Some methodological proposals for the preparation of market policy decisions by enterprises producing capital goods

Abstract

Decisions made in the area of capital goods, including investment goods, generally bind the enterprise for a much longer time and exert an influence over a longer period than in the case of consumer goods. It follows that if sound decisions are to be made, it is not sufficient to study only superficial and obvious events and information, but a deeper study must be made to reveal the underlying factors. A more far-reaching analysis of this nature naturally calls for more complex work.
By giving recommendation how to investigate the market trends of these products the author differentiate the original market, the intermediary market and the primary market of capital goods. She calls attention also to the differences of the capital goods’ life cycle compared with that of the consumer good. The earnings cycle theory can also help in providing a sound basis for decisions. This method is used not for the study of a single product, but takes into consideration all of the enterprise’s more important products.
The overall demand for capital goods must be broken down to its constituent elements, which gives the new demand; this generally consists of demand from first purchasers, and replacement demand; this arises from the replacement of machines written off over the years. Representation of the total demand for a given enterprise product takes the form a two-humped curve.