Ongko Furniture Scenario
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- Date Submitted: 12/12/2011 05:12 PM
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Ongko Furniture Scenario
In reading the Ongko furniture scenario, I am going to discuss and identify the finance concepts I understood such as the competitive economic environment, principle of value, self-interested behavior, two-sided transactions, behavioral, and valuable ideas and how they relate to this scenario to better help Ongko understand his dilemma.
A competitive economical market place creates many principals that shape how businesses behave. When Ongko’s furniture was established, Jaya Ongko understood that as an owner it is imperative for him to make decisions that reflect his own financial self interest. Therefore, he leveraged the amble supply of timber and low cost labor market to manufacture furniture and sell them at a premium price. This comparative advantage helped Ongko’s Furniture expand their business with ease to more than 20 countries globally. This expansion yielded incremental benefits- incremental costs and benefits are those that occur with a particular action, minus those that occur without the action (Emery, Finnerty, & Stowe, 2007). He also understood his opportunity cost so he took the most advantageous course of action and forgone other possible business opportunities. Jaya business model did not hinge on the fact that he was taking advantage of his customers; every financial transaction has at least two sides. Jaya customers paid for his products because they saw a value and acted in their own self interest as well. This type of behavior created a zero-sum financial transaction- a situation in which one person gain only at the expense of another (Emery, Finnerty, & Stowe, 2007).
As economic market conditions started to change in the late 1990s, Ongko was faced with challenging decisions. Competition entered is market space and leveraged their comparative advantage by using high-tech manufacturing approach to compete with him and offer lower prices at the same level of quality. So Ongko looked at what others in his...
In reading the Ongko furniture scenario, I am going to discuss and identify the finance concepts I understood such as the competitive economic environment, principle of value, self-interested behavior, two-sided transactions, behavioral, and valuable ideas and how they relate to this scenario to better help Ongko understand his dilemma.
A competitive economical market place creates many principals that shape how businesses behave. When Ongko’s furniture was established, Jaya Ongko understood that as an owner it is imperative for him to make decisions that reflect his own financial self interest. Therefore, he leveraged the amble supply of timber and low cost labor market to manufacture furniture and sell them at a premium price. This comparative advantage helped Ongko’s Furniture expand their business with ease to more than 20 countries globally. This expansion yielded incremental benefits- incremental costs and benefits are those that occur with a particular action, minus those that occur without the action (Emery, Finnerty, & Stowe, 2007). He also understood his opportunity cost so he took the most advantageous course of action and forgone other possible business opportunities. Jaya business model did not hinge on the fact that he was taking advantage of his customers; every financial transaction has at least two sides. Jaya customers paid for his products because they saw a value and acted in their own self interest as well. This type of behavior created a zero-sum financial transaction- a situation in which one person gain only at the expense of another (Emery, Finnerty, & Stowe, 2007).
As economic market conditions started to change in the late 1990s, Ongko was faced with challenging decisions. Competition entered is market space and leveraged their comparative advantage by using high-tech manufacturing approach to compete with him and offer lower prices at the same level of quality. So Ongko looked at what others in his...