Short Run and Long Run Strategies in Business Essay

Short Run and Long Run Strategies in Business - Essay Example The short run is a period usually in which factors of capital other than labor are all fixed and cannot be changed, the short run for the shipping industry may be 3 years and the short run for a smaller business like handicrafts may be 6 months but generally the short run is considered to be one year. The ultimate goal for any company other than not for profit is to earn a considerable profit for its stakeholders but at times market conditions are such that this objective has to be kept behind and other strategies have to be pursued in order to meet the long-term objective of making a profit for all the people who are concerned with the business. Some of these environmental situations are explained below. At times in the face of strong competition that might threaten the business in the long run and the short run as well businesses tend to forget the objective of making a profit until they drive the competition out of the market, there are several strategies that a business could use for this. One of the most popular strategy that businesses use to drive out competition from the market is dumping, since the company which is just entering the market have higher production costs because of lower efficiency due to a variety of reasons such as not knowing the best suppliers and not having a reputation and a rapport would mean that costs for the company automatically are higher than a company which is already existent in the market. Hence established firms take advantage of this and start selling their products at well below their marginal costs, the new entrant into the market can ill afford that and is forced to move out of the market. When a firm deploys this strategy to drive competit ion out of the market, is it earning a profit on the products that it is selling? No, it is not, in fact, it is selling at a price lower than what it cost to produce one extra unit.