An essay "Importance And Role Of Economic Information" outlines that there exists the high level of decision making independency on between the firms and every decision related to business is conducted with concrete consideration given to the fact of reaction from competitors. …
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This mutual understanding is for the reason that businesses do not require to end up in price wars among competitors that ultimately eludes the profitability of the businesses. Owing to the interdependence and resulting price stickiness characteristic of industry, the demand for the product turns elastic in case the price is increased as compared to industry participants. If the competitors will attempt to increase the price as compare to other participants and this will result in losing revenue as demand will switch to other competitors. While in case of lowering price customers show inelasticity as all industry participants reduced price taking all firm to competitive positions again. Even in case of a high increase in marginal cost, the considerably low impact has to be transferred to customers. Since profit is maximized at a point where marginal cost equals marginal revenue therefore as long as marginal cost cuts marginal revenue in vertical position price will remain at P. Further, in case MC cuts marginal revenue vertically the price is retained same and a benefit is not passed on the customer.Further, competition is supported in other aspects such as branding, services accuracy etc, ABB has developed a competitive advantage with fast delivery services supported by online operations as compared to competitors in certain areas in order to retain differentiation from competitors. Other competitors based on respective capacity compete on aspects such as quality or differentiated range of products offered. ...
Further, incase MC cuts marginal revenue vertically the price is retained same and benefit is not passed on the customer. Further, competition is supported in other aspects such as branding, services accuracy etc, ABB has developed competitive advantage with fast delivery services supported by online operations as compare to competitors in certain areas in order to retain differentiation from competitors. Other competitors based on respective capacity compete on aspects such as quality or differentiated range of products offered. All these factors ensure increasing barrier to entry for new entrants while retaining competition. Therefore, securing industry from competition authorities to charge participants with accusation of cartelization; practice that is followed in oligopoly. Hence, being abreast not only with respective business position economically ABB has to remain updated as well as linked with the strategies of competitors to retains the competitive business positions. IMPORTANCE AND ROLE OF FINANCIAL INFORMATION Financial information and respective understanding forms the back bone of the business. Importance of financial information is not only critical for top management that are concerned for decision making with respect overall business goals but at the same time financial information is critical for every department (Brealey, Myers, Allen, & Mohanty, 2007). For instance, marketing department’s investment in the advertisement and sales campaign are concerned to fetch sales that add considerably to profitability. Similarly, HR department also evaluates performance of departments, respective employees and comparison of efficiency of company employees with other
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