Length: 1193 words (3.4 double-spaced pages)

Rating: Excellent

Open Document

Essay Preview

More ↓

Coca - Cola

On the 14th of June Coca-Cola’s soft drinks were banned from the markets in Belgium and later also in Luxemburg and France. Two failures in the bottling system were the cause for the nausea that the people suffered. According to the article it would have been better if they would have acted fast and told the whole truth. Coca- Cola is in an ologopolistic market and therefore branding plays a great role. It is possible that the company ha lost market shares, due to this accident. In the ologopolistic market the firms don’t compete with price, but rather with advertising and other non-price strategies. Therefore one can predict that this scandal has shifted the demand curve to the left. This accident can be seen as a negative externality. The government should make Coca Cola increase their health controls (internalise their externalities), if scandals of this sort happen again. They can enforce this by either subsidies (reward) of in this case taxation (punishment). People who would usually only buy Coca Cola due to the heavy advertising might try a substitute during the time of the ban. This can be seen as a sort of free promotion for the others in the market. According to the zero sum game, the lose that Coca Cola is making right now is directly proportional to the profits the other firms are making in the respected market. Coca Cola will need to take further actions to restore their brand name that they have established throughout all these years. This will significantly influences their total added costs. A strong brand has very few goods substitutes and it is very difficult for competitors to challenge the supremacy of the brand. This health scandal might have opened the doors fro new competitors. In the long run this can lead to Coca Cola’s costs for advertising to increase or furthermore they could lose control of the market and fall into a disequilibrium. The accelerator theory suggests that the level of planned investments varies with the rate of change of income or output rather than with the rate of interest. It will be hard for the big American company to fulfil their expectations of expansion in Europe with no investors being pleased with their progress.

Best Foot forward at Reebok
On October 18th Reebok published a 41 page report on how it is dealing with its workers in Indonesia.

How to Cite this Page

MLA Citation:
"Economics." 25 Sep 2018

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Essay on The Basics of Economics

- Economics is the study and understanding of the economy or the system of government and people that deals with money and financial things. Because the government officials did not understand my report about the economic reforms that are supposed to help stimulate the economy, I have decided to teach them about few concepts about the economy and how it works and how they can benefit from me and use these concepts to make wise and good decisions to stimulate the economy. The first thing I decided to teach the government officials about is economic freedom....   [tags: Economics]

Free Essays
844 words (2.4 pages)

Economics Q & A Essay

- 1) The current recession is the longest since the Great Depression in the 1930's. We are still far from a recovery with unemployment at about 9.7% and weekly new jobless claims at 442,000+. In your view, are we about to grow out of the recession or will it continue. In addition to the unemployment data, support your positions with such economic indicators as: new housing starts, used home sales, GDP growth, etc. The current recession or financial crises began in United States of America and created a domino effect of creating instability in the financial markets the world over; the spark of this recession ignited fire around December 2007....   [tags: Economics ]

Free Essays
1023 words (2.9 pages)

Economics of Information Essays

- Introduction There have been discussions among scholars in developed countries regarding economics of information. Developed countries includes Australia, New Zealand, United States, Ireland, Germany, Japan, Canada and many more are countries that have a high level of development according to some criteria. The criterion is income per capita; countries with high gross domestic product (GDP) per capita would thus be described as developed countries. Another economic criterion is industrialization; countries in which the tertiary and quaternary sectors of industry dominate would thus be described as developed....   [tags: Economics ]

Research Papers
1078 words (3.1 pages)

Principles of Economics Essay

- Buying a new home can either be an exciting experience in someones life, or can be a major heache with serious consequences. I was fortunate enough to get a house the a VA loan, and the process was somewhat more simple, because I did not have to do the majority of tasks by myself. I advise all of my friends and family, or whomever wants to purchase a home to consider many factors before making that decsions. Principles of economics plays a vital role in the decision making process when wanting to purchase a home....   [tags: Economics]

Research Papers
1782 words (5.1 pages)

Economics and Growth Essay

- The demand curve is likely to change upwards or rise as a result of changes in a number of factors. One, if there is a move up in the price of an alternative commodity, or decrease in price of the given commodity’s accompaniment. Two, if there is a rise in buyers’ income. Three, if the taste as well as preferencs of the consumers shifts in regard to the particular product or service under consideration. Four, when there is a decrease in the cost of borrowing. And finally, if there is an overall increase in the buyers’ trust accompanied with optimism for the particular product or service....   [tags: Economics]

Research Papers
931 words (2.7 pages)

Essay on Economics and Growth

- Causes of increase in equilibrium price Equilibrium price is the price at which the quantity demanded in the market by consumers balances with the quantity supplied in the market by the suppliers (Gillespie 2007). Apparently, there are a range of factors that determines a specific commodity’s supply and demand at the market place. Consequently, changes in these factors influences the shifts in the equilibrium price of that commodity (Sloman, 2007, p. 51-182). For instance, assuming the supply of a commodity is invariable, if there is a positive change in buyers’ income sources causing its increment or if tastes as well as preferences of the consumers shift in regard to the particular commod...   [tags: Economics]

Research Papers
851 words (2.4 pages)

Economics Essay

- Economics is an ever-changing field of study. Within that area of interest, there are many people who have influenced the world with their individual economic point of view. Some of those people have made a fundamental impact upon not only the United States of America, but also upon the world. Adam Smith, David Ricardo, John Maynard Keynes, Friedrich Von Hayek, Milton Friedman, and Fengbo Zhang are six men who have accomplished just that. Their opinions, actions, and words have forever changed the world of economics....   [tags: Economics]

Research Papers
1076 words (3.1 pages)

Islamic Economics Essay

- Islam is a religion that was founded in the year 622 AD by the prophet Mohammed. Mohammed founded the religion in the city of Mecca, in what is now present day Saudi Arabia. The God of Islam is referred to as Allah, which means the one true god. The holy book of Islam is the Qu'ran, which is considered to be the words of Allah as revealed to Mohammed. Islam is an Arabic word that means to submit. A Muslim is a person who submits to Allah and follows the teachings of Islam (World Religions, 2003)....   [tags: Economics]

Research Papers
1927 words (5.5 pages)

Essay on Economics Defined

- It seems as though no one has ever succeeded in neatly defining the scope of economics. Merriam-Webster online dictionary defines economics as a social science concerned chiefly with description and analysis the production, distribution, and consumption of goods and services (, 2015). Roger Arnold, states in his book “Economics,” writes “Economics is about the choices people and societies have to make. He further states more succinctly, that economics is the science of scarcity....   [tags: Economics Essays]

Research Papers
621 words (1.8 pages)

Economics Essay

-      Definition of Topic: Economics is the study of supply and demand. It defines the ways that human beings allocate resources and how resources are distributed amongst a market. It allows you to see trends in current market places and predict what may happen in the future. Many different subjects were once regarded as a part of economics. Political science and even sociology were once considered part of the field. These subjects still play a major role in understanding economics but are also completely separate disciplines today....   [tags: Understanding Economics Essays]

Research Papers
1694 words (4.8 pages)

Related Searches

Its report was a critical analysis done by an independent firm. Consumers want low prices, the shareholders are looking for high profits and capital gain, but at the same time non government organisations protest against exploitation. It is however a very difficult task to please the consumer with low prices and at the same time to keep the costs of production at a low level without exploiting the workers. In my opinion the prices won&#8217;t affect Reebok significantly because they are in an ologopolistic market. Firms like Nike are in the same situation and therefore will have higher costs of production as well. They will have to use non pricing strategies to compete with each other. Through advertising they can try to differentiate their product, making it seem more favourable to the customer. The Firms could stay at the same price and lose profits or they could charge the customer more. They would have to find the right balance. Also if Reebok would stop exploiting the Indonesian suppliers, they would help strengthen their economy and therefore creating a new potential market. Reebok would inject money into the circular flow of money in Indonesia if the would raise the wages. This would raise the employment and help to stabilize the prices. If the labour earns more then their buying power will increase and therefore they would demand more goods. Then more people would be employed to produce these goods. It would have an accelerating effect on the developing economy. NGOS could actually provoke the exact opposite effect. A result of the protesting could be that Reebok would fire all the labour in Indonesia and employ more workers in the USA. This would lead to an increase in the buying power of American citizens. The two Indonesian contractors have spent 250,000 dollars to meet the reports mild criticism. The price varies inversely with the buying power. This means that if Reebok increased their prices, due to and increase in the costs of production, people wouldn&#8217;t be able to purchase the same quantity. &#8220;America&#8217;s lucky athletes can thus buy shoes produced by Indonesians working in safer and more politically correct conditions &#8211; and at no extra expense.'; This statement doesn&#8217;t sound very realistic to me. If the Indonesian workers gained benefits then the firms&#8217; cost of production would increase. Also since the labour would be more expensive now some of the labour might lose their job. Reebok might also atomise and this would result in technical unemployment. As a result American athletes would either have to bay more or the firms&#8217; profits would decrease.

The gap between the rich and the poor is widening. The poorest quintile of the population is shown to earn 9 % less in real terms than in 1977, while the rise in the income of the top 1 % since 1977 exceed the total income of the bottom 20 % this year. The economic theory predicts that the consumption of the household will rise. The marginal propensity to the consumer measures the proportion of a change in income that is spent or saved. Even though the poorest quintile might be spending more money they are getting less back in real value, due to inflation. The stockmarket boom in the 1990s has contributed a great deal to throwing the distribution of wealth of balance. One can predict that a rise in income will lead to more spending, but some saving too. Usually only the wealthier have a marginal propensity to save or to invest. The poor are the ones that put their money right back into the circular flow of the economy to buy the current G.N.P. Meaning that there are no withdrawals. When withdrawals exceed injections, output, employment and national income fall. Much of the income is going from the poor to the rich. Unlike the poor the rich aren&#8217;t always injecting the money into the current circular flow. They are more likely to withdraw the money from the economy. When injections exceed withdrawals output, employment and national income rise. Injections and withdrawals produce a disequilibrium in the economy. If the rich would save a substantial amount of money and thereby withdraw a significant amount of money from the circular flow they could trigger a so called &#8220;ripple effect';. It can be said that one person&#8217;s spending becomes the others income. Due to this inequality it will be hard for the economy to grow. The poor will be limited to only buying necessities. The government could redistribute the incomes, by taxing the very few, extremely rich extensively. This would push more money into the circular flow. The poor could purchase goods and as a result this would become the income of others. The industry would then increase output due to the increase in demand.
Return to