Financial Literacy and Economic Prosperity
Added on 2020-10-05
14 Pages3629 Words316 Views
|
|
|
Financial and EconomiesLiteracy For Managers
Table of ContentsINTRODUCTION...........................................................................................................................11.Explaining the concepts and practices of business economies with the pursuit of consistencyof profit maximization with the consumer sovereignty..............................................................12.Examining the market structure, demand and the supply theory of different companies........23.a. Difference between the wealth and the profit maximization................................................3b. Superiority of wealth maximization over profit maximization...............................................54.Explaining the various concepts of the business economies....................................................55. Calculations.............................................................................................................................8a. Ratio Analysis.........................................................................................................................8b. Present Value..........................................................................................................................9c. Net Present Value..................................................................................................................10CONCLUSION .............................................................................................................................10REFERENCES..............................................................................................................................11
INTRODUCTIONFinancial literacy is an understanding and the education of determining the spending of themoney and its savings. It also provides for the ability and skills of the managers to makeoptimum use of the company's financial resources and to facilitate effective decision making.This concept is applied individual as well as the organization. Through this the manager canbalance out the checkbook and income tax. It also helps the managers in formulating the budgetwith making wise decisions in terms of the money. On the other hand, economic literacy refers tothe ability of the managers in using the basic concepts of the economy for making the decisionsin relation to the earnings, spending, saving and sharing the money. The present study is basedon the concept of financial and economies literacy. Furthermore, the study explains the consumersovereignty in terms of the profit maximization. The market structure and the demand-supplytheory of various companies is also described under the study. Contrast and superiority betweenthe wealth and profit maximization is also analyzed. Several policies that brings economicprosperity to the UK government and the calculation of the financial ratios of Zenobia limitedwith the computation of the net present value is present under the study. 1.Explaining the concepts and practices of business economies with the pursuit of consistency ofprofit maximization with the consumer sovereignty.Business economies refers to the economic principles that are applied to in the businessfor analyzing the problems that are faced by the company. It facilitates the link between thetheory of economic and decision sciences in making the analysis for managerial decision-making. Consumer sovereignty is the concept that states the preference of the consumerinfluence the production of the products and the services (Garg and Singh, 2018). It depicts thepower of the consumers in relation to the products that need to be produced in the economy. It isthe idea that keeps in the center the customer preferences for the development of the product.Consumer has the power of manipulating the demand and supply in the market. Due to theprivatization, consumer sovereignty operates in the free economy with very little or nointerference of the government. Consumer sovereignty works with the notion of maximizing theprofits by satisfying the needs and the desire of the customer. Through maximizing thesatisfaction of the customers, an enterprise can gain the opportunity for increasing its sales andmeeting the sales target which in turn results in attaining the objective of the profit maximization1
(Yang, Ishtiaq and Anwar, 2018). By developing the product as per the specifications of thecustomer, organization can achieve the loyalty of the customers towards its products which helpsin improving the financial performance of the business. The consumers that are satisfied with theproducts and services of the entity will recommend about its product to other customers as wellso that large customers can be attracted which leads to higher revenue and profit margin in thebusiness. Higher production is achieved when the consumer demands more products which alsoresult in the increased supply of the products to the customers. This helps the firm in reaching thesuccessful position in the overall market. In the free market, all the production factors are ownedby the individuals and decisions regarding the what, for whom and how to produce the productsare taken by the market forces interaction. Under this system it is assumed that the consumers arelogical and attempts for maximizing the utility that they gain from their own income. Theyalways try to maximize their profits as per the concept of the consumer sovereignty. As per theassumptions made under this system, consumers has full freedom for purchasing the productsand the services that they wish across the globe (Grohmann and Menkhoff, 2017). It issometimes considered as the consumer votes in terms that they will spend more on thoseproducts that they prefer to buy. More of those goods will be produced on which the consumershas expressed or shown more preference or votes. Production, under this system is said forresponding the price signals which reflects those goods that need to be produced, and therefore,consumer sovereignty prevails in the market on a global basis. This system implies that theproducers are the passive agents in the system of pricing, simply responding towards the wantsof the consumers. This concept plays a very crucial role in the organization for achieving itsgoals and enable the firm in reaching the growing success consistently with the sustainability. Asthe concept of Consumer sovereignty is adopted by the company in attaining higher profitmargins so that competitive edge can be reached against its rivalry. 2.Examining the market structure, demand and the supply theory of different companies.Market structure of companies- Tesco, Mac Donald's and British Airways operatesunder the oligopoly as a market structure as the supermarket, fast food restaurant and the airlineindustries in UK fall under the category of oligopoly. Under this structure very few firms arepresent and the market is shared between those firms. This market structure is considered ashighly concentrated as little firms dominate. These firms dominate the market and enjoys controlover price of its product. Interdependence on the competitors is high for these firms as very few2
End of preview
Want to access all the pages? Upload your documents or become a member.
Related Documents