Business economy is a branch in applied economics that makes use of statistical and economic theories to study the relationships between firms and the variables that affect their production, structure and share of market resources. It is theoretically built around the assumption that economic activity is the result of the interactions among economic agents that are directed toward the allocation of scarce resources in the market. The study of business economy is part of the broad area of economics and specifically of economic development. It makes use of advanced statistical techniques like mathematical analysis, micro analysis, and ecological or economic models.
Business economy is directly associated with macro-economic analysis and hence it has an economic perspective. This branch of economics makes use of techniques like time cycle analysis, economic depreciation, and monetary policy to trace the path of economic fluctuations and to forecast the path of the economy. The main area of business-people economic analysis is retailing and wholesale industries. This is because of the interdependence of these two industries with any economy and retailing with all other industries. As a business owner you must be aware of the business cycle and know your competition and how you can counter it if you want to increase the volume of sales.
Economic polices of businesses must be analyzed based on the current business practices and management style as well as the government’s policies. As a manager or business owner you should be able to understand the impact of business practices on the economy. As a matter of fact, most of the economic aspects are addressed by economic planning, strategic and tactical decision making, productivity management, profit making, and spending and financing management.
Strategic and Tactical economic policy addresses the most critical issues affecting the organization like the balance of capital expenditure and cash flow, budget preparation and evaluation, and long-term strategy. On the other hand, Micro-economic theory deals with economic policies that deal with particular firms on a micro level. The macro-economic perspective addresses the broader aspects of business policies. The accounting economics courses are usually offered by colleges and universities that specialize in business analysis, including managers’ economics.
In order to be a great business leader or manager you should be familiar with business analysis, economics, finance, marketing, and human resources. You should also have an ability to communicate well with people. Most importantly, you should have sound financial management skills and business sense. As a whole it is very important for you to learn about and analyze the economic policies that affect your business.
Since there are many types of business economies, the specialization of business analysis, managerial economics is not limited to any specific type of business. For instance, if you own a manufacturing company you may need specialized business analysis, manufacturing economics and manufacturing optimization economics. However, all these cannot be generalized. The reason is because all companies do not follow the same business practice. Therefore, a certain business corporation may adopt a certain business practice while other companies may choose to adopt a different practice. Therefore, specialization is required.
As a matter of fact, it has been seen that small businesses are highly sustainable. They tend to create a balance between short-term savings, and long-term savings, as a result of their decisions regarding their long-term viability. This is in contrast to large corporations who spend a lot of their corporate capital on short-term savings but do not focus on long-term profitability.
Many businesspeople consider the economic policy of large or medium-sized companies to be inefficient. They often quote examples such as Walmart or McDonald’s, which they say are examples of large companies that failed because of bad economic policy. However, business executives can quote cases such as Microsoft, where the company made strategic decisions that led to its success. Therefore, businesspeople are reminded to always quote examples of successful businesses, and compare the practices of large corporations to their own.