Chapter 1: Introduction To Managerial Economics: Deshiree Briz Angeles Marie Therese Añonuevo

RO D U C T I ON TO
CHAPTER 1: INT
MANAGERIA L E C O N O M I C S
DESHIREE BRIZ ANGELES
RIE THERESE A ÑONU EV O
MA
ECONOMICS
• STUDY OF THE PRODUCTION,
DISTRIBUTION, AND
CONSUMPTION OF GOODS AND
SERVICES
• STUDY OF CHOICE RELATED TO
THE ALLOCATION OF SCARCE
RESOURCES
MANAGERIAL ECONOMICS
• SUBFIELD OF ECONOMICS THAT PLACES SPECIAL EMPHASIS ON THE
CHOICE ASPECT IN THE STUDY OF CHOICE RELATED TO THE ALLOCATION OF
SCARCE RESOURCES.
• ITS PURPOSE IS TO PROVIDE ECONOMIC TERMINOLOGY AND REASONING
FOR THE IMPROVEMENT OF MANAGERIAL DECISIONS.
CONCEPTUAL APPROACHES IN THE
STUDY OF ECONOMICS
MICROECONOMICS MACROECONOMICS
• STUDIES PHENOMENA RELATED TO • STUDIES PHENOMENA AT AN
GOODS AND SERVICES FROM THE AGGREGATE LEVEL LIKE THE TOTAL
PERSPECTIVE OF INDIVIDUAL CONSUMPTION AND PRODUCTION
DECISION-MAKING ENTITIES SUCH OF A REGION
AS HOUSEHOLDS
• PROVIDES MEASURES AND
• BEHAVIOR OF ATOMIC ENTITIES IN THEORIES TO UNDERSTAND THE
AN ECONOMY OVERALL SYSTEMATIC BEHAVIOR
OF AN ECONOMY
1.1 WHY MA N A G ER I A L
OM IC S I S R ELE V AN T F O R
ECON
MANAGERS
MANAGERIAL ECONOMICS
• DEALS WITH THE DEVELOPMENT OF ECONOMIC THEORY OF THE FIRM AND
HELP THE MANAGERS TO TAKE DECISION SMOOTHLY WITH REGARD TO
SALES AND PROFITS
• IT HELP THE MANAGERS TO ANALYZE RISK AND PRODUCTION TO INCREASE
THE EFFICIENCY OF THE PRODUCTION PROCESS
MANAGEMENT
• IT MEANS ONE INDIVIDUAL OR A SMALL GROUP OF KEY PEOPLE WHO MAKE
THE SIGNIFICANT DECIONS AND KEEP THE POLICY MAKING POWER AND
FUNCTION AS AN ABSOLUTE POWER OVER AN ORGANIZATION
• MANAGEMENT PROCESS ALSO INCLUDES PLANNING, STAFFING,
ORGANIZING, DIRECTING AND CONTROLLING
• PROCESS WHERE MANAGERS AFTER TAKING INTO CONSIDERATION
CERTAIN FACTORS COME TO THE FINAL DECISION
IMPORTANCE OF MANAGEMENT
• IT HELPS IN ACHIEVING GROUP GOALS
IT ARRANGES THE FACTORS OF PRODUCTION, ASSEMBLES AND ORGANIZES
THE RESOURCES, INTEGRATES THE RESOURCES IN EFFECTIVE MANNER TO
ACHIEVE GOALS
• OPTIMUM UTILIZATION OF RESOURCES
MANAGEMENT PROVIDES MAXIMUM UTILIZATION OF SCARCE RESOURCES
BY SELECTING ITS BEST POSSIBLE ALTERNATE USE IN
• REDUCES COSTS
IT GETS MAXIMUM RESULTS THROUGH MINIMUM INPUT BY PROPER
PLANNING AND BY USING MINIMUM INPUT & GETTING MAXIMUM OUTPUT
•ESTABLISHES SOUND ORGANIZATION
ESTABLISHES EFFECTIVE AUTHORITY & RESPONSIBILITY RELATIONSHIP
•ESTABLISHES EQUILIBRIUM
ENABLES THE ORGANIZATION TO SURVIVE IN CHANGING ENVIRONMENT
• ESSENTIALS FOR PROSPERITY OF SOCIETY
EFFICIENT MANAGEMENT LEADS TO BETTER ECONOMICAL PRODUCTION
WHICH HELPS IN TURN TO INCREASE THE WELFARE OF PEOPLE
W H E N IS M A N A G E M E N T
I D ER E D S U C C ES S F U L?
CONS
• THE MANAGEMENT IS SAID TO BE
SUCCESSFUL WHEN IT MAKES INDUSTRY
EFFICIENT AND EFFICIENCY IS MEASURED
CONCRETELY IN TERMS OF QUALITY AND
QUANTITY OF PRODUCTS PRODUCED WITH
THE MINIMUM EFFORTS AT LEAST
POSSIBLE COST
TYPES OF MANAGEMENT SKILLS
• TECHNICAL SKILLS
ABILITY AND THE KNOWLEDGE TO USE A VARIETY OF TECHNIQUES TO ACHIEVE THEIR
OBJECTIVES
• CONCEPTUAL SKILLS
ABILITY FOR ABSTRACT THINKING AND FORMULATING IDEAS
• HUMAN OR INTERPERSONAL SKILLS
ABILITY TO INTERACT, WORK OR RELATE EFFECTIVELY WITH PEOPLE
EXAMPLES OF MANAGERIAL SKILLS
• PLANNING
ABILITY TO ORGANIZE ACTIVITIES IN LINE WITH SET GUIDELINES WHILE STILL REMAINING WITHIN
THE LIMITS OF THE AVAILABLE RESOURCES SUCH AS TIME, MONEY, AND LABOR
• COMMUNICATION
IT CAN DETERMINE HOW WELL INFORMATION IS SHARED THROUGHOUT A TEAM, ENSURING THAT
THE GROUP ACTS AS A UNIFIED WORKFORCE
• DECISION-MAKING
A GOOD MANAGER NEEDS TO POSSESS GREAT DECISION-MAKING SKILLS, AS IT OFTEN DICTATES
HIS/HER SUCCESS IN ACHIEVING ORGANIZATIONAL OBJECTIVES
• DELEGATION
IT INVOLVES THE PROCESS OF ALLOWING YOUR TASKS OR THOSE OF YOUR EMPLOYEES TO
BE RE-ASSIGNED OR RE-ALLOCATED TO OTHER EMPLOYEES DEPENDING ON CURRENT
WORKLOADS
• PROBLEM-SOLVING
INVOLVES IDENTIFYING A CERTAIN PROBLEM OR SITUATION AND THEN FINDING THE BEST
WAY TO HANDLE THE PROBLEM AND GET THE BEST SOLUTION
• MOTIVATING
IT HELPS BRING FORTH A DESIRED BEHAVIOR OR RESPONSE FROM THE EMPLOYEES OR
CERTAIN STAKEHOLDERS
N A GE R I A L E C O N O M I C S I S
1.2 M A
LE T O D I F F E RE N T T Y P E S O F
APPLI CA B
OR G A N IZ A T I O N S
MANAGERIAL ECONOMICS IS RELEVANT TO THE
FOLLOWING:
“BUSINESS” OR “FIRM”
• ORGANIZATION PROVIDING GOOD AND SERVICES
• IT IS THE ACTIVITY OF MAKING ONE’S LIVING OR MAKING MONEY BY
PRODUCING OR BUYING AND SELLING GOODS
• BUSINESS AN ORGANIZATIONAL ENTITY AND LEGAL ENTITY MADE UP OF AN
ASSOCIATION OF PEOPLE
• TERMS THAT CONNOTE A FOR-PROFIT ORGANIZATION
CLASSIFICATIONS OF BUSINESS ORGANIZATIONS
FOR PROFIT ORGANIZATIONS FOR NON-PROFIT ORGANIZATIONS
• EXIST TO MAKE PROFIT • EXIST TO SERVE SOCIETY
• OWNERS KEEP THE PROFIT • HAVE RELIGIOUS, EDUCATIONAL,WELFARE OR
CHARITABLE PURPOSES
• INCOME FROM SALES
• A VITAL PART OF A FREE-MARKET • INCOME FROM DONATIONS, SUBSCRIPTIONS
AND GRANTS
ECONOMY
• EXAMPLES ARE SHOP,RESTAURANT AND • EXAMPLES ARE HOSPITALS, UNIVERSITIES,

CHURCHES AND FOUNDATJONS
SUPERMARKET
MAJOR FORMS OF BUSINESS
ORGANIZATIONS
• SINGLE OR SOLE PROPRIETORSHIP
• PARTNERSHIPS
• CORPORATION
A N K Y OU A N D G OD BL E S S !
TH

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Chapter 1: Introduction To Managerial Economics: Deshiree Briz Angeles Marie Therese Añonuevo

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RO D U C T I ON TO

• EXAMPLES ARE SHOP,RESTAURANT AND • EXAMPLES ARE HOSPITALS, UNIVERSITIES,

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