Business is an industry of production and services that combines the practical aspects of manufacturing and commercial activities. It is the collective endeavour of human beings, to convert raw materials into output, and to transform these output goods into useful goods and services. In order to perform these tasks, human beings need the necessary information and technology and they also need an efficient way of managing human resources, finance and business operations. In short, business is about managing the economy.
Business economics is a discipline in economic science that makes use of statistical methods and theoretical economic theory to study the relationships between firms, products and labour markets and the various factors leading to the evolution of firm-specific structures and relationships with other firms and organisations. A business leader is one who guides the economic activity of a company towards achieving planned objectives. The objective of the company may be different from that of the individual entrepreneur. For example, a businessman may be motivated by achieving higher sales and market share to expand his firm’s market share. A manager may be concerned about increasing the firm’s cash flow, reducing costs or finding ways to compete successfully with other businesses in the same industry.
The discipline of business finances describes the economic theory that managers should use their discretionary revenues to buy necessary assets, such as plant and equipment, and to cut costs, while using other revenues to invest in non-trading assets such as retained earnings, goodwill and short-term liabilities. The concept of managerial economics was introduced by Carl von Mises and John Taylor in the 1900s. It is based on the principle that prices set by the supply and demand forces among organisations will result in a successful outcome for each enterprise. In addition, this theory also postulates that there are certain characteristics of efficient markets which should be observed to ensure the optimal performance of firms.
One important aspect of managerial economics is technical economic theory. This school of thought suggests that firms should use technology to improve their overall performance. However, this can only be effective if the business managers are properly educated and understand how technology influences their market strategy, their firm structure and their customers. The basic economic concepts involved in business problems such as money, credit and risk can be explained in detail through the lenses of technical economics. These theories are essential in assisting decision-makers to determine how to best utilise the existing resources to improve their business performance.
The third economic theory that a great business leader incorporates into his or her economic policy is flexibility. Flexibility refers to the ability of a firm or an organisation to respond to changes in its environment. The great business leaders of the past were able to adjust their organisations to meet the fluctuating economic conditions of the time. Today, the same skill is required to successfully run a company or organisation.
Economic analysis courses help you become a better business leader by teaching you how to incorporate economic policy into your business structure. You will learn how to implement policies that create more opportunities for your customers, employees and suppliers. You will also gain knowledge of how to maximise the efficiency of the production process and how to keep your business cost-effective.
Business and managerial economics provide a solid background in economic policy and decision making. Students in business and managerial economics programs are taught how to develop business decision making processes that are effective at generating profits. They are taught how to construct market strategies that meet customer requirements. They are taught how to implement these strategies in the face of external and internal constraints.
Economics courses are useful for students who plan to enter business administration, trade or even politics. The economic principles that guide business decisions are important in all these fields. For example, free trade and protectionism are often considered to be economically inefficient ways of promoting economic development. By studying economics, students will be better prepared to tackle the issues that affect international trade and business decisions.