The development of stable operations in production has a coherent relation to the formulation of policies that protect against losses. Essentially, there are various paramount strategies to prevent the loss of money owned by a company. However, this discussion assesses the property-casualty insurance where such vices as accidents to the employees and loss of funds due to negligence can arise. Technically, the establishment of a protective plan to curb these unexpected incidences relies on making appropriate decisions.
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In this regard, there arises a pertinent issue about increasing the units of production. In essence, businesses try to maximize their profits by producing as many units as those covered by an insurance policy (Boggs 143). Therefore, if the maximum units covered by an insurance company are reached, then the cost of producing 1 more unit requires much more capital than the ones already formed. This perspective shows that producing such a unit might incur adequate losses. This form of negligence regarding losses incurred due to the marginal cost can be insured as well.
The production of goods is reliant on the target market and profit made from each unit. The marginal cost is the capital required to produce a new entity or unit. In defining the marginal cost, it should be apparent that the production of a new unit may require the purchase of a machine, a raw material, new markets, extensions in the distribution sector, and increments in the insurance cost among others. In other cases, the production of the unit may require as little as what the initial items needed.
Furthermore, the production of a new unit may lead to a reduction in cost per entity For instance, the production can facilitate buying of raw materials at wholesale prices, which are often lower than retail ones. It, therefore, implies that producing a new unit can lower the cost of production. In either case, logical and reasonable decisions must be made to adjust the profits towards the maximum and stabilize the production processes.
In essence, the thought of purchasing items as the capital of production must be planned properly. For instance, purchasing a new vehicle to market or distribute products demands motor insurance and assurances which are renewable. A mature arrangement comprising of financial analysis and strategic plan to maximize profit must apply to avoid losses and poor management. In another perspective, the purchase of an item may pose risks to the employees.
If such an item is risky, it may be vital to deliberate on the possible losses and implement medical attention and allowances for the pain and suffering as the state’s conditions of working speculate. The item may cause further losses if an affected person decides to sue the business for negligence. This act can lead to losses attributed to compensation if the business has no property-casualty insurance cover.
These attributes of failure to cover the losses caused due to an unexpected event/course lead to many closures of businesses as the normal schedule cannot be restored without external funding. Otherwise, a company can lower its cost and units of production to facilitate sustainable and stable establishment. On the other hand, the management can agree to take the cover, prevent such losses, and be assured that there are few risks taken.
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Business and Insurance
Health insurance exchange requires employers to pay fines for their personnel. This personnel gets tax credits for health insurance through an exchange. However, this excludes low-wage earners, enforces fresh regulations on health strategies in the exchange and minor market sets, and expands medical aid to 133% of the national poverty level.
Health insurance exchanges are state-run American Health Benefit Exchanges and Small Business Health Options Program (SHOP) Exchanges, controlled by a governmental or non-revenue generating organization (Hewitt 133). These organizations incorporate people and small enterprises with up to a hundred employees to secure licensed coverage.
It authorizes countries to sanction businesses with over a hundred members of the workforce to acquire the coverage from SHOP Exchange commencing in 2017. The states can develop local exchanges excessively to function in a country where they practice a separate approach.
Effect of Law on Business
Laws created by the government allow a space in which businesses can battle each other on a fairground. Occasionally, the government adjusts these regulations and structure compelling companies to alter how they function. Therefore, business is influenced intensely by the government’s course of action.
Taxation regulations by the government such as cooperation taxes, environmental taxes, and VAT affects a business just like an increase in costs leads to the passage of some costs to the consumer through raised prices. Moreover, increment of interest rates by the monetary authority when attempting to regulate the money supply will raise the cost of credit.
Consequently, enterprise owners will not want to borrow from the commercial banks which can lead to contraction of the economy and reduction consumer’s expenditure. It also causes selective credit creation where the government subsidizes some business activities, such as agriculture, to curb unemployment (Sherman 156). Other requirements are evident in:
- Laws regulating the minimum wage rate which acts as a guideline to employers on the remuneration of workers
- Laws requiring employers to cater for disabled persons and thus promoting inclusion of the minority groups in the companies
- Protection of consumers against exploitation and unscrupulous practices which can foster the businesses to produce quality goods and services
Public Option and Market Behavior
A public option is an expansion of the healthcare sector where it is overseen by the state to provide insurance to eligible individuals. The controversial nature of the public option is on being good when presented in terms of covering all Americans, but the public rejects it when details of its financing come to light. Currently, it is warding off insurance companies from turning down coverage to individuals who have a prevailing situation. A company should cover the possible risks for the consumers to warrant maintenance and their security, as well as protect their rights as an organization.
Several attributes can be considered at the production level to enhance the marketing strategies. The prevailing marketing plans facilitated by information technology have aroused a competitive nature in the markets of many products (McConnell and Brue 76). The consumers’ urge to purchase a product is affected heavily by the knowledge he or she has of it. When there are compliments of the product, the market prices must be regulated to facilitate preference of the subject product.
In some instances, a company may be subjected to losses if there are risks published after using its products. For instance, a consumer may buy its product and develop health problems where the company is held liable. Ideally, the company should compensate that person to avoid making loyalty problems. Primarily, creating a brand for goods produced is important.
Therefore, the repercussion of the incidences where the producer lowers the brand name is low confidence in the market and less gross income since people may buy the compliments in place of the company’s product. The losses incurred due to these possibilities can be covered through insurance companies.
Boggs, Christopher. Property and casualty insurance concepts simplified: the ultimate ‘how to’ insurance guide for agents, brokers, underwriters and adjusters. United States: Wells Publishing, 2010. Print.
Hewitt, Maria. Facilitating state health exchange communication through the use of health literate practices workshop summary. Washington, D.C.: National Academies Press, 2012. Print.
McConnell, Campbell, and Stanley Brue. Microeconomics. 19th ed. United States: McGraw-Hill Education – Europe, 2011. Print.
Sherman, Howard. The roller coaster economy: financial crisis, great recession, and the public option. Armonk, N.Y.: M.E. Sharpe, 2010. Print.