Financial and Economic Literacy for Managers

Running head: FINANCIAL AND ECONOMIC LITERACY FOR MANAGERS
Financial and Economic Literacy for Managers
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1FINANCIAL AND ECONOMIC LITERACY FOR MANAGERS
Table of Contents
Answer to Question 1:.....................................................................................................................2
Answer to Question 2:.....................................................................................................................4
Answer to Question 3:.....................................................................................................................7
Answer to Question 4:...................................................................................................................10
Answer to Question 5:...................................................................................................................11
Answer to Question 6:...................................................................................................................12
Answer to Part a:.......................................................................................................................12
Answer to Part b:.......................................................................................................................14
Answer to Part c:.......................................................................................................................15
References:....................................................................................................................................17

2FINANCIAL AND ECONOMIC LITERACY FOR MANAGERS
Answer to Question 1:
Structure, Conduct and Performance paradigm:
Structure, Conduct and Performance paradigm (SCP) is utilised as an analytical
framework for making relations amongst market conduct, market structure and market
performance. This paradigm is immensely beneficial at the time of evaluating industries and
markets in the fields of economics, controlling and business management (Agarwal et al. 2015).
The three elements of the paradigm in the context of Amazon are briefly evaluated as follows:
Structure:
As laid out by Allgood and Walstad (2016), the way in which the markets could not
follow the conditions of perfect competition rely primarily on the degree of demand
concentration, supply concentration, barriers of market entrance and product differentiation. In
addition, the available technology and the nature of the product ascertain the overall market
structure.
In case of Amazon, most of the products of the organisation are found at online retailer or
in the local market. The organisation has made its focus to make reading, shopping, watching
television and listening to music convenient for the customers. It operates in an oligopoly market
structure. Since the organisation has its own brand value, the organisation is able to determine its
own prices for numerous other various demands depending on the demand of various products
and services. Amazon follows an aggressive approach for minimising pricing adversely like the
holiday season approaches. The products targeted for price reduction constitute of the most
gifted products like consumer electronics and toys. There are number of competitors in the

3FINANCIAL AND ECONOMIC LITERACY FOR MANAGERS
identical market structure like Amazon; however, they are not restricted to Wal-Mart, Target,
Toys Us and Goldman Sachs. The major competitive advantage of Amazon is electronic
products when it comes to pricing strategy and quality.
Conduct:
This element depicts the way in which the sellers and the purchasers behave both
amongst each other. The organisations select their own strategic behaviour investment in
advertising levels, research and development and collusions (Babiarz and Robb 2014). The US
consumers have access to greater quality information in relation to the services of the online
retailers and the products sold. There are a number of competitors in the market and the low
switching costs have helped the consumers to switch over from Amazon like Wal-Mart. In
addition, the greater availability of substitutes further strengthens the customers to move from
one retailer to another.
Performance:
The performance of an organisation is gauged by contrasting its performance along the
industry in efficiency terms and in terms of profitability. The primary variables taken into
account at this level include product quality, price quantity, production efficiency and resource
allocation (Bay, Catasús and Johed 2014). In 2016, Amazon had realised $136 million in net
sales, which has increased by 25% from 2015. The net income of the organisation has depicted
effective growth of about 300% increasing from $596 million in 2015 to $2.37 billion in 2016.
Business organisation and globalisation to Amazon: