MARKETING

MANAGEMENT
(POLITICAL AND ECONOMIC
ANALYSIS)
LECTURE 3 (JUNE 2, 2018)
 WHAT IS AN ECONOMIC SYSTEM?
• An economic system (economy) is the organized way a nation provides for the
needs and wants of its people.
• It is a way how a nation choose to use its resources to produce and distribute
goods and services.
• A country’s resources determine economic activities such as manufacturing,
buying, selling, transporting, and investing.
 WHAT ARE RESOURCES?
• Resources are all the things used in producing goods and services.
• Factors of production is the term used by economists when they talk about resources.
• Factors of Productions namely:
• Land
• Labor
• Capital
• Entrepreneurship
 FACTORS OF PRODUCTION
• LAND
• Includes everything contained in the earth or found in the seas.
• All natural resources are considered as part of land as part of factors of
production.
• All natural resources are used as raw materials for making goods and creating
services that are marketed to customers.
 FACTORS OF PRODUCTION
• LABOR
• Labor refers to all the people who work.
• Labor includes full and part-time workers, managers, and professional people in
both private and public sectors.
• Labor force is an asset to any given company, well trained and well educated
labor force will always have an advantage over other nations in attracting
business.
 FACTORS OF PRODUCTION
• CAPITAL
• Capital in basic terms are the goods used in the production process.
• Factories, office buildings, computers, and tools are all considered capital
resources.
• Raw materials that have been processed into more useful form.
• Capital includes infrastructure which is the physical development of a country.
• Capital also includes money to start and operate a business.
 FACTORS OF PRODUCTION
• ENTREPRENEURSHIP
• Entrepreneurs are employers of the a population.
• Entrepreneurship refers to the skills of people who are willing to invest their
time and money to run a business.
• Entrepreneurs organize factors of production to create the goods and services
that are part of the economy.
 SYSTEM OF ECONOMIES
• Traditional Economy: Traditions and rituals answer the basic questions of
• What to produce?
• How to produce?
• For Whom to produce?
• It is often based on cultural or religious practices and ideals that have been
passed from one generation to the next.
• Activities are assigned through tradition rather than by choice.
 SYSTEM OF ECONOMIES
• Market Economy: There is no government involvement in economic decisions.

• Companies and individuals own the means of production.

• Businesses compete for consumers.

• The government lets the market answer the three basic economic questions.
 SYSTEM OF ECONOMIES
• Command Economy: In a command economy setting the government makes
economic decisions and decides on the three economic questions of;
• What to produce?
• When to produce?
• How to produce?
• Under this system the government controls the factors of production and makes
all decisions about their use.
MIXED ECONOMIES
• Mixed economy is the combination of the three different systems a bit of
traditional, a dash of market and a sprinkle of command.

• All economies in the world today are considered mixed since every economy
should strike a balance on how to cater to the needs and wants of its population.

• A meaningful economic classification depends on how much a government

interferes with the free market.
 THREE POLITICAL PHILOSOPHIES
• CAPITALISM: It is a political and economic philosophy characterized by
marketplace competition and private ownership.
• The same as a free enterprise.
• In a capitalist society the government is concerned about its people and cares for
those who cannot care for themselves.
• (The difference is that the social services provided by capitalism does not match
that of a socialist country).
 THREE POLITICAL PHILOSOPHIES
• The political foundation of capitalism is most frequently associated with
democracy.

• Political power should be in the hands of the people.

• The people vote for those officials who agrees with their beliefs on how to run
the government and manage the economy at the same time.
 THREE POLITICAL PHILOSOPHIES
• COMMUNISM: It is a social, political, and economic philosophy.
• The government usually authoritarian, controls the factors of production.
• There is no private ownership of property or capital.
• The theory behind these practices is that goods owned in common.
• Goods are available to all as needed and society is classless.
 THREE POLITICAL PHILISOPHIES
• CHARACTERISTICS OF A COMMUNIST PHILOSOPHY
• All people who are able to work are assigned jobs. (There is no unemployment).
• Even those who can not work continues to get paid under this system.
• The government decides the type of schooling people will receive.
• Housing is based on needs.
• Food and housing subsidies keep prices low.
• Medical care is for free.
 THREE POLITICAL PHILOSOPHIES
• SOCIALISM: It is a system that is on it’s way to communist ideal of a classless
society.
• At present most countries that are defined as socialist have democratic political
institutions.
• The difference of socialist set up from a capitalist rule is that there is an
increased amount of government involvement in the economy.
• The main goal is to meet basic needs for all and provide employment for many.
 THREE POLITICAL PHILOSOPHIES
• CHARACTERISTICS OF A SOCIALIST PHILOSOPHY
• Socialist countries tend to have more social services to ensure a certain standard of
living for everyone.
• Medical care is free or low cost.
• Education has the same set up as to Medical care.
• Pensions and elderly care also has a system in this type of philosophy.
• Businesses and individuals pay much higher taxes than those with capitalist set up.
 THREE POLITICAL PHILOSOPHIES
• ROLE OF GOVERNMENT IN A SOCIALIST PHILOSOPHY
• The government runs all key industries and makes economic decisions.
• State controlled noncompetitive companies are often found in industries such as
telecommunications, natural resources (gas, power, and water), transportation
and banking. (Canada, Germany, and Sweden)
•END