Organisation, Competition and enviroment - Essay Example

The public provided services and the government policies have its own implications on the market and the organizations. It is imperative to have a holistic understanding of the economic system in order to have clarity of the production and consumption of products and services in an organization. It also helps in comprehending the various reasons that leads to competition between organizations. An economic system is a process that decides economic policies and economic activity of a society. The production, distribution and consumption of products and services largely depend on it.

There are three main features of an economic system. They are capitalism, free trade and free capital transfer and national economic policy. [Holte, n. d]. Capitalism refers to the production of goods by the privately owned firms and selling those products in competition with the other private organizations selling the same products. The policy which allow investment, production, distribution and consumption of products and services in a country by other countries and vice-versa is called free trade and free capital transfer.

In this case, there is larger market for products and services since the customers are world-wide. . [Comparative economic system, n. d]. In a traditional economic system, the methodology practiced for the production and distribution of the products and services by the people is the same as followed by their ancestors. The occupation of present generation remains the same as their parents and grandparents. For instance, many of the communities whose main occupation was agriculture still practice the same to make a living.

Economic systems were the individuals decide their occupation and their role as a buyer and seller is called market economic system. In this type of e system, individuals are responsible for purchasing or selling goods and services. A command economic system is the one were the organizations exist and function based on the decision of the government. This kind of economic system allows the government to make decisions about the production of goods and services. It is solely the responsibility of the government to sell goods and services.

[Comparative economic system, n. d]. The discretion of the implementation of various types of economic system largely depends on the state. However, different people have different views about the role of a state in deciding its economic system. Metzger [2004] states that "I am not the sort who believes the State is a necessary institution at all. However, many libertarians do think that a minimal State is useful." According to Kovcs and Kemny [1999] since state has the authority in deciding its economic system, they should revise the economic policy in accordance to the requirement of the given economic environment.

Kotz [2004] reports that in a democratic socialist country the strategies implemented by the state can only lead to its development. There are states were the government is the single