Basic principles of economics and business strategy - Essay Example

Basic principles of economics and business strategy are intrinsically linked to the people and therefore any business and economic decision that are made, must take into consideration of the impact that they are going to have on the society at large. The people are the end users of any business venture and economic theories and economic policies, that are framed, are all designed to work towards the betterment of society. This two way relationship between the society and the business and economic decisions also form the basis of larger national objectives which are people centric.

Main objective of any business is profit making which it derives by making its products and services available to people. Hence, the core business strategy of any business heavily relies on the fact that it products and services meet the needs and requirements of the people at large. Competitive pricing and strong market position are major business compulsions that are need driven and specially target the vulnerable segment of society who are more prone to buy their products and services. It is for this reason that businesses through the ages, have been conducting surveys and studies in order to gauge the preferences of the people so that one can establish financially viable business ventures.

So it would be true if one says that all business decisions are designed to impact society. Economy, on the other hand, broadly discusses the methods through which goods and services may reach the public to meet their needs and requirements. John Stuart Mills has defined economics as "the practical science of production and distribution of wealth". Economic decisions and policies therefore, facilitate the platform for distribution channels for the said needs of the people. The fundamental principles of supply and demand are based on the requirements of the people, and the markets facilitate exchange of goods and services with the money.

Since man is a social creature and is driven by social dynamics of the broader political system, economic decisions under different political system may have varying impact on the society. The capitalistic society is market driven and therefore markets have decisive role in formulating economic and business decisions that best serve the people with the state government providing the bare minimum governance and means and modes of production and services are privately owned. Another vital feature of this type of economy is that stock and commodities market determine the value of goods and services.

American economy is a prime example of this type of system. On the other hand, communism and socialist form of government have total control on the economy, controlling all production and services and therefore their decisions are uniformly applicable to everyone. Therefore, disbursement of wealth is nearly equal and vice versa of above applies here and all economic decisions of the government have considerable impact on the people and society. Russian economy exhibits this type of economic system.

In the end, one can state that since the business and economic decisions have significant impact on the society, new social paradigms have emerged in the business and economic strategies which necessitate special approach for public welfare by corporate business houses so that they can contribute to the development of the society as a whole and become intrinsic part of nation building. Reference Mill, John Stuart. (1848). Principles of Political Economy with Some of Their Applications to Social Philosophy.

Boston: C.C. Little & J. Brown.