January 16, 2012
Week One Article Analysis
David Colander defines economics as "the study of how human beings coordinate their wants and desires, given the decision-making mechanisms, social customs, and political realities of the society” (Colander, 2010, p. 4). Coordination in this definition refers to production content, method, recipients, and even quantity. To think like an economist one must analyze every situation by comparing the costs and benefits and make any decisions based on those findings (Colander, 2010). The study of microeconomics zeroes in on the individual and analyzes how economic forces affect the choices he or she makes. Economic forces will ensure that what people want and will pay to get will match what is available. This is the concept of supply and demand. If the prices are such that people are not willing to pay it to obtain an item or service, they will choose to buy less of it, not buy it, or buy a substitute. This is the working of the law of demand. The price affects both supply and demand. When prices increase, the demand decreases, and when prices decrease, the demand increases. In the law of supply, however, if prices increase, individuals and companies will increase the supply because the opportunity cost of not producing the product rises with the price (Colander, 2010). There are factors other than price that can lead to changes in supply as well as changes in demand. These could be government policies, taxes, income, social norms or expectations, political forces, tastes, and prices of other goods, to name a few. Four Steady Trends
In the Harvard Business Review, Beinhocker, Davis, and Mendoca discuss 10 trends emerging in this economy. They consist of four trends that are steady, five that are accelerating, and one that is decelerating (Beinhocker, Davis, & Mendonca, 2009). The four steady trends can be summarized as a scarcity of resources, the science of management, the economic growth of Asia, and progress in technological innovation (Beinhocker et al., 2009). Because of the recession investment in the production of oil has been limited, and the prices on that which is available has climbed steadily over the last few years. Water resources are also seeing a strain because of the growth in population, industrialization, and changes in climate. The use of advanced quantitative tools to make managerial decisions continues to be a steady trend. Companies will continue to make decisions through analytical methods using data and computing rather than gut instinct as research has proven it to be effective. Asian countries have shown significant growth in modern technology, industrial practices, and organizational methods. Although the current recession has slowed the economic growth in Asia, it has not stopped it, and they continue to show remarkable development within their economy. The final trend that remains steady in their outline is the use of research and development. Companies will continue to budget for research and development to improve upon processes and increase proficiency. The payoff for this practice is too large for companies to ignore. Five Accelerating Trends
Beinhocker et al. (2009) determined the five trends that are accelerating as loss of trust in business, government involvement in business, changing consumer-spending habits, reshaping of industries, and an unstable price environment. Companies are concerned with the decline of trust citizens have expresses toward corporations. This type of environment can make doing business difficult and more expensive. It is more difficult for businesses to attract and retain customers and talent. It also can lead to negative publicity or even boycotts. Leaders in corporate America need to demonstrate their understanding of citizens’ concerns relating to high-level compensation within their organizations, and their treatment of staff facing layoffs,...