vs. supply. The consumers’ demand has to be met with by the manufacturers. Profit is the primary motive of any firm and the priority of a firm lies in responding to the demands of the consumer market by supplying goods and services to the potential and prospective buyers. Input costs and production technology are the determinants of supply conditions. People’s preferences and earnings decide the elasticity of market demand. The price of the product and quantity sold is a result of the interaction between demand and supply. In a product market money flows from consumers to firms and goods and services flow from firms to consumers. What happens in a factor market? The reverse of those conditions in the product market are seen in a factor market. Here the individual becomes the supplier of production factors and hence the money flows from firms to individuals and factors of production from individuals to firms. Prices and profits control the flow of money and resources through the factor market and flow of money and goods through the product market. What is a Free Market Enterprise? Added advantage of a free market enterprise is that, the effortlessness with which one can enter and exit the market. The activity flow proves advantageous to each person involved .Firms make profits, individuals are satisfied of their consumption demand for goods and services, resource owners are compensated for their services. If an individual is not able to benefit by trading in these markets, he or she is not required to do so or free to leave the market which ensures that nobody is made worse off by voluntary trade in these markets. Essentially countries have to go in for suitable economic restructuring that promotes equality and even distribution of wealth. Wall Street protest in US is a clear-cut indication of strained market economy which is a result of people’s fury against the prevailing economic...
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Resistance to Change

Resistance to Change
Resistance to change should be considered as a good sign and can be compared to fever while there is a bodily infection. It creates a platform for the firm to find out the causes for resistance and hence the solution. Causes for Resistance to Change Individual Resistance A. Economic factors: When pay is tied up with productivity, resistance arises. B. Habit: It is the habit of humans to resist anything new. C. Fear of the unknown: Freshers always have a feeling of insecurity and uncertainty when they join an organization. D. Change affects emotions and sentiments: People are disturbed both emotionally and sentimentally when there is a change. E. Lack of clarification: People interpret change in different ways; so there is a need for the organization to clarify as to the nature of the change and its implied consequences or implications. F. For the sake of opposing: Illogical and weird opinions are given by the employees just for the sake of opposing. Resistance to change Organizational Resistance A. Built-in-Mechanism: People working in groups experience shock when there is a structural change introduced in the system as they are tuned to a set of rules and procedures. B. Group norms: This also acts as a strong source of resistance acting as a constraint C. Threat to expertise: Technological innovations pose new threats everyday to the non-technical persons D. Threat to established power relationship: If the powers are re-assigned amongst the managerial cadre there arises unrest E. Threat to established resource allocation: Budget reallocations are resisted by departments that are not favored How to Overcome Resistance to Change? Education and Communication: The logic of change must be conveyed to the employees in a convincing manner and full facts must be communicated without an iota of doubt. Participation: It becomes difficult for individuals or groups to resist change when they are made to act as change agents Facilitation and Support: Change agents can offer counseling, training etc to pacify the employees Use of Group Force: Groups can exert more pressure on attitudes, values and behavior and hence, if the group cohesiveness is strong, the change is easier to achieve. Leadership for Change: A strong leader-manager can create a climate for psychology support from subordinates Negotiation: The key persons or individuals whom the management think are potential change agents can be rewarded and brought to the negotiating table Manipulation: Twisting information, creation of false rumors, withholding undesirable information are some of the tactics of manipulation that decrease the intensity of resistance to change. Coercion:  Application of force that includes threats of transfers, delay in promotions, negative performance evaluation can decrease the resistance and also the credibility. Manipulation and coercion must be considered as last options to reduce the pressure as generally people will welcome any change that is positive and beneficial to the organization in the long run. It is the responsibility of the management to project the change in a gradual and convincing manner to the...
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