Some basic Problems of an Economic Organization A manager has to solve some basic problems or manager has to take some decisions before opening in economic organization. The problems he has to solve or the decisions the entrepreneur has to
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Some basic Problems of an Economic Organization A manager has to solve some basic problems or manager has to take some decisions before opening in economic organization. The problems he has to solve or the decisions the entrepreneur has to take are as follows:<br>
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1. What to produce? An economic organization always concerns with profit.
So it has to produce that thing which is profitable. Profitable things can be produced from the individual view but is not allowed from the societal view point.
For example, the production of Phencidile or Pig may be highly profitable from individual view point but it cannot be accepted from the view point of the nation and the Muslim religion respectively.<br>
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2. How much to produce? How much to produce depends on the objective of the firm.
If it is a subsistence firm, it will produce up to a limit but in the case of a commercial farmer, he will produce more.
On the other hand, if he needs to trade with in the country, he will produce in a range but if he needs to trade outside the country, he will produce in a broader range.<br>
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3. How to produce? It depends upon how much to produce.
A subsistence farmer will naturally produce in a traditional way but a commercial farmer may take the opportunity of large - scale modern farming technology.<br>
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4. For whom to produce? There are different population segments in the society. Healthy and sick, rich and poor, male and female, Muslim and non-Muslim, with long hair and short hair, educated and illiterate, jobholder and jobless, child and old, slim and fat is the population composition in our country.<br>
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If the entrepreneur feels to do something for the sick people, he needs to produce medicine for them. On the other hand, if he wants to take money from rich people, he may set up an expensive slimming center in an aristocratic area of the country<br>
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5. When to buy and sell? When the inputs are available and cheap then he will by the inputs.
When the output prices become higher then he will sell it to be more profitable.<br>
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6. From where to buy and sell? Where the inputs are cheap and available, he will by the inputs from that area.
Where the output prices are high, he will sell it there to be more profitable.
In this case, we must consider the transportation cost.
To sell at a distant market the price difference must be greater than the transport cost.<br>
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7. Are the resources fully utilized? To be optimistic a manager should always be careful about the utilization of all resources.
No resources should be left underused and nothing should be overused.<br>
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Classification of an economy 1. Free economy or market economy
2. Command economy or controlled economy
3. Mixed economy<br>
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1. Free economy or market economy: Where the entrepreneurs are free to take the decision about what to produce and how / how much to produce.
In such economy, the entrepreneurs are free to produce Phencidile if it is profitable.<br>
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2. Command economy / controlled economy: Where the entrepreneurs are not free to take the decision about what to produce and how / how much to produce.
If the government thinks that Phencidile is not good for the young people because it makes them addicted and therefore, it is not allowed to be produced by the entrepreneurs.<br>
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3. Mixed economy: In some cases, entrepreneurs are free to take decisions but in other cases, they are restricted by the government / society.
For example: In the case of garments, the entrepreneurs are free to produce any type of garments product but in the case of pharmaceuticals one cannot produce all type of medicines.
There may be some reservation of the government to import some items of medicines.<br>
