Markets and Non Markets Essay

1544 Words Feb 16th, 2011 7 Pages
Market and Nonmarket Environments

Market environment includes those interactions (which involve voluntary economic transactions and the exchange of property) between firms, suppliers and customers that are governed by Markets and Contracts.
Nonmarket environment is composed of the social, political and legal arrangements that structure interactions (between the firm and individuals, interest groups, govt. entities, and the public which are intermediated not by markets but by public and private institutions) outside of, but in conjunction with, markets and contracts.
Public institutions differ from markets because of characteristics such as majority rule, due process, broad enfranchisement, collective action, and publicness.
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c) Strategies are intermediated by Markets. c. Strategies are intermediated by public and private institutions including legislatures, courts, regulatory agencies and public sentiment.
d) Of business changes and competitive advantage evolves d. Changes and the issues on a firm’s nonmarket agenda evolve.

Nonmarket issues have five basic sources:

1. Scientific Discovery & Technological Advancement
2. New Understandings
3. Institutional Change
4. Interest Groups Activity
5. Moral Concerns


Nonmarket issues can arise from

1. New Technology & Scientific Uncertainty
2. Changes in Understandings
3. Institutional Actions
4. Market Forces
5. Heightened Moral Concerns

Approach to the Nonmarket Environment:

1. One approach is to respond to nonmarket issues only when they are strong enough to force the firm to act.

2. A second approach emphasizes limiting the extent of the damage once the firm has been challenged by an issue.

3. A third approach is anticipatory and is intended to prepare the firm to take advantage of opportunities as they arise and address issues before they become problems.
4. A fourth approach is proactive with the firm and its managers not only anticipating nonmarket issues but also acting to affect which issues arise and how they will be framed.

The fourth approach is the most effective but it requires considerable sensitivity to the sources of nonmarket issues and how they progress.


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