Understanding Cartel And Type And Examples

Posted by Imam Larh on Wednesday, 2 May 2018

Understanding Cartel And Type And Examples
Understanding Cartel And Type And Examples
Understanding Cartel As Well As Types and Examples - The definition of Cartel or often called "syndicate" is an agreement (written) between several companies such as producers and other similar companies.

These companies make deals that aim to control things such as price, marketing, and other areas, so as to compress competition and gain profit.

Understanding Cartel According to Expert
The definition of a cartel by Winardi is a combination or agreement (convention) by entrepreneurs who are juridically and economically independent. The objective of the cartel is to achieve objectives in the form of:
  1. The elimination of part or all of competition between entrepreneurs,
  2. To be able to dominate the market.
What distinguishes the Cartel with the Trust and the Concern is, because the Cartel is independent. This is characteristic of the cartel which is maintained so that even if the cooperation on the sale is so far, it will be made a joint sales office that can divide orders according to the agreement set by the business entities that are members of the Cartel.

Kinds of Cartels

1. The cost price cartoon

What is the deal with the price cartel?
All members will create rules that apply to each member for the calculation of the cost of goods and the amount of profit.

The price type of the Cartel sets the selling prices for cartel members. Seeds of competition are also often derived from the calculation of profits to be obtained from a business entity.

2. Cartel prices

Jens cartel prices set
a minimum price for the sale of goods they produce or trade. Thus, every member is prohibited from selling his goods at a low price compared to a set price.

However, if a member wishes to sell on top of the pricing, it is still allowed with a record of its own responsibility.

3. Cartel terms

The type of the terms cartel requires
stipulations in the terms of the sale. In addition, the Cartel also establishes the quality standards of the goods sold and establishes the terms of delivery.

Which includes the terms of delivery such as whether the warehouse loco is specified, FOB (shipping point or destination point), CIF and embrace or packing and other requirements in accordance with the agreement ie uniformity among members incorporated in the cartel.

The purpose of uniformity in price policy so that there will be no competition between them.

4. Carton rayon

Types of rayon cartels
or cartels that serve as a marketing area for them. Area determination followed by pricing for each cartel member area. The rules in question are like, every member is prohibited from selling his goods in other areas. So the rule is used to prevent competition among members with the price of goods with different potential.

5. Contingent cartel

Contigentering cartel type
gives each member a share of the allowable production amount. The interesting thing is if a company produces a smaller amount than the quota that the rest according to the agreement/provision will be given a prize premium.

However, if what happens is otherwise, it will be fined. This regulation serves to make a thick restriction on the amount of inventory, so the impact is the price of goods they sell can be raised.

6. Sales syndicates or sales central offices

The type of sales
cartel establishes a rule such as, the sale of a product of a member must pass through a single entity whose role as a central sales office. The benefit is the competition between them can be avoided.

7. profit or pool cartel

The type of profit cartel
usually determines the rules made directly by the members of the cartel that relate to the profits they earn. For example, that gross profit should be centralized to a cartel's general treasury. Furthermore, the net profit of the cartel will be distributed to them with certain comparisons as well.

Example of a Cartel Making Company
There are several companies in Indonesia that cooperate in the form of Cartel, the company that includes:

1. PT Semen Gresik, PT Holcim Indonesia, and PT Indocement are able to control domestic cement prices, due to the control of 88% market share.

2. In the UK, there are as many as 4 cement companies suspected of carrying out the most cartel. These companies include:\
  • Buxton Lime Industries,
  • Castle "Heidelberg",
  • Cemex UK.
3. In Germany, there are 5 cement producers that work together in cartel form. The company such as:
  • Alsen AG "Now Holcim Deutschland AG" Dyckerhoff,
  • Heidelberg Cement AG,
  • Lafarge Zement GmbH,
  • Readymix AG "Now Cemex Deutschland AG" and
  • Schwenk Zement KG
4. While in Europe, companies conducting cartels such as:
  • Holcim cement companies, Heidelberg, Dyckerhoff AG, Lafarge, and Cemex are spread across Germany, England, France, Belgium, the Netherlands, and Luxembourg.
  • Companies in agriculture such as Cargill Inc. and Bunge Ltd are cooperating with cartel dealers and distributors of cereals and agricultural products.
Benefits of Cartel 

Some of the advantages/advantages of the cartel are as follows:
  1. A cartel cooperation allows the implementation of rationalization that impacts the selling price of goods produced by the cartel tends to decrease. The fall in prices is due to the fall in the cost of goods (due to rationalization), and without the dismissal of workers.
  2. The position of the cartel as a monopoly market causes the cartel to be well positioned in the face of business competition.
  3. The goodness of the cartel for the business entity incorporated therein: can minimize the risk of selling the goods produced and the risk of the capital of the members, because either in production or sale can be arranged and guaranteed the amount.
Personnel management relationships with labor can be calmer because the causes of tensions such as wages and welfare demands can be easily granted by entrepreneurs.

Disadvantages of cartel cooperation

Some of the disadvantages of cartel cooperation are these:

1. The ugliness of the cartel for members such as the reduced activities of entrepreneurs and managers who are members of the cartel, because each member individually earns a profit that is almost stable and certain.

Work or not work, the members of the cartel will earn almost fixed profits, although this profit is sucked from other members who earn greater profits than members who are not working.

2. The existence of a joint regulation, complete with sanctions, shall bind the freedom of members incorporated in the cartel.

3. There is a possibility, a cartel's rival can smuggle into cartel members.

4. Cartel cooperation is considered something that is detrimental to people's lives, why? because the cartel is practical and can elevate the price with a more liberal style than the free market. In addition, cartel practice is the mastery of a number of products produced by a cartel group consisting of entrepreneurs incorporated in it.

That was the discussion of Understanding Cartel And Type And Examples. Hopefully useful and add insight to us all. Thank you so much for your visit.

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