managerial economics

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ROLE OF MANAGERIAL ECONOMIST : 

ROLE OF MANAGERIAL ECONOMIST By MIRZA SHOAIB IMBA - 143

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A managerial economist can play a very important role by assisting the management in using the increasingly specialized skills and sophisticated techniques which are required to solve the difficult problems of successful decision-making and forward planning. That is why, in business concerns, his importance is being growingly recognized.

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Managerial economist, studies both the internal as well as external factors in order to understand the various nitty-gritties of the market. This is the fundamental & primary role that the manager has to play.

The study of the External Factors:: 

The study of the External Factors: What is the outlook for the national economy? Where are the market and customer opportunities likely to expand or contract most rapidly? What about population shifts and the resultant ups and downs in regional purchasing power ?

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Will overseas markets expand or contract, and how will new foreign government legislation’s affect operation of the overseas plants? Is competition likely to increase or decrease?

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This enables management to chalk out more wisely the scope and direction of their own business plans and to determine the timing of their specific actions. And it is these questions which present some of the areas where a managerial economist can make effective contribution.

Studying Internal factors:: 

Studying Internal factors: Internal factors these are the factors affecting management decision over which management has some control. These factors lie within scope and operation of firm-such as determination of price policy, decision of contraction or expansion of business activities, determination of wage policy.

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What should be the sales budget for next year? What should be the policy regarding inventory next year? What should be the production schedule? What changes should be introduced in pricing policy of enterprise during next year? While atmosphere of business uncertainty creates complications in the process of decision making, economic principles help in minimizing these uncertainty. economist can help by analyzing these economic principles

In a nut shell: 

In a nut shell He studies the economic patterns at macro-level and analysis it’s significance to the specific firm he is working in. He has to consistently examine the probabilities of transforming an ever-changing economic environment into profitable business avenues. He assists the business planning process of a firm. He also carries cost-benefit analysis.

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He assists the management in the decisions pertaining to internal functioning of a firm. In addition, a managerial economist has to analyze changes in macro- economic indicators such as national income, population, business cycles, and their possible effect on the firm’s functioning. He is also involved in advising the management on public relations, foreign exchange, and trade. He guides the firm on the likely impact of changes in monetary and fiscal policy on the firm’s functioning .

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He also makes an economic analysis of the firms in competition. He has to collect economic data and examine all crucial information about the environment in which the firm operates. The most significant function of a managerial economist is to conduct a detailed research on industrial market. He also provides management with economic information such as tax rates, competitor’s price and product, etc. They give their valuable advice to government authorities as well .