Knowledge Economy Vs. Physical Economy

Knowledge Economy:

According to Wikipedia, a Knowledge Economy is a something that refers either to an economy of knowledge focused on the production and management of knowledge in the frame of economic constraints, or to a knowledge based economy. A knowledge based economy is the kind of economy based only on the production, distribution and the use of knowledge. A knowledge based economy is vital because it supports the physical economy.

Physical Economy:

In the physical economy, we focus on things that we buy and sell that are tangible. When I go into a clothing store and I buy a shirt, I am participating in the physical economy. I can also go into a grocery store and buy some food. That is an example of me participating in the physical economy.

How the two relate to each other:

The knowledge economy and the physical economy relate to each other because you need knowledge to create the physical economy. If you wanted to mass produce a guitar, you will need knowledge to make a guitar. This knowledge includes, types of wood, design, spacing of frets, pressure of strings so that guitar doesn't break, placing of bridge, electric or acoustic amplification, primer and painting, and other things of that nature. The knowledge of making guitars helps companies mass produce these products and sell them to the public.

Implications for professionals in the business world:

Many professionals can utilize both the knowledge economy and the physical economy to be successful in the business world. For example, using a knowledge economy can help inform people and help them utilize that knowledge for creating products and help enhance the physical economy. The physical economy is important everywhere. It creates jobs, helps sustain governments in their endeavors, and helps sustain a population with financial needs, which is vital in many well off countries. Companies like Apple consider both the knowledge and physical side of the economy. They need feedback from their core customers to see what products appeal to them. A current trend in the gadget market is tablet computers. Apple used this knowledge to help them design the iPad. With the help of its sleek design, powerful computing power, access to broadband, the utilization of the Apple App Store, and creative marketing, this company has made profits knowing that tablet computers are a new trend in products.

Another example of companies using knowledge economy to help the physical economy are car manufacturers. Companies like GMC and Ford recognized the need for fuel efficient cars because of the rising of gasoline prices. They stopped producing some models, increased fuel efficiency on their newer models, and even introduced hybrid and electric cars to appeal to the physical economy. They also know people value more power in their cars as well so they produced high horsepower and high fuel efficiency combination of cars to be able to compete in the physical economy. The knowledge economy is focused  on information. Companies use this information to stay competitive in the physical economy.