WHAT IS AN ECONOMIC THEORY OF BUSINESS STRATEGY?
Business is the collection of activities undertaken in order to produce and exchange goods and services. Production is a process undertaken within firms. All production processes require supporting activities: plant and equipment must be procured; direct inputs to the production process must be hired or purchased; the money required to finance production must be saved out of earlier profits or borrowed; the outputs from the production process must be sold; stocks of inputs, work-in-progress and finished goods must all be stored. All of these activities must be co-ordinated so that funds are available to pay the bills as they fall due, inputs are available as needed and outputs are produced in sufficient quantities to meet the demands for them, but not in such great quantities that there is insufficient capacity to store what is not sold. Goods and services are exchanged in markets. The process of exchange involves the establishment and publication of prices; it involves informing poten
