Economics plays an important role in the society. So, you need to pursue the degree which would make sure to build up a career. Economics is known as the science that would deal with the study of resource scarcity that occurs between societies as well as public and private administration.
Economics is the subject that deals with the production, distribution and the reuse of the products. Maintaining the stability of the country depends on the economy of the society. The growth of the economy will help to measure the stability of country.
What is the importance of economics in business?
- It is important to gain knowledge on the human needs, reuse, and production and make better use of resources.
- It offers the information related to exchange of goods and services that can occur between individuals and organizations.
- Allow in setting of the prices related to goods and services
- It offers complete knowledge on the techniques and strategies that would prevent the crisis.
- Make adjustment in the political and financial imbalances.
Through economics it is possible to generate the systems and techniques that can easily enhance the social welfare. The economics techniques are skilfully used to understand the economic conditions that can actually act in favour or against the current situation. So, it is vital to analyse the situation and make sure to earn benefit and handle the problem.
The role of economics in business decision
The business manager actually emphasizes on the fact that the information would be gathered which will help in the decision making process and also enables in forward planning. Decision making plays an important role in management. Both management and decision making is inseparable.
Economics is known to be the science that would encompasses completely. In case you want to earn expertise in the field, it is essential to obtain a university degree and the student will understand the economy moves and how to generate the social conditions.
Decision making in business is actually an intellectual process and it takes time in handling different managerial activities such as organizing, directing, planning, staffing and monitoring.
It is known to be the process where the executive needs to consider different situations and then reach a conclusion on how to deal with the situation successfully. It is said to be the continuous process which would enable the management to take up better decision.
The microeconomics forces help in better decision-making process
Through the proven process it is possible to take valuable decision in the business:
- Understanding the goal:
This may appear to be quite simple. It is essential to understand the situation and gain clarity on it. The main objective is to buy new equipment and then discover what is more economical. The goal should be global and ensure that you replace the current equipment.
- Collect significant information:
It is the step that would turn out to be simple. You would be tempted by the sources. The online information would help in times of pressure of any small business owners. The corporate material is actually designed to impress. The valuable sources of information will help in taking economic decision. The proper guidance is needed when it comes to major economic decision making.
- Identify the alternatives:
It is vital to collect information and come up with the alternatives which are actually the thing that you want. The amount of information would gather is overwhelming. It is not easy to keep things straight. You can organize the necessary information and make a list of choices and respective consequences.
- Make the economic decision:
It is always advised to strike for the right one or you will not be able to reach the fundamental goal. The decision making process would demand time and effort as proper analysis is demanded.
The business owners would take the decision wisely so that value and profitability is obtained. The decision making abilities require proper problem solving skills and experience so that you can easily handle the situation.
Now, you need to understand why it is necessary to study economics?
Economics is said to be the boring subject and it is usually taken in the wrong sense. Economics is an elaborative topic that turns out to be essential in every field. It is known to be an approach that can lend to different fields from microeconomics and econometrics, game theory etc.
There are different job opportunities for economics graduates. You can certainly think of getting the good job through an economic degree and there is high chances of enjoying different other programs. With the help of the degree you can surely work in varied fields ranging from finance to banking.
Make use of the economics knowledge at a very personal level
While pursuing the degree, you will be able to grasp lots of skills and knowledge that can further be implemented in the job as well as personal life. The economic would help to take better decision after making investment and then obtaining mortgages.
Role of the managerial economists
Today, you can grasp the economics subject and think of building up a career in the field. It is possible to become the managerial economists that would enable the management to make proper use of the analytical skills and understand the well-developed techniques which will ultimately help in dealing with the complex issues.
It is really vital to take proper decision and make future planning through thorough analysis of the situation.
The managerial economist plays an important role:
- He is responsible for understanding the economic patterns at the macro level and then perform proper analysis of the specific firm that he is associated with
- He is concerned about performing the business planning process of the organization
- The managerial economist has the potential to prepare the speeches for the top management and also help in managing the cost-benefit analysis.
- The managerial economist can analysis the changes that occurs in the macroeconomic level such as business cycles, national income and population.
While discussing about the managerial economists role, you will also get to know that he is responsible for constantly examining the ever-changing economic environment which would act in favour of the business and ensure to gain revenues. He can also offer the management with valuable information related to competitor’s pricing, tax rates and the products which will allow taking valuable decision to government.
The economists would make proper analysis of the firm to stay in the competition. He will take the responsibility of collecting economic data and then examine the information related to environment in which the firm would operate.
Now, you might wonder what is the application of economics, when it comes to business management. There are different aspects of economic theory when considering the business practice:
- Reconciling of the traditional concepts of the economics
While discussing about the economic theory, you will to understand the technique of analysis. This will help in making some of the important assumptions and then draw conclusions on basis of such assumptions. This would include the behaviour of the firm as well.
The assumption will finally not give you the satisfactory explanation. This is when you need to reconcile the theoretical principles which are actually based on the assumptions. Along with the business practice and then enhance the extension as well as reformulate the economic theory.
- Understanding the economic relationship
This actually includes the measurement of different types of elasticity of the demand such as the price elasticity, cross-elasticity, promotional elasticity, income elasticity etc.
The estimate would make you understand the economic relationships for the purpose of the forecasting.
- Understanding the relevant economic quantities
When we talk about the economic quantities it includes demand, costs, pricing, profit and capital that are predicted in the numerical terms along with the probabilities. The business manager sometimes need to work in an unfavourable condition and had to management the uncertainty of environment.
The future is unforeseen and it is important to make the right prediction and assumption for better decision making. You need to emphasize on the forward planning which is possible enough.
- Making use of the economic quantities while making decision
This would include the formulation of the business policies that is primarily necessary for the establishing of the business plans. This is the nature of the forecasting and also indicates the probability of the different outcomes such as the loss and gain that may occur for the strategies available.
The business manager can take the decision while following the strategy adopted and understand the probability of each outcome. The management would be highly vigilant and would be able to cope up with the pressure.
Is it necessary to understand managerial economics?
The managerial economics would deal with the cost estimate that can be of great help to the management for better decision making process. It is necessary for the manager to understand the production analysis and also determine the economic cost along with aim to make proper profit planning and cost control.
The managerial economics actually play a very important role in the business organization. It appears to be highly effective for the management in the best decision making process and the forward planning.
The main objective of the business is to earn profits and it is the only way to achieve success in the business. The managerial economics would cover different aspects of the firm such as profit policies and the ways to adopt for the profit planning.
Break even analysis is also known as the cost volume profit analysis which helps in assisting the profit planning as well as cost control methods that allows in maximizing the profit of the business.
While making any internal operation it is important to have a thorough understanding of the market as well as have a grasp on the analytical tools which will finally help you to persist in the competition. At the same time you should understand the market behaviour that would help in proper prediction of the current situation of the firm.
The managerial economics is not only associated with the profit generation of the firm, but can also enable you to take proper decision when it comes to non-profit institutes.
This helps in optimum use of the scare resources in the organization that would help in achieving the goals in the most effective manner. The managerial economics can surely be of great use when it comes to price analysis, capital budgeting, determination of demand, production analysis etc.
It also allows in analysing of the information related to business environment so that the business can be managed properly. It is essential to understand the systematic course of the business by emphasizing on the possible forecasts.
The managerial economics would ultimately contribute in the growth of business and make sure to have an effective solution when there is any problem due to the change in the economic scenario in the feasible business opportunities.
Understand the nature of the managerial economics
Managers need to study the managerial economics that can give the insight of the business so that you can possibly conquer the market and understand the functioning of the organization. The manager makes use of the principles for the economic behaviour in the most reasonable manner that would allow in gaining the result in smooth functioning of the organization.
The managerial economics is said to be the most important field which can be compared to the science and also helps in fulfilling the criteria of being the science in different ways. It is known as the systematic tool of knowledge that offers methodical observation.
The managerial economics is known as the science that enables in decision making along with the scarcity of resources along with the other alternatives. It is known as the body of knowledge that would help in understanding the internal as well as external environment for the decision making.
The economists would necessarily require the art of making use of the capability, knowledge and the proper understanding of the subject which would enable in achieving the organizational objective. The economist should adopt the art of putting in the practice of the theoretical knowledge. The managerial decision is made keeping in mind the econometrics and the economic theory in mind.
Meagan Adams is an experienced and talented tutor who has the knowledge on the subject and make sure to deliver the accurate information to students. The unique teaching style helps student to have complete grasp on the subject and gain more grades.