Eco envt(3)

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Eco envt(3)

  1. 1. The Economic Environment PGDIB - I
  2. 2. THE ECONOMIC ENVIRONMENT <ul><li>There are generally three forms of Economic System of an Economy. These forms are:- </li></ul><ul><ul><li>Market Based Economy </li></ul></ul><ul><ul><li>Centrally Planned Economy or Command Economy </li></ul></ul><ul><ul><li>Mixed Economy </li></ul></ul>
  3. 3. Market Based Economy <ul><li>Market Based Economy is an economy where the market forces of demand and supply are supreme. </li></ul><ul><li>In Market Economy, decisions by an individual firm is taken on the basis of demand and supply conditions prevailing in an economy. </li></ul>
  4. 4. Market Based Economy <ul><li>In Market Economy, all productive activities are privately owned. </li></ul><ul><li>Production is also determined by the forces of demand and supply in the market. </li></ul><ul><li>Consumers have freedom of Choice. </li></ul><ul><li>Ex: USA, Denmark, Finland, Sweden, etc. </li></ul>
  5. 5. Centrally Planned Economy <ul><li>It is also known as Command Economy. </li></ul><ul><li>Centrally Planned Economy is an economy where production and distribution system is owned by the Government. </li></ul><ul><li>In this type of Economy, All businesses are state owned. </li></ul><ul><li>Production and distribution is planned by Government. </li></ul>
  6. 6. Centrally Planned Economy <ul><li>The state owned Enterprises are less efficient because there is no incentive for them to improve quality or to offer new kinds of products. </li></ul><ul><li>Since 1980s’, the Command Economies has fallen dramatically. </li></ul><ul><li>Ex: Cuba, North Korea, Former USSR, etc. </li></ul>
  7. 7. Mixed Economy <ul><li>Mixed Economy is a compromise between Centrally Planned Economy and market-based economy where private and public sectors exist side by side. </li></ul>
  8. 8. Mixed Economy <ul><li>In Mixed Economy, certain sectors of the economy are left to the private ownership and free market mechanism while other sectors have significant state ownership and Government Planning. </li></ul><ul><li>Ex: India, China, etc. </li></ul>
  9. 9. Reference <ul><li>International Business </li></ul><ul><ul><li>By Vyuptakesh Sharan </li></ul></ul>

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