What is economic addiction?
Economic dependence is a situation where the costs or income associated with the project depend on the costs or income generated by another project. The concept is located in companies, industries and even economies of different countries. Shifts in any of the factors associated with these two related projects can lead to profitability and general stability of one or both projects.
An example of economic dependence within business would be the relationship between the cost of the production of a particular good and the costs associated with marketing that are good for consumers. Production costs have a direct impact on the determination of retail prices of goods, because the aim is to get the return on each unit sold. If the price for any of the raw materials used in the production process increases, it will have a direct effect on the amount of profit generated by every sale.
The same general idea of economic dependence can be used on two businesses that have a working relationship. If one spolEnsurance will create machine components that the other company needs to produce goods, any change in a number of available components will have a direct impact on the customer of the supplier. This may mean an increase in the cost of components. In a situation where the supplier interrupts the production of the component, the result of the cost and income for the client is at least until the component is secured from another supplier.
Along with this type of business dependence in business, the concept of economic addiction is also found among nations. In situations where two countries create a fair trade balance, each has the advantage of balancing goods at reasonable prices and at the same time importing goods at prices that are considered fair. If one country decided to reduce imports of the najin situation could lead to an imbalance in a trade that has a negative impact on the general economy of one or both nations, maybe increase the price for affordable goods or by creating a number of loss of jobs in related sectors.
inThe best case of acquiring economic addiction creates a situation where all parties benefit from the agreement. When an imbalance occurs, the potential will increase significantly so that one or both parties experience loss of income or unfavorable change in related costs. For this reason, it is very important to take the time to assess the impact that any change to other departments within the company, suppliers and customers, and even a business balance between nations. Once lost, the restoration of economic balance may require a lot of time and effort.