Economics and Managerial Economics
Economics may be defined as a branch of knowledge dealing with allocation of scarce resources among competing ends.
Managerial Economics may be defined as application of eco for problem solving at corporate level.
Factors affecting Managerial decision
Often only pure logic does not contribute to decision making
Human behavioral considerations often influences a manager into compromising or moderation a decision which would otherwise have made eco sense
Eg. Impact of a decision on an employee’s morale or motivation, which is outside eco consideration, is taken into account
Many entrepreneurs prefer to do biz on a modest scale fearing that expansion would hamper their lifestyle and increase their stress levels despite the fact clear prospects of increased growth and better earnings await them.
A final decision is therefore taken by consideration both eco factors and human elements.
It s not uncommon for sentiments and emotions to play a part in very imp decisions even if that means a slight erosion in profits as long as there is a long term advantage.
In the present day biz scenario, the influence of tech is too persuasive (pervasive) to be ignored,
An assessment of tech alternatives, tech measures of competitors and new emerging tech are critical factors in a managerial decision on planning and resource allocation within the enterprise.
Even short term productions and marketing decisions are bound to take into account appropriate tech inputs.
However, beware that only technological options can provide a basis for decision making - it has to be essentially interplay of economic and tech factors.
In fact, economic considerations often decide the fate of technological applications.
Environmental pressures operating on the enterprise affect managerial decisions when they are primarily economic in nature.
Economic sense may call for price rise but political and social