Market Mechanism – Essential for every successful business

By  |  0 Comments

Free-trade economic system

Laissez-faire, An economic system which was followed in India before Independence. This is originated from France during 16th Century, The objective of this system is to support the private business sharks to control the government operations. In simple terms using this system, the transactions between private parties are free from any form of government interference.

This economic system was implemented by the British in India, China & other countries under their colony to access countries resources in terms of international free trade. Understanding the basis of Laissez-Faire will help you to get a clear picture about market mechanism.

Major types of economic systems

There are many economic systems are available. Before going into that, it is very important to define economic system.

“Economic system is a system of Production, Resource allocation & accessing, distribution of available goods or services locally & globally”.

The 3 major economic systems are as follows,

  1. Free economy – Private entities control the entire market. Resources allocation plays an important role in any economy. In free economy system the resources accessing & allocation were controlled by private arms. Government don’t have any control over the system.
  2. Planned economy – All resources in the country was owned by the government.
  3. Mixed economy – Resources are owned by private & government. Here the government can overlook & create policies to manage the private.

After independence, India implemented “Mixed Economic System” across the nation.



Market Mechanism

This talks a lot about what is the demand? what kind of product or service the people in the country is looking for? What kind of resources are required to produce the products or services to keep the people engaged? Etc. Success of a market mechanism is 100% based on the proper requirement plan of a country. It lead’s to an inefficient economy if the information provided is not accurate.

Now lets start think about how these economy systems affecting the growth of our nation.

  1. Most of our Government’s plan leads to failure because of providing information which is not accurate.
  2. The demand system was focused on trade value outside the country or commodity value inside the nation which gives more opportunities for the overseas corporates to access the country’s resources. Our projections & market mechanism was not focused much on the growth of our nation, instead of focused on exposing the resources for cheap cost in the International market.
  3. Our produce systems was developed as charity & trade system was developed as commodity.
  4. Even though we implemented mixed economy system in the country, the policies were deployed & change supporting the private arms who controls the nation’s political system.

How to create a successful market economy in your business

Don’t think the above information doesn’t relates to your business. Your entire entrepreneurial growth is based on the kind of strategy that you design & execute. For your simple understanding,

 For example:

Say there are around 100000 businesses in Chennai. You run an IT company & say for example there are nearly 10,000 firms offering the same services & products which you offer. Probably all the 100000 companies may require IT services for their businesses. As per market mechanism all the 10,000 firms build a strategy to acquire N number of customers from that 100000. Now at this stage as per the strategy you developed you were able to acquire 100 customers which means 0.001% is your IT firm’s customer base. Not even 1%, well do we just have less resources in the country or poor distribution system or poor allocation of resources, start think which stops you to achieve 1% of local market share, then strategise for 5% market share & so on.

How to increase the outcome of the economy as an entrepreneur

Successful mechanism is based on the strategy that you develop to acquire the market share. The strategy which always focus on converting few dollars to few thousand or few thousand dollars to $millions will never help the country to grow. The strategy must focus on maximum distribution of product or services, Proper resources management allocation which ensure or create more job opportunities in the country, which in turn increase the transactions which in turns maintain the country’s inflation. As an entrepreneur it is your duty to have a proper system for production management, Resources allocation & Distribution.

Keep short term goals & achieve it.

Bharathiraja Thangappalam, Founder of Beachange, India. Be A Change is about taking responsibility as the representative of this planet earth, and start contributing to the human society. We are a team who is focused towards taking our Nation to join the League of Developed Nations through Entrepreneurship.