managerial economics assignment help australia

managerial economics assignment help australia

Managerial Economics: Enhancing Business Performance

1. Introduction to Managerial Economics

The teaching of the subject “Managerial Economics” to 310 management students of the 2008-12 batch took place through an interactive coaching schedule. The data needed for the descriptive study were collected both before and after coaching the students. The data were presented in table form and plotted in the form of diagrams to gain insight into the extent of the managerially important subject matter imparted to them. This demonstration paper aims at informing the supervisor based on the feedback. It will be a good motivating factor for the institutional administration which can decide based on the students’ perception on the teaching of the subject. Managerial economics provides a variety of ways to manage business performance effectively. By analyzing the various quantitative and qualitative aspects of businesses, it helps in efficient decision making. The business environment is characterized by an escalating pace of change. Therefore, business owners need to understand the implications of these changes in the macro business environment. Managerial economics can be a logical means to understand, predict and, ultimately, deal with these changes.

The accelerating pace of change is evident in all business activities. This calls for proactive rather than passive classroom teaching. By doing so, a meeting point, in terms of students’ future, is provided to facilitate a sustained learning process. The efficacy of the programme is judged based on the student’s perception of the proposed teaching methods. More emphasis should be given to developing analytical problem-solving skills and in imparting knowledge to enhance the decision-making capabilities of business executives. Higher education should necessarily focus on creating a skill base which, in turn, provides the competitive edge to students in the job market.

2. Understanding Demand and Supply

The supply represents the various quantities of a product which sellers are able and willing to sell according to a given price, time, and income, assuming that the state of nature and the state of technology contribute to these quantities. The supply comes from the producers who bring the goods and services to the market and sell them. Whether the product is sold depends on various factors like price, the specification of the product, change in the level of production, etc. In the diagram given below, only when the price is equal to OP units will be supplied by the producer. The drawing is given for a single determinant, which is the price. It represents the supply with reference to price. The distance of the price OP represents the various quantities which are supplied by the producers or suppliers. This shows the direct relationship between the price and quantity supplied of the product. But the supply schedule or curves, as one moves along the curve, will be an increase in the total units of the commodity that comes to the market per unit of time. It can be referred to as an expansion of supply. If the price increases, the quantity supplied decreases and the situation can be referred to as a contraction of supply. For the definition of supply expansion, it is the movement known as an extension of supply. The contraction side is also the movement known as constricting the supply.

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The demand can be defined as the various quantities of a product which consumers are able and willing to buy according to a given time and income. If the price of a product is 20 crores and increases to 40 crores, the demand goes up and the extent of increase in demand due to change in price is called the QDP15P. In the diagram given below, OX is quantity demanded and OY at TL is the price. Only when the price is Tl, OX units will be demanded by the consumers. The diagram given is indicative of a single determinate assumption and shows that there is a direct relationship between price and quantity demanded of a commodity. This means that if the price of a commodity falls, resulting in an increase in aggregate quantity demanded and vice versa. Therefore, we can say that this is a market demand curve or market demand schedule. The slope of the demand curve is the price. In other words, the rate at which the decrease in price will lead to an increase in the quantity demanded of the commodity per unit of time. For any product or service whose price elastic demand is equal to one, a 10% decrease in price will give a 10% increase in quantity demanded.

3. Cost Analysis and Decision Making

It might be observed that there exists an even broader class of economic decisions that are made by firms. These decisions relate only to costs. The basic types of cost-related decisions at the heart of a business enterprise can be organized into some broad categories. One part of the organization is concerned with the purchases of intermediate inputs such as natural resources, intermediate goods (including semi-fabricated intermediate and capital goods), and services. Another part of the organization is devoted to financially organizing the firm and interacting with the macroeconomy to raise equity or debt; or, to manage tax liability. In addition to operating on these two strategic issues, these economizing activities involve short-term operational challenges and short-term management of macroeconomic uncertainties. However, no matter how these business functions are organized and performed, the success or failure of a firm is measured only in value-added terms. Irrespective of the inputs used in the production process, the value of the output is always determined by the performance of the activities in the final category. Results, therefore, are determined to be successful only when value added exceeds the sum of all other costs.

Difficult decisions that require trade-offs between various costs are made in many firms, including publicly owned ones. It is generally felt that the basic goal of a publicly owned business is to maximize shareholder wealth. Managers of businesses applying well-established methodologies will typically attempt to achieve this goal. Supporters of these methodologies feel that elements of them are derived from contributions to positive economic knowledge. They also feel that developments represent credible advances over what was previously understood about decision making and economic performance. Even those who may be uncomfortable with the philosophy that the basic goal of a business should be to maximize shareholder wealth may use these tools. This is for one or more of several reasons. First, there may be no practical alternative. Second, these business practices are generally consistent with the assumptions of a competitive model. The outcomes of a competitive model are often deemed to be results that are desirable. Consequently, the tools, and the broad objectives to which they may be applied, often carry great respect in policy discussions. Third, these firms may use these tools in part because their use can help provide assistance in reaching the broad objective.

4. Market Structures and Strategic Planning

One of the principal functions of business strategy is to uniquely position a firm in its competitive environment and thereby create sustainable value for the stakeholders. Firms that are positioned by being unique, based on the source of superior and sustainable value to buyers. Successful firms first focus the conscious attention of managers to set their business strategy to maximize customer value and foster differentiation. Then, the value, opportunities, and constraints must be fully integrated. Industry conditions feed back into strategy regarding critical scope, firm-wide differentiation, and long-term profit potential. Aggressive marketing messages among hard-hit consumers suggest that the firm no longer trumps other opportunities that buyers may perceive as being real. Market share is the sphere of marketing analysis and not one of those critical firm-wide decisions. Other things being equal, being more attractive to customers is beneficial. While market demand conditions affect marketing decisions at the margin, good marketing strays from the principles of business economics by focusing primarily on short-run tactical and not long-run strategic issues. Instead, a customer value-or firm differentiation-based perspective of the firm gently facilitates the strategy, tactics, and organizational policies required to compete effectively in the industry and promote long-run growth in firm performance.

If Tommy Hilfiger raises the price policy, customer advisers believe that Abercrombie & Fitch, Gap, and J.Crew are acceptable substitutions. Consequently, Tommy Hilfiger’s demand is relatively elastic. If Abercrombie & Fitch is the significant residual demand and price policy for the industry, the demand for Smart cyclicality. Industry performance throughout economic contractions would be more resilient. Pricing degrees of freedom generally are proportionate to the market share held by sellers: the larger the seller, the greater the pricing of freedom with all other things being equal. Managers can adjust the price policy opportunistically only when the board overpricing will not erode the market share and will not be enough to offset volume losses from the price increases. Managerial decisions should underpin a firm’s customer value and firm differentiation strategies.

In a competitive firm, the firm is a “price-taker” and the market plays a “price-setter” role. If Kroger tries to charge a higher price for a pack of gum, some buyers will either do without gum or purchase their gum elsewhere. Kroger’s price above the equilibrium price will severely reduce the supermarket’s gum demand. Managers can have a significant price-setting power in either monopolistic competitive or oligopoly markets. Market demand is frequently relatively inelastic in a monopolistic competitive firm or service industry. From the seller’s perspective, a relatively inelastic demand provides an opportunity for price increases.

Managers need to accurately assess market prospects and competitive conditions. Industries are classified into four basic market structures: i) monopoly, ii) oligopoly, iii) monopolistic competition, and iv) perfect competition. A duopoly is a two-firm market. Most industries in a market economy are oligopolies. PepsiCo and Coca-Cola control almost 70% of the US soft-drink market. Monopoly and oligopoly markets have two or more sellers or firms.

5. Managerial Economics for Business Growth

It is purported that companies can base the growth via mechanism, which is to become colossal today, concurrently within the labor relations, management, and production and product cost increases, general inflation.

A full utilization of the private sector’s potentiality is complimentary and necessary, too, to add the domestic economic growth and stabilization-principle construction in the free world. Unfortunately, negative supply interactions have been reported at the margin between the futures and further prices on specific agricultural products.

In search of a closely related sort, the NBER is being developed price and cost data that direct these issues. Both services regime and products, therefore, present the major potential implicating for exciting total input and cost bounds. Managerial economics formulations applicable to the managerial-economics policy prescripts of recommendations outlined earlier.

The microeconomic export with respect to total factor productivity is highly correlated across more United States industries. Generally speaking, business enterprises maintain power, i.e. higher is the fuller economic activity, and output, ranks them to some extent on prices, and to the extent that prices are increased of a cost level which is superior to rival preserving the support of their profit media.

Furthermore, total productivity in the new industries, with relatively rapid growth, has been higher than that in the traditional organizational structure existent before the 1950s. Total factor productivity declined slightly in only five industries: agriculture, mining, utilities, retail trade, and healthcare services, though the behavior tended neither to be persistent over time nor significant in amount.

As resources used for business expansions have increased, the total productivity factor, as well as other resource inputs, have shown further growth. Indeed, important business inputs provided an average much of output, by definition (output divided by the total input factor), which, in turn, has been increased considerably during the past decade.