The Economic Environment of Business (Museums) Essay

The Economic Environment of Business (Museums) - Essay Example Most museums around the world are charging entrance fees as it is the norm. This follows after several attempts by nations like Germany, France, Sweden, and Salvador tried free admission, but the project failed. Unlike other nations which have faltered in the free entry of museums, the United Kingdom (UK) has excelled in the last 10 years. The government use free admission as part of the government plan to broaden accessibility of the country’s heritage and culture. Free admission has been found to immensely increase the visitors’ numbers who visit the museums. UK’s culture Secretary Chris Smith argued that free admission would mark a new beginning for the arts and cultural life of this country. This has opened gates for the people who are entering the museums. Consequently, free entry has been the key to attracting people from all ages and across the divide. In the US entrance to the museums has long been free, but there are certain private museums that have exo rbitantly high charges and people still pay. This shows citizens are not discouraged by charges if the destination is good. Free entry has altered the image of museums because venues are staging a broader variety of exhibitions so as to bring in new people. However, the problem still remains that it can prove to be a challenge where the state’s funds are stretched to the limit. Consequently, most nations have made entry to museums chargeable. As noted by (Silito, 2011) some museums in Britain still charge including Cabinet War Rooms, Imperial War and Tate St. Ives. Discussion Museum visits Museums take various organizational forms. Museums are private non-profit organization, private profit firms, or public organizations operated in a non-profit manner. Johnson and Thomas (2008, p. 78) point out that non-profit organizations were established as result of satisfied demand for public goods. Museums’ cost structure is also responsible for establishment of non-profit firms . According to Frey and Meier (2006, pp.1020-21) assert that museums have two types of demand: private and public demand. Private demand is exerted by visitors who visit the museum as a leisure activity or as part of their profession. The core determinants relating to price or costs include, (1) admission fee; the demand for museum services are price inelastic (2) opportunity cost of time; individuals who are self employed or with higher income have a higher opportunity cost of time, compared to low income persons or with fixed working hours, thus are expected to visit museums more often (3) Price of alternative activities. The social demand influences the society beyond the experiences of the actual museum visitors themselves. The social effects include externalities and influence on the market. The external effects include: education, prestige, existence and bequest values (pp.1023). The market effects include creating job opportunities and generating commercial revenue (pp.1024). In addition, museums differ from other organizations in the services due to the following determinants: high fixed costs, the marginal costs are close to zero, are characterized with dynamic costs, and high opportunity costs. With regard to high opportunity cost Frey and Meier (2006, p. 1028) argue that museums understate their true capital costs by not taking into consideration the opportunity