Showing posts with label General. Show all posts
Showing posts with label General. Show all posts

Advantages And Disadvantages Of Monopoly

Business , General
Benefits Or Advantages Of Monopoly

The main advantages of monopoly can be described as follows:

1. Supernormal Profit

In monopoly, there is only one supplier for the entire market. Company can set selling price of goods freely as per wish. Therefore, monopolies can make supernormal profit.

2. Economies Of Large Scale

Only one company sells products to the large number of customers. Because of large volume of production and less cost of production firm enjoys the benefit of economies of large scale.

3. Government Revenue

Companies earns massive amount of profit because of monopoly. So, government can collect more tax from them. So, monopolies are good source of government revenue.

4. Price Discrimination

Price discrimination is another benefit of monopoly. Company may use this policy to benefit economically backward customers. For example, electricity authority may provide discount to poor families.

5. Research And Development

Company makes massive profit because of lack of competition in the market. So, it can invest huge amount of money for research and development activities. It helps to improve product quality and also minimizes the cost of production.

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6. Promotes Innovation

Because of huge investment in research and development, monopoly promotes innovation also.

7. Face Depression

Because of being single supplier of goods and services, economic crisis like depression does not affect monopolies or company can face depression easily.

Drawbacks Or Disadvantages Of Monopoly

The main disadvantages of monopoly can be described as follows:

1. Customer Exploitation

Single seller has absolute power of setting price and supplying goods in the whole market. It may sell low quality products at higher price. So, there exists a chance of exploitation of customers in monopoly market.

2. Poor Service

Being a single trader, company may focus only on earning more profit rather than providing good service to the customers. Because of no customer sovereignty, consumers may not get quality products and proper service.

3. No Choice

Customers have no choice because there is only one supplier for whole market.

4. Higher Price

Monopoly lacks competition because there is one supplier for all customers. So, company may charge higher price for low quality products. 

5. Unfair Practice

Monopoly restricts others to enter the market. New firms cannot sell their products in this market structure. So, it is an unfair trade practice.
advantages disadvantages of monopoly
Pros And Cons Of Monopoly In Short

Pros:

- Business Firms can earn massive profit
- Companies enjoy economies of scale because of large volume of production
- Requires less marketing and promotion costs
- It encourages innovation, research and development
- Government can collect more tax from monopoly firms

Cons:

- Customers have to pay higher price for inferior products due to the lack of competition
- It lacks customer sovereignty
- Because of single supplier, there is no alternatives for customers
- It may increase customer dissatisfaction
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Advantages And Disadvantages Of Monopolistic Competition

Business , General
Benefits Or Advantages Of Monopolistic Competition

The main advantages of monopolistic competition can be described as follows:

1. Easy To Enter And Exit

The main benefit of monopolistic competition market structure is that new firm can enter the market without any barriers. Traders can exit or leave the market at any time without any restrictions and obstacles.

2. Product Differentiation

In this type of market, products are differentiated or varieties of products are available. So, it provides selection facility for buyers.

3. Advertising

In monopolistic market, products are identical or homogeneous like in perfect competition. So, firms advertise their products through different media which helps to provide information about quality, price and using methods to the customers.

4. More Profit

Companies are free to set price of their products. So, they can set higher price of goods and services which generates more profit.
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5. Better Quality

Because of the ability to fix price and chance of more revenue, companies try to improve product quality. It helps to retain existing customers and attract potential customers.

6. Innovation

Monopolistic competition encourages innovation. Companies regularly perform research and development activities to add new features to their products which helps to increase quality and value.

Drawbacks Or Disadvantages Of Monopolistic Competition

The main disadvantages of monopolistic competition can be described as follows:

1. Higher Price

In this type of market, product price is higher than perfect competition because of the following reasons:
* Firm can set price itself
* Firm invests huge amount of money in advertisement and other promotional activities
* Wastage of resources such as excess packaging, marketing etc. 

So, customers have to pay more money in monopolistic market.

2. Misleading Customers

Various promotional activities are conducted to provide information about the products and services. Sometimes wrong information can mislead the customers.
advantages disadvantages monopolistic competition
3. No Economies Of Scale

Because of larger number of traders, all companies cannot enjoy the benefit of economies of scale.

Pros And Cons Of Monopolistic Competition In Short

Pros:

- Customers get selection facility because of different alternatives
- Companies can easily enter or exit the market because of less barriers
- Customers get detail information about the products or services
- It promotes innovation
- Because of competition customer get quality products at lower price

Cons:

- Price of the product may become high because of high marketing budget
- There is no economies of scale
- False information about products may mislead customers
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Advantages And Disadvantages Of Perfect Competition

Business , General
Merits Or Advantages Of Perfect Competition

The main benefits or advantages of perfect competition can be described as follows:

1. Easy Entry And Exit

In perfect competition, business firms or traders can enter the market and start business without any restrictions. They can exit or leave the market at any time without any obstacles. So, there is no entry and exit barriers in this type of market structure.

2. Lower Price

In this type of market, price of product or service is fixed by demand and supply mechanism. If any trader charges higher price then customers are free to buy products from another shop. So, consumers can fulfill their requirements at lower price.

3. No Consumer Exploitation

Due to competition, customers can get standardized products at affordable price because sellers cannot influence the market. Therefore, perfect competition discourages consumer exploitation.

4. Less Promotional Cost

As we know that this market structure deals with homogeneous products and price is fixed by the market mechanism, producers do not need to invest huge amount in advertisement, publicity and other promotional activities.

5. Optimum Utilization Of Resources

Because of lower price, firms earn less profit. Therefore they try to increase efficiency and minimize wastage by utilizing resources properly which helps to lower the cost of production.

Demerits Or Disadvantages Of Perfect Competition

The main drawbacks or disadvantages of perfect competition can be described as follows:

1. Less Profit

It is very difficult for small traders to sustain in the market because of the lack of incentive and lower profit margin.

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2. Limited Choice

This market deals with identical or homogeneous products and services. Therefore there is a limited choice for customers. Because of the lack of variety, customers have no selection facility.

3. No Economies Of Scale

There are various firms trading similar types of products. So, business firms cannot enjoy the benefit of economies of large scale. 
advantages disadvantages of perfect competition
Pros And Cons Of Perfect Competition In Short

pros:
- It discourages customer exploitation
- It creates active business environment
- There are no restrictions to enter or exit the market
- Customers get high quality products at reasonable price
- Producers focus on maximum utilization of resources to improve efficiency
- It requires less advertising and publicity budget

cons:
- It is difficult for small traders to sustain because of high competition
- It lacks product differentiation
- Firms cannot enjoy the benefit of economies of scale
- In this market, profit margin is very low. So producers cannot make sufficient investment for research and development purpose.
- Customers get limited choice
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Importance Or Advantages Of Office Management

Business , General
Importance and advantages of office management can be expressed as follows:

1. Goal Attainment

Office management directs the efforts of all staffs (top level to bottom level) towards the achievement of company's goals and objectives. Planning, organizing, coordinating, directing and controlling are the major functions of management which helps to achieve organizational goals effectively.

2. Smooth Functioning

It maintains proper balance and relationship between staffs, jobs, departments and units. Effective communication is maintained between one person to another person, one department to another department and one job to another job. Proper command, direction, supervision, and instructions are supplied to ensure smooth functioning of office activities.

3. Optimum Utilization Of Resources

Office management always tries to utilize available resources like human resources, physical resources, financial resources and technological resources in proper way that helps to increase productivity and decrease wastage and unnecessary costs.

4. Better Coordination

Better coordination is required to link different office activities, departments and people in the organization. Office management maintains unity of action, proper communication and harmony by using different coordination mechanisms.

5. Cost Minimization

Office management encourages better utilization of resources, effective communication, better coordination and employee motivation in the office. It helps to increase productivity and reduce wastage, leakage that minimizes the cost of production. Reduction in the cost of production helps to increase profitability of the business.
advantages of office management
6. Goodwill And Public Relation

Office works are performed effectively and smoothly because of better management. Motivated employees can deal properly with customers and public. It helps to increase goodwill and maintain public relations.

7. Promotion Of Leadership

Office management provides good working environment in the office. Authority and responsibility are delegated according to the skill, qualification and capability of employees. Top level managers use their skills to motivate others for better performance so employees can develop leadership and managerial qualities.
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Advantages And Disadvantages Of Deflation

Business , Education
Positive Impacts, Benefits Or Advantages Of Deflation

The main advantages of deflation can be expressed as follows:

1. Increase In Purchasing Power

Negative inflation or deflation increases the value of money. So, purchasing power increases and price of goods and services decreases.

2. Lower Monthly Budget

As we know that deflation causes fall in the price of commodities, so people can satisfy their needs by spending less amount of money. So, it reduces the monthly budget which benefits middle and lower level consumers.

3. Increase In Saving

Due to fall in price of goods and less spending of money, people's saving will be increased at the period of deflation.

4. Higher Living Standard

Deflation helps to maintain better living standard because of lower expenditure and increase in saving.

5. Beneficial For Creditors

Deflation increases the real value of existing debt. So, creditors are benefited in this situation.

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6. Lower Business Costs

Deflation lowers the cost of business because of  decrease in the price of raw materials, machinery, technology and fixed assets. So, this period is appropriate for long-term investment.

Negative Impacts, Drawbacks Or Disadvantages Of Deflation

The major disadvantages of deflation can be described as follows:

1. Lower Consumer Spending

People may stop spending on luxurious and expensive products with the expectation of more decrease in price in the future. So deflation may encourage lower consumer spending which is not good for the economy.

2. Loss For Investors

At the time of deflation, investors and producers who hold large quantity of inventory suffer because of the decrease in the value of stock.

3. Increase Value Of Debt

As we know that deflation increases the value of debt, it makes difficult for the existing debtors to repay their loan.
advantages disadvantages of deflation
4. Possibility Of Unemployment

Business profit decreases because of decrease in the price which force the producers to stop production or reduce their production capacity. It may create unemployment problem.

5. Lower Economic Growth

Limited production, less consumer spending, increased value of debt and unemployment lead to lower economic growth and instability in the country.

Pros And Cons Of Deflation In Short

Pros:
- It lowers the monthly budget of because of decrease in the price of goods and services
- It helps to improve living standard of because of improved purchasing power
- It is beneficial for creditors because banks reduce the interest rate
- Suitable period for investment

Cons:
- It may lead to lower consumer spending
- It may create unemployment problem
- It negatively affect economic growth of the country
- It increases the real value of debt

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