The Henderson State University Master of Business Administration (MBA) with a concentration in Management online program emphasizes the marriage of management strategy and economics throughout the curriculum. Economics is a social science that seeks to understand production, distribution and consumption, and managerial economics applies this understanding to solve practical problems in business management. The discipline is an interesting combination of art, science, microeconomics, macroeconomics and management principles.
Successful business leaders from middle management to the C-suite share a fundamental understanding of vital economic concepts, including market behavior, supply and demand, competition and how market changes impact individual businesses. As a leader at any level and in any industry, you must be able to assess market demand, think strategically, interpret and apply economic analyses to decision-making and communicate findings and conclusions. Given that businesses run on economic theories, professionals with these capabilities can positively impact a business’s investments and financial performance.
Understanding Management (or Managerial) Economics
Management or managerial economics is both a branch of economics and a discipline that focuses on solving business problems using microeconomic and macroeconomic theories. Managerial economics highlights the application of economic concepts, theories and methodologies to rational managerial decisions. Companies use it for both day-to-day operations and long-term planning.
Moreover, managerial economics is a practical application of economic theory that bridges the gap between logic and policy. In short, the greater your understanding of management economics, the greater likelihood you can solve complex business challenges.
Applications in Business
The methodologies you will learn studying managerial economics will inform many of your business decisions, especially in the following areas (according to a ThesisBusiness article):
Risk analysis: Different models in managerial economics are used to assess risk factors that could jeopardize a project or business. With an understanding of these models and methodologies, a manager or executive can make more informed decisions on whether to move forward.
Investment analysis: Management economics informs leaders in the best allocation of capital resources and helps to determine which projects are most worthwhile, given specific organizational objectives.
Cost and production analysis: Management economics models help assess production costs and efficiency, optimal factor allocation, economies of scale and total revenue to project costs, revenues and profits.
Pricing analysis: The study of managerial economics provides a range of concepts and tools for optimizing pricing for profit and maximizing sales volume. These include price discrimination, price elasticity, replacement cost, market comparison, value comparison, transfer pricing and joint commodity pricing.
Approaches to Managerial Economics
Different business leaders value the concepts of managerial economics differently. Depending on the industry, some may place a higher value on customer experience, while others may emphasize output efficiency. The result is the emergence of various forms of managerial economics. Here are some approaches to consider (as noted by the ThesisBusiness article):
Liberal managerialism: Markets are democratic environments where decisions can be made freely. There are many options available to customers. To meet the needs of customers and industry dynamics, businesses must adapt their strategies. A failure to do so could lead to the company’s collapse.
Normative managerialism: This pragmatic yet subjective approach holds that professionals can make reliable decisions based on prior experiences and practices and, as a result, what should happen given certain factors. It considers dynamics related to business expansion, such as forecasting, supply and demand, product design, marketing and recruiting talent.
Radical managerialism: This approach focuses on devising unconventional, revolutionary solutions, typically after other methods fail. An emphasis on consumer needs and customer satisfaction guides this approach. The ethos is that consumers are the reason for a company’s existence and respond best to rewards and incentives.
Henderson State University’s MBA in Management online program provides training in effective leadership, management and communication techniques that help students motivate people to achieve organizational objectives. In addition, courses in economics, accounting, finance, organizational strategy and information systems teach students how to analyze and use data from various sources to inform more strategic and consistently successful business decisions.
The required concentration course, Economic Analysis for Managerial Decisions, covers applications of micro- and macro-economic theories to managerial decision-making, including demand and cost analysis, theory of the firm, monetary policy and the Federal Reserve System with an emphasis on quantitative economic analysis. Graduates of the program cite the course as being particularly influential in their ability to allocate resources as business leaders.