Primarily, the economic doctrine of facets of production includes the total of all raw materials and other factors that play a part in the overall process of the manufacture of goods (Nixon, 2012). Additionally, Nixon (2012) insists on the need for enterprises, especially small-scale firms, to comprehensively interpret the said inputs to improve the company's returns. This is because minimal progressive alterations in the company's framework of valuation could be the variance connecting either extreme financial gains or deficits. Some of the critical economic ideas utilized in a manufacturing business with the intention of maximizing capital and increasing profits revolve around decisions made in the short run and long run as well as the types of managerial tools used. The paper describes an in-depth discussion on the differences between short-term and long-term production decisions and their impacts on the firms' costs and economies of scale. Moreover, the paper also discusses several tools of management used to alleviate motivational problems in the workplace.
To enhance and achieve the augmentation of a firm's bottom line, most factory owners tend to inculcate distinct targets and commensurate plans of action. Here, the said strategic approaches mainly seek to address product value, consumer well-being, salesperson anthology, the identification of drawbacks and relevant findings, and the organization's productivity and operating costs (The Strategies of Manufacturing, 2014). The Strategies of Manufacturing (2014) claim that the discussed approaches usually work through making the right decisions in the short run and long run phases of production
Difference between Short and Long Run, and Impacts on Costs and Economies of Scale
The short run refers to an indefinite duration of time whereby not less than one constituent in output tends to be resolute in volume, during the fluctuation phases of the other encompassed elements. Miners (2010) posit that theoretically, all the forms of mass-production in real business set ups gravitate in the course of the short run period. At this point, fixed prices typically do not possess any significant effects on the short-term resolutions made by an entity's management. Nevertheless, returns acquired over the short run phase often vary according to the firm's variable unit prices as well as incomes. As a result, businesses could expand their levels of production via heightening the volumes of the inconstant aspects utilized during the manufacturing process.
For instance, firms could increase the units of a variable factor such as the labor used, by introducing extra payable working hours, thereby laying out the platform for a potential output increment. Miners (2010) postulates that in general, business entities seeking to inflate their gains will tend to proliferate their yields when their borderline incomes exceed the external costs of production incurred and minimize the said outputs in reciprocal scenarios. In the same way, organizations with the aim of attaining the discussed agenda would immediately halt production in cases whereby the standard mutable costs of products transcend the set value at the overall amount of quantities produced per capita.
On the contrary, from the microeconomic perspective, the long run refers to a given duration of time where all components utilized in the production activity as well as expenses incurred are characterized as being inconstant. In other words, this means that in the long run, there tend to be absolutely no fixed elements of production. Ideally, this means that there lack restrictions which hamper any alterations of yield levels by either making adjustments to the finance reserve or by moving into or exiting a given line of business. The said definition classifies the long run as the span of time imperative not only to allow the modification of the number of employees but to also measure the company's proportions both upwards and downwards. In turn, this provides a concrete basis for the rearrangement of undertakings encompassed during the manufacturing process as wished. Radically, the long run phase opposes that of the short run where as indicated, most factors of production tend to be fixed apart from labor, as noted earlier on, which in turn limits free industrial entry and exit. In the same light, the macroeconomic notion of the long run describes it as the time frame whereby some factors such as the overall valuation proportion, standard remuneration rate and gain expectancy, fully fine-tune to the current plight of the economy (The strategies of Manufacturing, 2014).
Likewise, Horsley & Wrobel(2016) stipulate that the discussed view tends to differ from the short run whereby the future adjustment levels of the said variables becomes totally unpredictable. In addition to the different notions on the short and long run production decisions and their impacts on costs and economies of scale, the two phases also contrast in the measuring of costs. At given times, the long run could refer to the time stretch in a firm that completely lacks any sunk fixed costs. Typically, fixed tariffs apply to those that under no circumstances change with alterations in the yield levels while sunk costs pertain to the unrecoverable costs incurred by businesses after payment. As such, this definition contradicts the short run's hypothesis of fixed costs since, in the long run, entities tend to be free to decide on the operational proportions that regulate the ultimate fixation levels of fixed costs.
Moreover, Horsley & Wrobel (2016) posit that the long run phase also lacks sunk costs given that organizations possess many options at their disposal like failing to engage in any business thereby sustaining zero costs. Therefore, the apparent variation between the short run and long run plays a unique role in the behavioral differences in the market. As in, the short run guarantees solid production only if market valuations cater for variable tariffs at the minimum because fixed prices never constitute the decision-making operation due to being already reimbursed. Besides, in the short run, the financial returns made by firms tend to be either positive, negative or even zero. Contrariwise, entities, in the long run, infiltrate a given market only in the wake of high market prices which could lead to favorable economic gains and vice versa. Furthermore, given a relatively competitive market in the said phase, returns tend to be zero if all entities possess similar selling prices.
Managerial Tools for Mitigating Incentive Problems in the Workplace
Similarly, another method to oversee substantial business success involves the inculcation of various tools to mitigate incentive problems in the workplace. To this effect, Cravens et al. (2015) have it that most firms deplete a considerable amount of time and exuberance attempting to gather the best means of stimulating their personnel. Fundamentally, this happens because of disgruntled and uninspired employees, in the end, pose adverse impacts on their efficiency as well as relations at work. Nevertheless, the success of motivational tools used by managers of different companies finally relies on the vivaciousness of the overall business labor force. The said tools categorize in two main ways namely, the external, also termed as extrinsic and internal, also known as intrinsic.
For the external devices, they mainly revolve around the material or financial premiums to the existing workforce in the form of rewards or child welfare expenditures. Here, managers could offer gift vouchers and fully sponsored recreational holidays to their employees as a means of rejuvenating and encouraging them to continually focus on advancing the company towards enhanced productions. This kind of gesture from the management tends to relay a message of a sense of belonging to the personnel since it indicates that someone else genuinely looks out for them in addition to the regular remuneration (Cravens et al. 2015). However, the management should wisely use the external tools since too much of them could result in undesirable behavior from the employees in cases whereby they would only improve their productivity for financial gains.
Likewise, Cravens et al. (2015) have it that empowerment tends to be another vital motivating tool though as an intrinsic factor. Ideally, empowering the workforce enables them to feel wanted and important contributors to the firm with the ability to be instrumental in significant developments. This can be achieved by offering the staff individualized duties and bestowing to them the power to be in charge of some elementary recommendations. Moreover, in a bid to empower their personnel, managers could also continually invigorate them to expand their levels of invention and innovation. In turn, this kind of gesture will undoubtedly stimulate the employees towards meeting the firm's targets.
Self- improvement also acts as another motivational tool for the employees. In essence, this is because it aids the personnel to quickly acquire the proper coaching required to improve their lines of work. In principle, this indication serves two primary purposes in the motivational endeavor. In this first place, it makes known to the employees that the entity gives credence to their capability to perform with additional expertise. Secondly, the self- improvement also generates valuable knowledge that could end up prompting new inventive ideas (Cravens et al. 2015).
Finally, Cravens et al. (2015) propose that enhancing the employee's lives could also serve as another critical tool towards increasing staff motivation. This is because some workers under perform due to pressure from various occurrences in their lives. For instance, single parenting could take a huge toll on the affected employees due to the emotional and physical exertion while attempting to balance between work and parenthood. Here, adjustable work set-ups and increased number of days off could come in handy for such employees. In turn, the said scheduling could end up minimizing tension thus yielding improved work outcomes.
In conclusion, it would be correct to deduce that indeed, economic strategies tend to be extremely vital for a company's well-being. Hence, by understanding and implementing certain trivial business matters such as the impacts of decisions made in the short run and long run could help in improving sales and profits, thereby driving the firms towards achieving their objectives. Similarly, familiarizing oneself with the principle managerial incentive tools mandatory for the workplace, as indicated in the research paper, could also serve as a platform for business improvement. Therefore, following the said ideas, it would be therefore highly recommendable for companies to incorporate economic strategies during the production process for fully maximizing their returns as well as enhancing the continuity of their businesses.
Nixon, R. (2012). Production Economics. New Delhi: White World Publications.
The Strategies of Manufacturing. (2014). Ipswich, Massachusetts: Salem Press.
Miners, L. (2010). Costs of Production: Short Run and Long Run. 21St Century Economics: A Reference Handbook,
Horsley, A., & Wrobel, A. J. (2016). The Short-Run Approach to Long-Run Equilibrium in Competitive Markets: A General Theory with Application to Peak-Load Pricing with Storage. Switzerland: Springer.
Cravens, K. S., Goad Oliver, E., Shigehiro, O., & Stewart, J. S. (2015). Workplace Culture Mediates Performance Appraisa...
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