Figure 1. Ancient Egypt was an example of a command economy. Command economies are very different. In a command economy , economic effort is devoted to goals passed down from a ruler or ruling class. Ancient Egypt was a good example: a large part of economic life was devoted to building pyramids, like those shown in Figure 1, for the pharaohs.
Medieval manor life is another example: the lord provided the land for growing crops and protection in the event of war. In the last century, there were two primary examples of command economies: socialism and communism. Under communism, the government decides what goods and services will be produced and what prices will be charged for them.
The government decides what methods of production will be used and how much workers will be paid. Many necessities like healthcare and education are provided for free. Currently, Cuba and North Korea have communist economies. Another type of command economy is socialism. Under socialism , industries that provide essential services, such as utilities, banking, and health care, may be government owned.
Other businesses are owned privately. Singapore Democratic Republic of Congo 3. New Zealand Argentina 4. Australia Republic of Congo 5. Switzerland Iran 6. Canada Turkmenistan 7. Chile Equatorial Guinea 8. Estonia Eritrea 9.
Ireland Zimbabwe Mauritius Venezuela Denmark Cuba United States North Korea Table 1. Decisions … Decisions in the Social Media Age The world we live in today provides nearly instant access to a wealth of information. Self-Check Questions The chapter defines private enterprise as a characteristic of market-oriented economies. What would public enterprise be? Hint : It is a characteristic of command economies. Review Questions What are the three ways that societies can organize themselves economically?
What is globalization? How do you think it might have affected the economy over the past decade? Can you think of ways that globalization has helped you economically? Can you think of ways that it has not? Solutions Answers to Self-Check Questions Public enterprise means the factors of production resources and businesses are owned and operated by the government. The United States is a large country economically speaking, so it has less need to trade internationally than the other countries mentioned.
This is the same reason that France and Italy have lower ratios than Belgium or Sweden. One additional reason is that each of the other countries is a member of the European Union, where trade between members occurs without barriers to trade, like tariffs and quotas. Previous: 1. Next: Introduction to Choice in a World of Scarcity.
Stronger links between marketing and manufacturing also encourage production managers to be more outwardly focused and to consider decisions in light of their effect on customer satisfaction. Service companies find that making operating decisions with customer satisfaction in mind can be a competitive advantage. They also work closely with other major divisions of the firm, such as marketing, finance, accounting, and human resources, to ensure that the firm produces its goods profitably and satisfies its customers.
Marketing personnel help them decide which products to make or which services to offer. Accounting and human resources help them face the challenge of combining people and resources to produce high-quality goods on time and at reasonable cost. They are involved in the development and design of goods and determine what production processes will be most effective. Production and operations management involve three main types of decisions, typically made at three different stages:.
All three decisions are ongoing and may occur simultaneously. In the following sections, we will take a closer look at the decisions and considerations firms face in each stage of production and operations management.
An important part of operations management is production planning. Production planning allows the firm to consider the competitive environment and its own strategic goals to find the best production methods. Production planning and subsequent production control follow adaption of product design and finalization of a production process. Production planning and control address a fundamental problem of low productivity, inventory management and resource utilization. Production planning is required for scheduling, dispatch, inspection, quality management, inventory management, supply management and equipment management.
Production control ensures that production team can achieve required production target, optimum utilization of resources, quality management and cost savings. Planning and control are an essential ingredient for success of an operation unit.
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