Business Factors of Production Monopolistic Research Proposal

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Also in the U.S., the highest unemployment rate since 1983 was reached in August, and was rated at 9.7% (AP, 2009). Generally speaking, the demand has increased, based on the fact that many companies had to close, adding many jobless to the already existing unemployed persons, and decreasing supply.

Given the context, the cost of the workforce is likely to decrease on short-term and medium term. Many companies cannot afford to produce their goods at the same cost as before the crisis. Therefore, they can either reduce wages, or reduce personnel, if not both. In these conditions, employees will be willing to work for less. On long-term, once the economy starts to recover and new jobs are created, it is expected that the labor price will increase progressively.

For large companies producing soda drinks and related products, outsourcing production in Regions like China or India, where the workforce is significantly cheaper, can be a solution for creating competitive advantage. The level of skilled work required in this industry is not a very high one, which means the quality of the product would not decrease.

Capital goods are a vital factor of production. Without suitable equipment used in the production plants, the actual production of goods, in this case soda drinks, would not be possible. The production process requires chemical treatments, which makes it even more important for the equipment to be of good quality.

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The supply and demand for production equipment is mainly dependent on new and advanced technologies provided by various types of equipment. For example, once a certain type of equipment becomes more obsolete, the demand for that product will be lower. The price is higher for new developed equipments. This is reflected in both the quality of the product and its price.

In order to create competitive advantage, a company producing soda drinks must exploit new, high quality equipment. This will lead to increased quality of the product, which creates the effective competitive advantage. However, such a strategy can only be pursued by large companies, with greater financial power that allows them to recuperate their investments on a longer period of time or by producing more units, and by maintaining a lower price. This is because small companies would be forced to increase the price of the product, which would practically cancel the competitive advantage created by the better quality of the product.

Reference list:

1. Walsh, Campion (2006). Land Prices Increasingly Drive Housing Markets, Fed Study Says. The Wall Street Journal. Retrieved October 31, 2009 from http://www.realestatejournal.com/buysell/markettrends/20060622-walsh.html.

2. Country Comparison: Unemployment Rate (2009). Central Intelligence Agency. The World Factbook. Retrieved October 31, 2009 from https://www.cia.gov/library/publications/the-world-factbook/rankorder/2129rank.html.

3. Unemployment rate jumps to 9.7% (2009). The Associated Press. Retrieved October 31, 2009 from http://www.msnbc.msn.com/id/32689068/ns/business-stocks_and_economy/......

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