How Does Microeconomics Contribute to Business Strategy?
Business is no small company; it is actually an organism growing in number like the grass. Like grass it needs nutrition, water and the right amount of sunlight. When these elements are missing or insufficient, the plant will wither and die. A company or business demands daily doses of business news and current affairs to stay on the cutting edge of technology, business strategies, business growth, and marketing. Finance and economics are also vital elements to a thriving company. There are many areas of business where economics play an important role; one such area is in the commercial real estate industry.
Business economics is a discipline of applied economics, which studies the economic, managerial, market-based, and ecological factors faced by corporations. Business economics assesses some factors influencing companies’ business organization, planning, management, growth, and market strategy utilizing economic theory, statistical analysis, and empirical research. Managerial economics deals with problems facing managers and their ability to make informed decisions. In this area of study the focus is on the managerial decision-making process.
The current economic climate has caused a great deal of changes in business economics. Many businesses have been forced to change their business models. Some have run into difficulties because of the recession. For these businesses and organizations, business economics has provided the necessary information and assistance needed to restructure their business model. Other businesses have restructured because they were acquired and sold by larger firms. In all cases, business economics has provided the tools and information necessary to successfully restructure the businesses enterprise.
Entrepreneurs have an opportunity to exercise control over their economic future through business economics. Entrepreneurs have a unique opportunity because with the proper information and strategic planning they can formulate a business plan that can lead to profits and success. These entrepreneurs are in an excellent position to capitalize on the changes taking place in the economy. In addition, the current environment offers enormous business opportunities.
Microeconomics is the study of business or economies at the individual level. Microeconomics is an essential element for any study of business cycles. Most of the leading business magazines and publications include a section devoted to microeconomics.
As businesses grow, they generate more employment and income. The availability of human capital is critical to a growing economy. The size and sophistication of today’s businesses make them potential competitors for most other businesses. Changes in business cycles due to macroeconomics and microeconomics have had profound effects on businesses large and small. Economic theory predicts that the concentration of capital in a small number of productive businesses will increase the overall economic activity of the nation. Concentration of economic power in businesses increases both employment and income.
A successful business system should provide adequate rewards to workers based on their performance. A firm with centralized planning and ample research and development facilities will be able to attract and retain the best workers. These employees will be the cream of the crop in today’s competitive market. A company that realizes that it needs to compete with other businesses operating in the same market will strive to employ intelligent tactics to keep ahead of its competition.
The overall economic picture is affected by state-specific laws. The structure of the laws governing corporate taxation also affects the competitiveness of a business environment. Business owners should carefully consider all the legal ramifications before investing in new ventures. Changes in the tax system and state regulation can have a direct or indirect effect on businesses, affecting their ability to compete in today’s marketplace. Business owners should become as knowledgeable as possible on the laws governing business, both at the local and state level.