The Nature and Scope of Managerial Economics
The Nature and Scope of Managerial Economics
Managerial Economics
• Managerial economics, meaning the application of economic methods in the managerial decisionmaking process, and it is a fundamental part of any business.
This is happening for several reasons
It is becoming more important for managers to make good decisions and to justify them, as their accountability either to management or to shareholders increases.
Number and size of multinationals increases, the costs and benefits at stake in the decision-making process are also increasing. In the age of plentiful data it is more imperative to use quantitative and rationally based methods, rather than ‘intuition’.
The pace of technological development is increasing with the impact of the ‘new economy’. There is an increased need for economic analysis because of the greater uncertainty and the need to evaluate it. Improved technology has also made it possible to develop more sophisticated methods of data analysis involving statistical techniques. Modern computers are adept at ‘number-crunching’, and this is a considerable aid to decision-making that was not available to most firms until recent years.
What is Managerial Economics???
It is the integration of economic principles with business management practices It is essentially applied economics in the field of business management.
Definitions: Managerial Economics
• Integration of Economic theory with business practice for purpose of facilitating decision making and forward planning by management - Spencer & Siegelman
• It is concerned with the application of economic concepts and economics to the problems of formulating rational decision making -Mansfield
Why do Managers need to know Economics?
• Economic theories contribute in building analytical models, which help to recognize the structure of managerial problems
• Economic theories do enhance analytical capabilities of business analyst • They offer clarity to various concepts
Managerial Economics
• Managerial economics, meaning the application of economic methods in the managerial decisionmaking process, and it is a fundamental part of any business.
This is happening for several reasons
It is becoming more important for managers to make good decisions and to justify them, as their accountability either to management or to shareholders increases.
Number and size of multinationals increases, the costs and benefits at stake in the decision-making process are also increasing. In the age of plentiful data it is more imperative to use quantitative and rationally based methods, rather than ‘intuition’.
The pace of technological development is increasing with the impact of the ‘new economy’. There is an increased need for economic analysis because of the greater uncertainty and the need to evaluate it. Improved technology has also made it possible to develop more sophisticated methods of data analysis involving statistical techniques. Modern computers are adept at ‘number-crunching’, and this is a considerable aid to decision-making that was not available to most firms until recent years.
What is Managerial Economics???
It is the integration of economic principles with business management practices It is essentially applied economics in the field of business management.
Definitions: Managerial Economics
• Integration of Economic theory with business practice for purpose of facilitating decision making and forward planning by management - Spencer & Siegelman
• It is concerned with the application of economic concepts and economics to the problems of formulating rational decision making -Mansfield
Why do Managers need to know Economics?
• Economic theories contribute in building analytical models, which help to recognize the structure of managerial problems
• Economic theories do enhance analytical capabilities of business analyst • They offer clarity to various concepts