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Discuss the extent to which the economic theories in the Market's Reader can be applied to the "New Economy". (50 marks)

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Introduction

A) Discuss the extent to which the economic theories in the Market's Reader can be applied to the "New Economy". (50 marks) In this question, I will define the old and new Economy, then I will mention the main characters of New Economy and what is different between new and old Economy. After that, I will discuss the role of knowledge, innovation, and individual creative and competitive as the primary resource needed to create economic wealth. Then, I will discuss Innovation reduce costs and improve product quality and how advances technology achieve the cost reduction and reserve the economic scale in good level. finally I will Study the Economic theories in market reader, clearifing how it could use and ably in the new economy. It may be helpful to describe the "old economy" before I talk about the "new economy." From around 1938 to 1974, the economy was built on a manufacturing base geared toward standardized production (It was manual labor) (1). It was organized into stable, hierarchical and generally autocratic organizations. These organizations achieved a competitive edge in the market by making standardized products faster and more economically. They focused on incremental cost reductions and a national marketplace. This is how success and prosperity were achieved in most courtiers, examples of type of organization could be found in textile and steel mills. This economic order began breaking down between the mid-1970s and the early 1990s. The crisis included both textiles and steel in a period of transition from the old economic order to the new one. a lot of countries loss their competitive edge because other countries were making things faster and cheaper. The cheap labor which had brought industries to the South was being very cheap. At the same time, workers also began wanting a higher standard of living, wanting cars, televisions, washing machines, better clothes and homes, wanting a chance to educate their children. ...read more.

Middle

When these activities have been adequately addressed, the Government must then take some definitive action to promote the sector and to adopt use of the technologies in their dealings with their citizens. The government uses three basic institutions to protect individual rights in a market economy. Police protection is used to prevent individuals within a society from violating one another's rights. National defense is used to protect the rights of individuals within a nation from foreign aggressors. The courts and criminal justice system are used to resolve disputes among individuals within a society so that those who have disagreements do not have to resort to the use of force to settle their disputes. In all cases, the use of government to protect individual rights is intended to create a system in which all individuals interact with one another through voluntary agreement, and the legitimate use of force against others is reserved to the government. B- Stabilization The Government's role is not only to pick winners, but to improve the conditions within which all businesses and employees operate. Under its new model of partnership with business, the Government is therefore acting to promote economic stability, improve the legal and regulatory framework, and promote innovation, high-quality investment and employment opportunity. the government could productively get involved in creating a more stable economic environment. In response to banking crises that would occur during recessions, Congress created the Federal Reserve System in 1913 to stabilize the banking system. A host of stabilizing programs appeared during the Great Depression, and, after World War II, the government explicitly pledged itself to pursue policies that would produce full employment. Monetary policy and fiscal policy are the primary tools that are used to stabilize the economy. Monetary policy is aimed at controlling the money supply and the banking industry, while fiscal policy uses taxes and government expenditures for the purpose of maintaining full employment and low inflation. ...read more.

Conclusion

Sony accelerated the structural reform of its entire electronic business and positioned Aiwa as a wholly-owned subsidiary in order to enhance its overall corporate value and corporate resources will be further concentrated in realizing the Ubiquitous Value Network, which is at the heart of Sony's growth strategy. The company continued in its partnering efforts by forming soft alliances with Real Networks reflecting the rapid expansion in network distribution of digital audio and video content to personal computers and a new generation of networked consumer electronics products. The goal here was to make Sony a leading Global Media and Technology company. In handheld devices, Sony finally proved itself a strong competitor after stumbling at first. It accomplished this by using the same strategy that made its Walk Man one of the most successful consumer products ever, releasing half dozen new models covering every price range. Initial efforts had fell flat on their face because of lackluster design and high prices. The year also marked the company's restructuring of its sales and distribution channels. In addition to the existing structures based on product categories, a new organization was set to be established, that would focus exclusively on mass-retailers, in an attempt to foster close knitted relationships and improve communications with its consumers. The strategies that Sony must continue to pursue are: it must keep itself ahead of the change curve. In order to do so, the company must be able anticipate the direction of the change. Second, it must be able to focus and make the change happen. Also, Sony as a company needs to redefine itself from a business perspective, demonstrating that Sony is a consumer electronics products company, not a gaming company. For the market of consumer electronics is an ever-growing market and will always be significantly greater than the target market for games, which only includes a small segment consisting mainly of children and teenagers. However, from a holistic point of view, Sony should strengthen and maximize the brand value of its core sectors- electronics, games and content (music and picture). ...read more.

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