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HOW CHRYSLER COMPANY APPLIES THE ECONOMIC PRINCIPLES 4
The Economic Environment
March 30, 2022
How does Chrysler Company apply the economic principles?
Its quite evident that economics plays a very essential role in our society today. Through economics, many businesses can get a deep insight into how the business world works and the significance of the economic decisions they make daily. There are some essential rules and guidelines (economic principles) that govern entrepreneurs when making such kinds of decisions. For instance, Chrysler automobile industry is one of the companies that apply the basic economic principles in making decisions that helps it in entrepreneurship. Chrysler is an American company that is known for making Chrysler vehicles (Bardwick, 2018). There are ten principles of economics. However, in this paper, I will mention and discuss only three principles and how they are applied by Chrysler automobile company.
One of the principles that the company applies is the opportunity cost (people face a trade-off) principle. Entrepreneurs have to make good decisions when faced with a scenario that has two or more options. In other words, they have to trade off one option for another to make a more profitable decision. For instance, Chrysler Company can apply the opportunity cost principle to enhance manufacturing performance. The opportunity cost principle also influences the make-or-buy decision of the company (Flux, 2018). The company can weigh between manufacturing a product and buying it from another company. The option that has many benefits/brings profit to the company will be chosen.
In addition to the above, the company can also apply the incentives principle. In simple terms, people make decisions regarding what they are to purchase by weighing the benefits of the product and the cost. To avoid incurring losses, Chrysler should ensure that it predicts the needs of its consumers/buyers. Also, to increase their customers satisfaction, they should ensure that they offer more products than demand and reduce time-to-market.
Lastly, Chrysler Company can apply the rational thinking principle. The company can use the information they have when making new decisions. This is done by comparing the marginal costs and benefits of the company. For instance, the company can use this principle when choosing one Chrysler model over the other, since they believe it will offer a higher return.
Bardwick, J. M. (2018). Ford, Chrysler, and General Motors: the fall and rise of an automotive empire. The Business & Management Collection.
Flux, A. W. (2018). Economic principles: an introductory study. Routledge.
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