The commercial world keeps extending my horizons the more I engage its topics. You may have heard in passing about economics and while you are trying to figure out the fundamentals someone utters the phrase, “Managerial economics.” This should never bring confusion to your innocent mind as it simply refers to applying economics to decision-making, thats the main purpose for types of managerial economics. This category of economics practicalises abstract theory into managerial practice.
After entering into a world where theories are thrown in your face, it becomes a call for joy having to look at things from practical perspectives. We tend to understand concepts more. Optimal results are a priority in managerial economics and as such the phenomenon is goal-oriented.
Types of Managerial Economics
There is a lot of prescriptive action taken in managerial economics. There are three different types of managerial economics, which we will interact with for the purposes of this article. You will reslise that the word manager is usually associated with efficiency and achievement of goals by meeting set target. Put together as a name for a science (managerial economics) we can only anticipate these characteristics in the types of managerial economics.
In this type of managerial economics, there is less regulation as far as decision making is concerned. A free and democratic market characterises liberal management. There is also prevalence of a wider range of options for customers such that competition is the order of the day. Adaptation of strategies by to the needs of customers is the lifeblood of any company.
Because customers can easily go where delivery is satisfactory, if a company fails to adapt, there is a great chance it will collapse.
Picture yourself as a business owner in such an environment. It is actually difficult if you are an emerging business owner. Certain customer needs are not favourable to small businesses yet competition ranges from fellow small businesses to large corporation. What do you do?
I would say figure out a problem in the market and start by solving it.
Administrations approach issues and decide upon them through a pragmatic approach. The normative view derives its decision from natural day today life experiences. Decisions around product design, forecasting, marketing, supply and demand research, hiring, among other aspects contributing to the growth of the business.
This approach is whereby administration drops all traditional solutions when they fail and employ revolutionary measures. Change is inevitable, yet not so easy to accept but it is important for growth. My little experience as a young African professional has shown me how sometimes older guys hold on to old ways of doing things even when the dead wood is useless.
This has created so many disfunctional economies in the continent.
However, all hope is not lost because ww have an energetic generation of young entrepreneurs coming up. Radical managerialism will bear more fruit in Africa than any other place, but it needs to be handled with caution.
The beauty of radical managerialism lies in the fact that customer needs and satisfaction take centre stage. Such an approach intends to secure one of the most important stakeholders of any business. Consumers are the reason business exists in the first place.
They are the lifeblood of commerce. Leaders in the public and private sector have the responsibility to make decisions around resource allocation. This is the main concern of manageri economica and applications of economic theory principles and methodologies to decision are used in cases of risk and uncertainty.
As listed by buse.ac.zw Attainment of these five objevtive is the the desired outcome:
- “1. Use economic concepts, models and analytical techniques of economics to study and analyze business decisions or operations and types of decisions managers face, thereby
- “2. Getting a better understanding of the business environment and the making of quality decisions.”
- “3. Applies economic tools and techniques to business and administrative decision making.”
- “4. To use tools and techniques of economic analysis to solve managerial problems.”
- “5. Link traditional economics with decision sciences to develop vital tools for managerial decision making.”
The three types of managerial economics are all effective in different ways but all bring results. Let us look at the key takeawas from each one of them.
In liberal managerialism, adaptation is key because of the free decision making kind of environment that exists. There is a lot of competition and if firms fail to adapt a complete collapse of the business is possible. The normative approach responds to natural trends and makes decisions based on that. Administration undergoes less frustration because everything is evident, hence no need to cook up things from scratch.
You will realise that time is saved when people respond to natural trends and usually a natural course of action follows.
The disadvantage now is when speed is initiated, a lot of gaps are left because people tend to rush through processes thinking they already know the steps. This reluctancy created by normative managerialism can again plunge a company into bankruptcy.
New is good with radical managerialism.
This among types of managerial economics approach thrives on discarding dead wood. There is a n employment of new techniques and solutions to problems. Despite the fact that moving with times is vital, radicalism does not always end well. There is need to preserve some fundamentals of old concepts. After all they have been tried and tested.
Optimal results are a priority in managerial economics and as such the phenomenon is goal-oriented. There is a lot of prescriptive action taken in managerial economics. This category of economics practicalises abstract theory into managerial practice. After entering into a world where theories are thrown in your face, it becomes a call for joy having to look at things from practical perspectives. We tend to understand concepts more.
A practical approach to any phenomena is always effective and exciting for the person to which the task has been handed. I hope with the way we have not oy undressed the types of managerial economics, but also defined most things around it, my fellow young entrepreneurs out there will be able to use this tool in their endeavours.