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Economy of force is one of the nine Principles of War, based upon Carl von Clausewitz's approach to warfare. It is the principle of employing all available combat power in the most effective way possible, in an attempt to allocate a minimum of essential combat power to any secondary efforts.
Therefore, the model assumes that war is the undesired outcome for both actors, and only under the correct conditions will war occur. This is different than economic or other political models of war which propose that war can have a positive net utility, or provide benefits to the victor that are greater than the losses of the defeated.
The First World War period saw a change of emphasis in economic theory away from industry-level analysis which mainly included analyzing markets to analysis at the level of the firm, as it became increasingly clear that perfect competition was no longer an adequate model of how firms behaved. Economic theory until then had focused on trying to ...
War usually leads to a shortage in the supply of commodities, which results in higher prices and higher revenues. Regarding supply and demand in terms of economics, profit is the most important end. During war time, "war-stuff" [15] is in high demand, and demands must be met.
Management theory and practice often make a distinction between strategic management and operational management, where operational management is concerned primarily with improving efficiency and controlling costs within the boundaries set by the organization's strategy. [citation needed]
Morris used a French loan in 1782 to set up the private Bank of North America to finance the war. Seeking greater efficiency, Morris reduced the civil list, saved money by using competitive bidding for contracts, tightened accounting procedures, and demanded the federal government's full share of money and supplies from the states. [29]: 225–52
Profit management is technology enabled, as firms must be quick to respond to rapid changing market and to know the true economic cost of its products and services. Management needs to drive cooperation between different functions of the firm such as sales, marketing, and finance, to ensure the teams recognize the importance of coordinated effort.
Marx's theory is frequently confused with input-output economics and the marginalist theory of capital, in which total inputs and total outputs are always exactly equal in value, an equality accomplished by treating the factor income which is gross profit as an input, so that profit is both a cost and a revenue at the same time.