Janvi Rajiv Shah - Sunday, 21 October 2018, 7:52 PM
Article 1: Role and Responsibilities of Managerial Economists: Empowering Business through
Methodology and Strategy
With the changes in the world and globalization, companies are incorporating more of behavioral economics in
their day to day functioning. They have finally come to realize that a company cannot find success just by
knowing and predicting the market, but need to ensure employee satisfaction, cooperation and motivate
them and retain them. Along with employees, the company needs to understand the behavior of firms and
relationships among them as well. It is important to understand that the ‘entrepreneur’ is the one making
decisions and they are not just dependent on market forces. Business economists need to incorporate human
behavior into economic studies.
Article 2: Role Of Managerial Economics In Competitive Edge Dynamic Business Decision-Making
Process
Managerial economics focuses on combining economic theories with managerial practices. It helps tackle the
problem of limited resources and unlimited needs. It studies human behavior when faced with scarcity of
resources which cannot fulfil all human wants and needs. Managerial economics helps firms with business
decisions but is also a major part of non-business entities such as governments, hospitals, education
institutions, etc. The study of managerial economics helps managers take the right decisions and run the firm
effectively and efficiently.
Article 3: Economic Value Added In Managerial Economics
This article talks about the effect of the economic value added (EVA) indicator, evaluating the performance of
a specific business sector. The difference types of indicators like economic and financial factors and their
effect should be considered and evaluated. These indicators generally includes factors like cost invested,
capital cost, net present value, EVA and operation return value. EVA indicators help to measure performance
of the company and are called modern indicators. The advantage of this calculation is that it helps to
understand the performance of the company from the owner as well the investor’s point of view. A negative
EVA reflects the negative impact on the shareholder’s returns. A manager might tend to evaluate the
performance of his company based on narrow and biased parameters, this eliminates that risk. This technique
minimizes cost of capital and gives the company a competitive edge.
References:
1. Hans, V. Basil (December 2016). Role and Responsibilities of Managerial Economists: Empowering
Business through Methodology and Strategy, Nitte Management Review, Vol. 10, Issue 2.
2. Waykole, M. (2013). Role of Managerial Economics in Competitive Edge Dynamic Business DecisionMaking Process. Asia Pacific Journal of Marketing & Management Review, Vol. 2, Issue 1, 136-139.
3. Rylková, Žaneta. (2016). Economics Value added in Managerial Economics. Scientific Papers of the
University of Pardubice. Series D, Faculty of Economics & Administration.
Ravi Kiran Rachha - Wednesday, 24 October 2018, 12:48 AM
Managerial Economics:
Combining the economic theory with managerial practices is nothing but managerial economics in
brief. Managerial economics in decision making in the organizations. The decision making in the
organization depends on forecasting the future demands in the organization. This demand depends
on the future sales estimates, future requirement of human resources, future production costs
involved, estimation of upcoming profits, market position of the company etc. Managerial economics
deals with a kind of calculations that are related to the future demands. So, this includes calculating
the costs related to the production and cost of the output, cost of the raw materials, miscellaneous
cost, time involved etc (Dean & Delhi., 1968). This will also deal with the correct pricing strategy of
the product or service offered by the company. This ultimately related to the revenue of the
organization. Managerial economics involves in managing the profits of the organization. This will
include the future calculation of the profits, uncertainties, risks involved, loss that company should
bare for the calculated risks and will try to maintain the moderate profits. This will also involve in
maintaining the capital investment and expenditure of the company (Petersen, 1999).
When we say that it involves in estimating the future scenarios managerial economics involves
in estimating the number of resources that are required for the organization, any back up need to be
maintained for uncertainties, what is the wastage that is involved, what is the budget that is available
and will try to maintain all the aspects according to the requirement of the organization. This
managerial economics will perform the SWOT analysis of the organization, so that you can estimate
the threats involved and the opportunities to solve those identified threats. By performing this
analysis, you will get to know the market position of the company. This will involve in collecting,
analyzing, processing, testing and validating the required data for the company. Statistical
economics involves some kind of techniques such as regression analysis which will help to forecast
the uncertain situations in the company (Pappas, 1991).
References
Dean, J. (1968). Managerial economics. Prentice-Hall Of India Private Limited; New Delhi.
Petersen, H. C., & Lewis, W. C. (1999). Managerial economics.
Pappas, J. L., & Hirschey, M. (1991). Managerial economics. Harcourt College Pub.
Shanthiveer Nandas
ID:544197
1. Managerial economics
applies economic theory and methods to business and administrative decision making. Managerial
economics prescribes rules for improving managerial decisions. Managerial economics also helps
managers recognize how economic forces affect organizations and describes the economic
consequences of managerial behavior. It links economic concepts with quantitative methods to
develop vital tools for managerial decision making.
Evaluating Choice Alternatives
Managerial economics identifies ways to efficiently achieve goals. For example, suppose a small
business seeks rapid growth to reach a size that permits efficient use of national media advertising.
Managerial economics can be used to identify pricing and production strategies to help meet this
short-run objective quickly and effectively. Similarly, managerial economics provides production and
marketing rules that permit the company to maximize net profits once it has achieved growth or
market share objectives.
2. Importance of managerial economics to managers
Managerial economics has applications in both profit and not-for-profit sectors. For example, an
administrator of a nonprofit hospital strives to provide the best medical care possible given limited
medical staff, equipment, and related resources. Using the tools and concepts of managerial
economics, the administrator can determine the optimal allocation of these limited resources. In
short, managerial economics helps managers arrive at a set of operating rules that aid in the efficient
use of scarce human and capital resources. By following these rules, businesses, nonprofit
organizations, and government agencies are able to meet objectives efficiently.
3. Making the Best Decision
To establish appropriate decision rules, managers must understand the economic environment in
which they operate. For example, a grocery retailer may offer consumers a highly price-sensitive
product, such as milk, at an extremely low markup over cost—say, 1 percent to 2 percent—while
offering less price-sensitive products, such as nonprescription drugs, at markups of as high as 40
percent over cost. Managerial economics describes the logic of this pricing practice with respect to
the goal of profit maximization. Similarly, managerial economics reveals that auto import quotas
reduce the availability of substitutes for domestically produced cars, raise auto prices, and create the
possibility of monopoly profits for domestic manufacturers. It does not explain whether imposing
quotas is good public policy; that is a decision involving broader political considerations. Managerial
economics only describes the predictable economic consequences of such actions.
Managerial economics offers a comprehensive application of economic theory and methodology to
management decision making. It is as relevant to the management of government agencies,
cooperatives, schools, hospitals, museums, and similar not-for-profit institutions as it is to the
management of profit-oriented businesses. Although this text focuses primarily on business
applications, it also includes examples and problems from the government and nonprofit sectors to
illustrate the broad relevance of managerial economics.
References:
Hirschey, M. & Bentzen, E. (2016). Managerial economics. United Kimgdom: Annabel Alnscow.
Gumel, B. (2015). Understanding the Concepts of Managerial Economics.
10.13140/RG.2.1.3505.5441.
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