Managerial Economics

3 Key excerpts on "Managerial Economics"

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  eBook - PDF

  Leading and Managing Nonprofit Organizations

  • Chester Alexis C. Buama(Author)
  • 2019(Publication Date)
  • Society Publishing

    (Publisher)

  Basically, Managerial Economics is the science which deals with how to use uncommon or rare resources and future planning in the management. Managerial Economics spreads over economic theory and various methods to business and decision made by top management executives or managers. Managerial Economics has application in both profit and non-profit sectors. Managerial Economics offers a wide-ranging action of putting economic theory into the operation and various significant methods which help in management decision making. Managerial economy states that a decision is said to be coherent and sound if given the primary goal of the organization to maximize the profit. The nonprofit organization (NPO) is defined as one of the common or non-specific organizational forms which work collaboratively with profit organizations as well as governmental bodies. The importance of the sector of NPO in enhancing sustainable development especially in developing as well as developed countries, where states and markets often fail is commonly recognized in the works on organizational behavior and development. 4.1. INTRODUCTION Managerial Economics can be defined as the integration of economic theory with business practices. Economic theory and business practices will help the management in making decisions and future planning. Managerial Economics supports and helps to manage the staff such as managers and decision makers of an organization. Managerial Economics helps the manager to find an optimum solution for the obstacles which are being faced in the activities of an organization. Managerial Economics makes use of economic theory and concepts. Managerial Economics help various levels of managers in planning or strategizing reasonable managerial decisions. The fundamental key of Managerial Economics is the microeconomic theory of the organization. Managerial Economics can be used to reduce the gap between the economics in theory and economics in practice.

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  eBook - PDF

  The SAGE Handbook of Organization Studies

  • Stewart R Clegg, Cynthia Hardy, Tom Lawrence, Walter R Nord, Stewart R Clegg, Cynthia Hardy, Tom Lawrence, Walter R Nord(Authors)
  • 2006(Publication Date)
  • SAGE Publications Ltd

    (Publisher)

  The field of organizational economics can be defined in a variety of ways. Some have argued that organiza-tional economics is distinguished from other types of organizational analysis by its reliance on equilibrium analysis, assumptions of profit maximizing managers and the use of abstract assumptions and models. In fact, some organizational economists do engage in these kinds of analyses and build models of organiza-tions using these kinds of tools. However, not all orga-nizational economists apply all the tools, all the time. For example, both evolutionary economic theory (Nelson and Winter 1982) and Austrian economics (Jacobson 1992) are explicitly non-equilibrium in nature. Models of risk shifting (Arrow 1985), decision-making (March and Simon 1958) and transaction economics (Williamson 1975) do not assume perfect rationality. Agency theory (Jensen and Meckling 1976) and theories of tacit collusion (Tirole 1989) and strategic alliances (Kogut 1988) do not assume that all managers, all the time, adopt profit maximiz-ing objectives in their decision-making. Finally, a great deal of organizational economics is neither very mathematical nor highly technical, although ques-tions of how abstract a model is are usually matters of taste. Indeed, the diversity of perspectives subsumed under organizational economics seem to have only two things in common in their approach to organi-zational analysis. The first is an abiding interest in organizations or firms (as economists usually call organizations). Unlike most economists, who are interested in the structure, functioning and implica-tions of markets, organizational economists are interested in the structure, functioning and implica-tions of firms. Secondly, most organizational economists have an unflagging interest in the relationship between competition and organizations.

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  eBook - ePub

  Social and Business Enterprises (RLE: Organizations)

  An Introduction to Organisational Economics

  • Jonathan Boswell(Author)
  • 2013(Publication Date)
  • Routledge

    (Publisher)

  Two further points need to be made about goals. First, there is the patent fact that organisations have multiple goals. Economists tend to cope with this problem in several ways. For example, in quantitative models one of an organisation's goals is regarded as dominant, with the others introduced as constraints. But in a more fundamental sense economic analysis is often precisely about the degree of consistency or ‘trade-off’ which may exist between different and often widely contrasted organisational goals. Second, the economic theory of decision making is not restricted to the dizzy heights of strategy and of dominant or overriding goals. It is also concerned with the microscopic logic of small decisions. The problem may be something as down-to-earth as appointing a foreman, scheduling meals on wheels for old people or deciding on suppliers of envelopes. Provided the decision means that scarce resources will move one way rather than another, however infinitesimally, the theory applies. But with many decisions the initial difficulty is one of correctly defining the problem. It is only when the problem has been clearly defined that an appropriate goal can be identified. That is why, in so many books on management loosely adhering to the economic approach, the first stage in decision making is specified as ‘problem formulation’. This emphasis is perfectly correct.

  EVALUATION OF COSTS AND BENEFITS

  The third axiom of the economic theory of decision making, that the decision maker seeks to evaluate all relevant costs and benefits, poses great difficulties, both intellectual and practical. For what is the meaning of these slippery words ‘cost’ and ‘benefit’? What costs and benefits are ‘relevant’? Just those that can be quantified, or others as well? Just the costs and benefits affecting the organisation, or those affecting other people too? How do we actually perform the ‘careful evaluations’, particularly where the items we are concerned with appear to be measurable in principle but hardly in practice, measurable but not commensurable, or not even measurable at all?

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