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  • MBAPPT Topic 1-1 Introduction

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    Sharanya Ramasamy
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    Economics for business is useful as it helps managers (1) recognize how economic forces affect their organization, (2) describe the economic consequences of their decisions, and (3) develop tools for decision making by linking economics and quantitative methods. It identifies efficient strategies, such as pricing and production strategies, to help managers use scarce resources efficiently. To make good decisions, managers must understand the economic environment of companies, consumers, and the government.

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    Economics for business is useful as it helps managers (1) recognize how economic forces affect their organization, (2) describe the economic consequences of their decisions, and (3) develop tools for decision making by linking economics and quantitative methods. It identifies efficient strategies, such as pricing and production strategies, to help managers use scarce resources efficiently. To make good decisions, managers must understand the economic environment of companies, consumers, and the government.

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    © All Rights Reserved
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    25 views12 pages

    MBAPPT Topic 1-1 Introduction

    Uploaded by

    Sharanya Ramasamy
    Economics for business is useful as it helps managers (1) recognize how economic forces affect their organization, (2) describe the economic consequences of their decisions, and (3) develop tools for decision making by linking economics and quantitative methods. It identifies efficient strategies, such as pricing and production strategies, to help managers use scarce resources efficiently. To make good decisions, managers must understand the economic environment of companies, consumers, and the government.

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    © All Rights Reserved
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    of 12

    1

    INTRODUCTION TO
    ECONOMICS FOR BUSINESS
    Topic1-1

    OEEM5013 Economics for Business


    How is Economics for Business
    2
    Useful?
     Applies economic tools and
    techniques to business and
    administrative decision making.

    OEEM5013
    How is Economics for Business
    3
    Useful?
     Helps managers recognize how
    economic forces affect organization.
     Describes the economic consequences
    of managerial behavior.
     Links economic concepts with
    quantitative methods to develop vital
    tools for managerial decision making.
    OEEM5013
    How is Economics for Business
    4
    Useful?

    OEEM5013
    How is Economics for Business
    5
    Useful?
     Identifies ways to efficiently achieve
    goals.
    e.g. Identifies pricing and production
    strategies.
     In short, help managers arrive at
    operating rules that helps in the
    efficient use of scarce human and
    capital resources.
    OEEM5013
    How is Economics for Business
    6
    Useful?
     To establish appropriate decision rules,
    managers must understand the economic
    environment in which they operate
     Economics for business can be used to
    understand logic of company, consumer,
    and government decisions.

    OEEM5013
    Firm
    7

     Business/economic entities.
     A useful and legal device for
    producing and distributing goods
    and services.

    OEEM5013
    Firm
    8

     Business enterprise represents a series of


    contractual relationship that specify the
    rights and responsibilities of various
    parties
     In the simplest version, primary goal is
    Profit Maximization
     In more complete model, the primary
    goal is long-term expected value
    maximization (i.e present value of
    Expected Future Profits)
    OEEM5013
    The Corporation is a Legal Device
    9

    OEEM5013
    Constraints of the Firm
    10

     Resource scarcity.
     Technology.
     Contractual obligation
     Laws and Regulation

    OEEM5013
    Role of Business in Society
    11

     Why Firms Exist


    Business is useful in satisfying
    consumer wants.
    Business contributes to social welfare

     Social Responsibility of Business


    Serve customers.
    Provide employment opportunities.
    Obey laws and regulations.

    OEEM5013
    Value Maximization is a Complex Process
    12

    OEEM5013

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