ECONofORG 2013 14 Tutorial 1 Wk 3

Economics of Organisations 2013-14 Tutorial 1 (WEEK 3): Some Introductory Observations on Economics and Business

January 2014

Essential Reading

C. Mulhearn and H.R. Vane, Economics for Business, Basingstoke, Palgrave Macmillan, Second Edition, 2012. (henceforth M&V) Chapter 1.
W. Kiechel, ‘The Management Century’, Harvard Business Review, November (2012), pp.63-75.

We consider in this week’s introductory tutorial what economics is and how it applies to business. Currently in N. Ireland, as in the rest of the UK, there is a debate about rebalancing the economy away from public sector and financial services and towards manufacturing and the private sector. This focus on economic structure is crucial. As the text makes clear economics is concerned with ‘What goods and services societies produce, how they produce them and for whom they are produced’ (p.2). In questions 1 to 2 we consider how economics helps understand business and in question 3 we turn our attention to a brief history of management as published in Harvard Business Review (HBR) in 2012. HBR is one of the world’s most prestigious journals devoted to management. The paper is particularly useful as it highlights the ways that economic reasoning has influenced management thinking in the last century. Indeed, as the article suggests management study was to be ‘rooted in economics’ (p.63). Currently, many economic/management graduates are employed as analysts and there is a fair chance if you get a 2:1 or better you could do so after graduation. We will see why economic reasoning is so valued.

M&V

Q1. Look at Table 1.1 (p.2). The Table covers the four categories of what is produced by a given society. Considering the four categories applied to the UK, which goods and services are and are not produced within the UK? Why, as exemplified by healthcare or housing, are how questions linked to for whom questions (pp.4-5)? Why do economists claim expertise in providing positive answers to normative concerns rather than direct expertise on normative issues?

Q2. What are ‘the two complementary parts of modern economics’ described by M&V? (p.20). Why do the two branches both matter for understanding the impact of economics on business? (hint: see M&V pp.23-25)
HBR (2012)

Q3. What are the three phases in management thinking identified in the article? What examples of the long-standing relationship between economics and management does the paper present? To what extent can we view management as a form of “social engineering” for which economists have provided some of the tools? (hint: see p.66; another hint: ‘Google’ some of the following names ‘Peter Drucker’, ‘John Kenneth Galbraith’ and ‘John Maynard Keynes’)

Graham Brownlow