Fundamentals Of Capitalism Case Study
Essentials of entrepreneurship which seems important for this case comprises of consumer sovereignty and profits.
The application of fundamentals of profit in this situation is on the basis that the short term loan advancing companies like payday industry make huge revenue annually, which means billion dollars across number of branches in any given country. Numerous customers see the substantial earnings to be unethical which these organizations are making off from small loans; on the other hand generating profits seems to be the principle objective in today’s competitive economy for any businesses.
The next applicable fundamental of capitalism is consumer power or sovereignty. (Pettinger, …show more content…
By availing advance credit, consumers are able to purchase and fulfill their needs, clear their credit card payment, pay their bills, etc on time even before obtaining a pay cheque. Consumers find it convenient and easy to borrow money so as to fulfill their wants and desires within a short span of time. They also believed that payday loan industry are accessible, customer friendly, and have reputation. Lastly, they did not have to feel embarrassed to have been rejected by banks all the time.
The payday loan industry, their investors have huge benefits like charging higher rate of interest to customers; customers using these products for the first time often become habitual to this industry and turn to them for any financial need which leads to ever increase in customer to this industry. Industry also earns higher revenue from Loan fees, N.S.F fees and increases their overall revenue leading to increased customer base.
The government is also benefitted significantly by this industry. As long as payday industry makes huge profits, they are entitled to pay more taxes which mean government gets more revenue from high taxable income of this …show more content…
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