Microeconomics is a branch of economics that analyzes the market behavior of individual consumers and firms in an attempt to understand the decision-making process of firms and households. It is concerned with the interaction between individual buyers and sellers and the factors that influence the choices made by buyers and sellers. In particular, microeconomics focuses on patterns of supply and demand and the determination of price and output in individual markets (e.g. coffee industry). Areas microeconomics covers:
Ø Supply and demand
Ø Profit and loss
Ø Opportunity cost
• Rigid laws:-
Businesses may be doomed to be non starters due to restrictive business environment which may take the form of rigid government laws ( no polluting industry can ever be located in around 50 Km radius of the Taj) , state of competition ( Car manufacturing capacity presently in the country is far in excess of demand) etc.
• Environment impact:-
The present and future viability of an enterprise is impacted by the environment For eg no TV manufacturer can be expected to survive by making only B&W television sets when consumer preference has clearly shifted to color television sets.
• Key Inputs:-
The availability of all key inputs like skilled labor , trained managers, raw materials, electricity, transportation, fuel etc are a factor of the business environment.
• Public awareness:-
Increasing public awareness of the negative aspects of certain industries like hand woven carpets (use of child labor ) , pesticides (damage to environment in the form of chemical residues in groundwater), plastic bags (choking of sewer lines) have resulted in the slow decline of some industries. • The Market:-
Organizations closely monitor their customer markets in order to adjust to changing tastes and preferences. A market is people or organizations with wants to satisfy, money to spend, and the...