In junior secondary, the Integrated Science teacher introduced us to mechanical advantage. Mechanical advantage (MA) is your load (your resistance force) divided by effort (your effort force) This equation is the heart of all simple machines. That mechanical advantage is linked to another property called Velocity Ratio (VR) which is determined by dividing the distance moved by effort by the distance moved by load. In an ideal world, MA and VR should be equal for a 100% efficient system. That is how you get Efficiency = MA/VR *100%. Unfortunately, you have wear, tear and frictions.
Yes, FRICTIONS which are also in market systems. Frictions make it impossible for demand and supply to attain a perfect equilibrium point in markets, due to many factors including information asymmetry in markets. To overcome Frictions, we create companies, which go to fix them. Companies use inputs ( factors of production) to produce a force called Products & Services. Great companies use less inputs to bring out great outputs (products & services).
You can see, markets can be modelled under physics and that means what happens in markets can be largely predictable. Innovatively disruptive companies reshape the ordinance in markets, bringing orders of magnitude in the efficiency level of the translation of input to output. They create orthogonal paths, different from others and set a new basis of competition.
Join me and 140 global faculty as we explain the Mechanics of market systems at Tekedia Mini-MBA. The next edition begins June 7. It is 100%, self-paced and costs N50,000 or $140. Register today.
Mechanics is the machinery or working parts of something. Yes, motion and forces producing motion. In mechanics of markets, you understand how markets work. You master the forces and motions in markets, looking at demand and supply. You see the momentum in markets through the translation of mass and velocity into scale and execution vision. We make business physics – and that is a good thing. JOIN US.
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