Coca Cola - Managerial Economics Paper

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Managerial Economics : The Coca-Cola Company

Almost all decisions in a company have an economic consequence. Managerial economics is an integral, relevant part of business management processes that involves cost, revenues and profits, considering not only the monetary costs, but nonmonetary costs as well – monetary, in terms of cash flow in and out and any excess revenue over costs or profit; nonmonetary, in terms of benefit for the consumer – whether its affect psychically is good or bad causing utility or disutility of the product. “Costs can be classified by behavior. Managers who understand how costs behave can predict how costs will change under various alternatives” (Noreen, Garrison and Brewer, 2010, p. 75).
“The profit concept is central to the pursuit of business and is thus central to the study of managerial economics. As discussed previously, profit is defined as the excess of revenues over costs. For not-for-profit and public-sector organizations, an excess of revenues over costs is called a “surplus.” Conversely, if costs exceed revenues, there is a loss, which is known as a “deficit.” Regardless of the terms used, no firm or organization can sustain losses or deficits forever. The decision-making problems facing managers of for-profit firms and not-for-profit organizations are essentially similar, involving revenue enhancement if possible and cost control wherever possible.” (Douglas, 2012, p. 5)
Analysis of the economics within a firm becomes a primary analytical tool used to help managers assess where an organization stands and what direction it should take in the future. For most companies today to efficiently and effectively make sound, managerial decisions, a viable strategy needs to be in place that analyzes, summarizes and evaluates various ways to increase consumer demand and at the same time assess what it takes to produce the product at value to the consumer. The Coca-Cola Company (TCCC) was established in 1886, and is one of the



References: Noreen, E.W., Brewer, P.B., Garrison, R.H. (2011). Managerial Accounting for Managers (2nd Edition). McGraw-Hill, Inc. New York, N.Y. Douglas, E.J. (2012). Managerial Economics (1st ed.). San Diego, CA: Bridgepoint Education. Walsh, H., & Dowding, T. J. (2012). Sustainability and The Coca-Cola Company: The Global Water Crisis and Coca-Cola 's Business Case for Water Stewardship. International Journal Of Business Insights & Transformation, 4106-118. Jacobson, Michael F. (2005). Liquid Candy: How soft-drinks are harming americans’ health. Retrieved from website on January 28, 2013 http://www.cspinet.org/liquidcandy/index.html Form 10K Report(2009-2012) Retrieved from www.coca-colacompany.com on January 26, 2013.

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