The world economy is changing at a faster pace these days. Due to the introduction of new technology, advanced production methods and expensive factors of production, the global economy is elevating at a higher level too…
Download file to see previous pages...
The rise in the prices of all these commodities started in the year 2006, when the international markets faced a steep hike in the prices of all the eatables around the globe. This essay shall discuss the concept of price escalation along with its causes and the course to be taken to improve it. Price Escalation According to the definitions given by the economists, the concept of price escalation refers, more or less, to the concept of inflation in the economy. It is defined as the tendency and ability of prices to reach the supernormal heights when the products are being marketed. Taking this concept further, international price escalation occurs when the goods are particularly being marketed internationally. The companies, due to the affects of escalation, the companies normally engage their activities and resources in re positioning and establishing their brand overseas (ECLAC, 2006, Online). The major causes that contribute to such price hikes include import duties, trade barriers, added transport, warehousing and freight costs, insurance, international lawyer’ charges, and other necessary charges. Causes There are various causes for the price escalation of the commodities on international level. There may be many imbalances between the demand and supply side of the products and services which causes prices to rise globally without any assurance of coming down \again. More clearly, these causes include: Structural Factors The structural causes of the global price hike include: Rise in the cost of production The implication of the price rise is possible due to the fact that the oil resources are decreasing and getting scarcer with the passage of time. The consumption patterns have been shifting and though, the newer technology is deployed to increase the efficiency but the economic crunch and recession has brought further obstacles. This, in turn, has impacted the prices of food and other bi-products of oil to increase thus, giving shocks to the prices of the related products (Dessus & Hoyos, 2008, Pp. 201). Change in consumption patterns in various countries and sustained rapid growth One of the major reasons for the international price escalation is the change in consumption patterns and trends of the population in various countries. The growing economies such as India and china account for the changing consumption trends of various products. One of the contributing factors to this structural spiral is the continuous expansion and thus, growing demands for the foods and services in various countries (Dawe, 2008, Online). Moreover, the translation of growing economies has increased the per capita income of the consumers, and so they are capable enough to improve their standards of living. This has helped push up the demand of the consumption baskets with higher rates (Dasgupta & Serageldin, 2000, Pp. 111). Temporary Factors The temporary factors accounting for such price escalation include the following: Natural disasters and poor weather The world has experienced bad weather, natural disasters and other avalanches which results into the inevitable damage of the natural products. These adverse events have resulted into an extreme rise in the prices of natural products such as wheat, rice, cotton and other crops (Temple & Johnson, 1998,
...Download file to see next pagesRead More
It also includes a detailed analysis of the market of China prior to penetrating it. It is conducted with the help of various management techniques such as PESTLE analysis, Porters’ five force analysis along with SWOT analysis. It helped to accomplish an explicit idea both about the country and industry as well, which proved quite beneficial for Scholz & Friends.
They popularly used the nickname; the Sonny boys since they are the ones who came up with this outstanding innovation saw the light of the day in the late 1950s when the two decided to go commercial with the Sony concept. It is among the leading assemblers of electronic gadgets for both consumers and the professional markets.
Nevertheless, there is also cause to consider a structural move may be beneath way that will lead in a more unbiased picture linking the two economies (Kynge, 2006). It is gradually more apparent that money movements and diverse rates of price increases and wage escalation are operating to slowly rebalance trade linking the China and the U.
Transportation got a boost with the advent of railways and airplanes. The world is totally different than what it was around 100 years back. The main reason behind this economic ride and development has been nothing but using fuels as a source of energy. The world moved itself from using wood to coal and finally to oil or better to say petroleum.
Price is an important concept to microeconomics and it is one of the important variables that are considered in the allocation of resources for the operation of the business. When price is considered in terms of the allocation of resources then it is referred to in terms of the price theory.
Escalation brings up an increase in the austerity of a clash and in the seriousness of devices used in following it. It is forced by the adjustments within every organization, new ways of communiqu between them, and the chipping in of new organizations in the resistance (Kriesberg, 1998, pg.
Due to the rapid improvements on communications technology, economic freedom and the continuous promotion of trade liberalization (World Trade Organization, 2008), modern business trend has gradually shifted from multinationalism to globalization.
Other than the
This rapid growth was because of the following factors. The gold average refers to the technique, which controlled the worth of exchanges around the world in expressions of a convinced quantity of gold (Staiger, 2006).
10 Pages(2500 words)Essay
GOT A TRICKY QUESTION? RECEIVE AN ANSWER FROM STUDENTS LIKE YOU!
Let us find you another Essay on topic International Price Escalation for FREE!