The Market Mechanism

DVD + 3-Year Streaming
3-Year Streaming
The Market Mechanism (30:00)
Item# 10845

Supply and demand is the basic relationship that fundamentally shapes any market-based economy. Module one of this program shows how S&D sets the price of a rose at the Aalsmeer flower auction in the Netherlands; module two reveals how Germany’s Flensburger shipyard has survived in a shrinking market through capacity planning; and module three demonstrates how quality decisions ultimately led Bianchi to victory in the Giro d’Italia bicycle race. (30 minutes)

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Segments in this Video - (6)

1. Supply Side Market Price (03:55)
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The Aalsmeer flower industry demonstrates supply side market pricing because the same amount of roses enters the market year around (inelastic supply). The Growers Association creates the auction system to move 17 million flowers a day at prices beneficial to the growers.

2. Market Price (05:44)

At the Aalsmeer auction, buyers compete with each other to pay the highest rather than the lowest prices at a particular moment. Product prices are never determined by accident but are constantly challenged and created anew.

3. Shipbuilding: Asia Corners the Market (03:32)

German shipyards are in trouble because the supply of ships exceeds the demand, driving prices down. German shipyard workers cost ten times that of their Asian counterparts. South Korea has currently cornered the world shipbuilding market because costs are lower there.

4. Shipbuilding: Buyers Market (05:26)

Germany's higher costs for shipbuilding must be counterbalanced with greater efficiency, better technology, production of better ships using new processes, or new product development. Flensburger shipyard cut costs by an innovative "serial" shipbuilding system.

5. Growth Market (04:38)

Twenty years ago, bicycles had the unexciting profile as transportation for the poor, but the new trend in mountain bikes and fitness has pushed demand up. Bianchi’s reputation lies in its high quality bikes and innovative research and development.

6. Champions in a Growth Market (04:20)

Though Bianchi is associated with championships, the company cannot rest on past successes. It continues to test new technology and materials for better products. Growth markets do not guarantee success, but companies who excel in these markets are stronger, tougher, and smarter than all the others are.

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