Image via WikipediaThis overview of the Free Market Economy was prepared by Joshua Smith, while an Industrial Technology major in the College of Business at Southeastern Louisiana University.
Introduction
This article is an explanation of what a free market economy is and the advantages and disadvantages of a free market economy. Everyday people are hammering down companies to get their demands met of different products. Companies want to meet these demands and get products out to gain the advantage of customers. In this article, I will explain some of the advantages and disadvantages of trying to meet those demands of customers through a free market economy.
The Idea in a Nutshell
A free market economy is a type of economy where all the goods and services are controlled by a private sector without any government intervention. The only intervention the government has is to enforce ownership and contracts. The resources of the economy are usually determined by the supply and demand for those resources. Companies try to meet these demands the best way possible to gain control of the customer’s appreciation and beat out the competition. There are many consequences that come with the free market economy and it can hurt you or help you in the long run with your business.
The Top Ten Things You Need to Know About a Free Market Economy
1. A company can set their own prices to win over customers and beat out the competition. The government has no control over how these companies set their prices which can work for or against the customer.
2. The demand of products will be met more quickly to please customers. Sometimes these demands can be met with the best quality available, but at times the worst product can be put out that can be harmful to the customers because of no government regulation.
3. A wide variety of goods and services can be produced to meet the needs of customers. The greater the need of a product, the more a company will focus on that need, but the least demanding products wont be focused on as much.
4. Different companies can provide the same goods and services to bring competition to the economy, but a company can gain control of a product or service and putting the competition out of business and later becoming a monopoly of the product.
5. Customers have a say in how they want the products and services to be and companies listen to those suggestions to meet those demands. If a company can’t meet those demands, they will lose out on the business of those customers to other competition.
6. New companies can jump in at any time and sell a product a company may have been selling for years. Low barriers to enter a free market economy make this possible without government control.
7. If a demand for a product is extremely high, a company can easily switch to that demand to meet the needs of that product or service. Companies do not have to undergo government protocols in order to service the product to the customer.
8. Innovation is one important aspect of a company to keep business booming. This helps increase efficiency of products to help meet the demands of customers.
9. Resources can become a huge waste of money when it comes to a free market economy. You can waste money from over advertising to losing out on products that are not demanded highly by your customers.
10. A free market economy can either make your business or break your business. Good management and meeting demands will make your business, but poor management and greed can break your business.
My Take
A free market economy is a good way to go if you have what it takes to be a competitor. Yes, there will be sacrifices you have to make but to win over a customer’s approval is a win in itself. If you provide great management and are able to provide what the customer wants, in its best quality and at a great price, you will have what it takes to survive in a free market economy.
References
Rothbard, Murray N. “Free Market”. econlib.org.
“Free Market”. wikipedia.com
Mickelson, Brady. “Advantages of a Free Market Economy in America”. associatedcontent.com. 26 Feb. 2009
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Contact Info
To contact the author of “Top Ten Management on Free Trade Economy,” please email Joshua Smith at Joshua.smith-7@selu.edu.
BIOGRAPHY
David C. Wyld (dwyld.kwu@gmail.com) is the Robert Maurin Professor of Management at Southeastern Louisiana University in Hammond, Louisiana. He is a management consultant, researcher/writer, and executive educator. His blog, Wyld About Business, can be viewed at http://wyld-business.blogspot.com/. He also maintains compilations of his student’s publications regarding book reviews (http://wyld-about-books.blogspot.com/) and international foods (http://wyld-about-food.blogspot.com/).
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