Introduction
The world has many organizations aimed at making profits through their daily activities. These organizations are sorted in various categories and this is done according to their sizes and structures. Companies are parts of these organizations and they are grouped into public and limited companies. These companies need good management for them to create profits and remain competitive in the market. However, other companies have failed to keep up with the pressure of competition in the market due to poor analysis. Therefore, companies need to carry out analysis by using economic concepts to improve their performances (Bernanke 23). This paper will show the economic policies that some performing companies have used for them to become successive.
Background
Asus is a company that deals with computer hardware and software, and it was founded in 1989 by Wayne Hsieh. It has outlets worldwide and therefore has a big impact on the world’s economy. Asus has a huge investment in terms of capital and labor. Asus has a capital of about 15 billion US Dollars, a profit of about 567 billion US Dollars and employs close to 21 thousand people. In addition, Asus owns structures and land where its workshops and offices are located. Asus is one of the performing PC companies and it was ranked the fifth world wide in 2013.
Economic Concepts
Price Elasticity of Demand
Demand elasticity is the measure of the effect on prices due to the demand. It is caused by the availability of substitutes, the time taken to adjust to the rate of purchases and the importance of the goods to the consumers. Asus Company faces competition from other companies who provide alternative products. This affects the sales of the company because it causes low sales. In addition the fluctuation in prices in the market hinders customers from buying products because the prices are very high. When young entrepreneurs plan to start businesses they should consider venturing in unique businesses that have less completion and supplements.
Demand and Supply
Demand and supply are the concepts of economics, which play a critical role in a company’s performance. When demand is low it leads to low sales, and mostly this leads to low prices. When demand is high, the cost of products becomes high and at that point the company makes big profits. Likewise, supply has its effects, low supply is caused by manufacturers who hold their products and its effect is identified by high market prices.
This concept needs an equilibrium point where demand and supply are equivalent for the market to be stable. Asus has a profit worth over 500 billion US Dollars; this means that its products are of high quality and buyers are interested. This is what young investors should consider when starting companies. Lastly entrepreneurs should do thorough research on this concept to make sure they make the right decision.
Resources
Resource scarcity is one economic concepts affecting companies and it can be in terms of human and non human resources. Scarcity of human resource affects a company in a negative way and it leads to low production. Human labor can be classified into trained labor and untrained labor. Many companies have the problem of trained human resource because most of the citizens are not trained and those who are trained are very expensive to hire (Bernanke 44). Asus currently employs 21 thousand people and considering it manufactures electronics, its employees are expensive to hire. Therefore, before starting a business it is important to consider the cost of human resources and the expected returns from the sales.
Land and capital are non human resources and they have an immense impact on a company’s performance. Land is a major factor for a company’s production because it needs large pieces of land to build workshops and outlets. Most companies find it difficult to acquire land since it has become very expensive and scarce. Asus company has its outlets worldwide and as a result they are forced to invest much in building or renting the office.
Opportunity Cost
Opportunity cost is the sacrifice that a company has to make to attain a certain goal or satisfy a want (Bernanke 32). Companies have taken big risks in terms of finances and risky decisions like diverting to other forms of production for them to make profits. In 2005, Asus invested in the production of LCD TV market, and this was a very big risk, because they did not know if it would be appreciated in the market. In addition, they partnered with Lamborghini in production of VX series. All these investments were a risk to try and make more profits and diversify their operations. These risks are important for entrepreneurs who should always be ready to diversify in order to look for other markets.
Conclusion
Economic concepts are clear guidelines for companies that have been operating for a long time and made a name for themselves in terms of their big profits. Young individuals who are interested in starting businesses should consider all these concepts and borrow from the performing companies before they make a final decision on which business to venture.
Works Cited
Bernanke, Ben. Principles of Economics. New York: McGraw-Hill, 2012. Print.