Managerial Economist :Role and Responsibilities

Demand decisions:- A proper estimation of possible demand has to be made. This alone will help to decide
on the employment of the resources for their production
Planning decisions :- Once the demand has been ascertained, planning comes next. This is the
implementation of the business strategy of the firm.
Price & Output decisions :- This is important task of manager. The price of the firms product has to be
decided. This will determine how much of the product will be sold in the market.
Advertising & Sales Promotion decisions :- Advertising costs is a major source of expenditure for a firm In
both perfect competition & monopoly adv. Cost can be avoided But monopolistic competition & oligopoly
needs expenditure on advertising.
Long Run Production decisions ;- In long run period, decisions will have be made on the choice of location
of the plant, its size, capacity, the technology used, the factor combinations etc.
Investment decisions :- Adequate investment is required to expand the productive capacity of the firm &
to diversify its production range.
This is the long term planning in which the manager has to decide the followings:
A) What should be the quantity of investment for a given period ?
b) What should be the annual rate of investment at the prevailing rate of interest.?
c) What are those profitable projects & industries where investment could be made?
d) How safe are these projects ? Will they assure both profit & safety to the investor?

Different types of organizational structure:

FUNCTIONAL STRUCTURE: When units and sub-units of activities are created in organization on the basis of
functions, it is known as functional structure. Thus, in any industrial organization, specialized functions like
manufacturing, marketing, finance and personnel constitute as separate units of the organization and Sub-
units
All activities connected with each such function are placed in the same unit. As the volume of activity
increases, sub-units are created at lower levels in each unit and the number of persons under each
manager at various levels gets added. This results in the interrelated positions taking the shape of a
pyramid.
VERTICAL ORGANIZATION STRUCTURE:
It is the most simple and most basic form of organization. It is characterized by units of the enterprise at all
levels of the vertical leadership system from top to bottom, pyramid shape. Vertical organizational
structure means a strict top down or bottom up structure. It is a hierarchically structured organization
where all management activities are controlled by a centralized management staff.
FLAT ORGANIZATION STRUCTURE:
A flat organizational structure has few levels of management between executives and employees. The
rationale behind such organizations is to make employees more productive by giving them greater input in
the decision-making process. The organizational structure is best suited to small companies and
enterprises.

Decision making
Decision making is crucial for running business enterprise which faces a large no. of problems requiring
decisions. Which product be produced , What price to be charged, What quantity of the product to be
produced, What & how much advertisement expenditure to be made to promote the sales, how much
investment expenditure to be incurred are some of the problems which require to be made by managers
Establishing the Objective : The important objective of a private business enterprises is to maximize profits
& other objectives such as maximization of sales , growth of firm etc. But the objective of a public
enterprise is normally welfare of society
Defining the Problem : This second step is important because decision making is after all meant for solution
of the problem. It needs to be investigated what are the causes of the problem of decreasing profits
Identifying possible Alternative Solutions : The next step is to find out alternative solutions to the problem.
This will require considering the variables that have an impact on the problem.
Evaluating Alternative courses of Action : The next step in business decision making is to evaluate the
alternative courses of action. This requires the collection & analysis of the relevant data. Some data will be
available within the various departments of the firm itself, the other may be obtained from the industry &
government.
Implementing the Decision : After the alternative courses of action have been evaluated & optimal course
of action selected, the final step is to implement the decision

Performance appraisal
Performance appraisal refers to the assessment of an employees actual performance, behaviour on jobs,
and his or her potential for future performance.
Appraisal has several objectives but the main purposes are to assess training needs, to effect promotions
and to give pay increases.
Broadly, performance appraisal serves four objective
i) Developmental uses
ii) Administrative uses / decisions
iii) Organizational maintenance/Objectives
iv) Documentation purposes
Process:
Objectives of Appraisal -> Establish Job Expectations(loop end) -> Design an appraisal programme ->
Performance Interview (loop start)-> Use of Appraisal Data

Cost control and cost reduction

Cost control and reduction refers to the efforts business managers make to monitor, evaluate, and trim
expenditures.
These efforts might be part of a formal, company-wide program or might be informal in nature and limited
to a single individual or department
Cost control refers to managements effort to influence the actions of individuals who are responsible for
performing tasks, incurring costs, and generating revenues.
Planning and control:
Cost control is a continuous process that begins with the annual budget.
As the fiscal year progresses, management compares actual results to those projected in the budget and
incorporates into the new plan the lessons learned from its evaluation of current operations.
Control Report:
Control reports are informational reports that tell management about a companys activities. Control
reports are only for internal use. In addition, management also refers to conventional reports such as the
income statement and balance sheet
Cost Cutting for Small Businesses: One method of cost reduction available to small businesses is hiring an
outside analyst or consultant. These individuals may be independent consultants or accountants who
analyze costs as a special service to their clients.
PRODUCT LIFE CYCLE
A products life cycle (PLC) can be divided into several stages characterized by the revenue generated by
the product.
Introduction Stage :
When the product is introduced, sales will be low until customers become aware of the product and its
benefits. It is possible that substantial research and development costs have been incurred in getting the
product to this stage.
Growth Stage : The Growth Stage is characterised by rapid growth in sales and profits. Profits arise due to
an increase in output (economies of scale) and possibly better prices.
Maturity Stage : The maturity stage is the most profitable. This is the time when most profit is earned by
the market as a whole. While sales continue to increase into this stage, they do so at a slower pace.
Because brand awareness is strong, advertising expenditures will be reduced. It is in this stage that
competition is most intense as companies fight to maintain their market share.
Decline Stage :
Eventually sales begin to decline as the market is shrinking and eventually gets saturated, the product
becomes technologically obsolete, or customer tastes change. If the product has developed brand loyalty,
the profitability may be maintained longer.

Law of demand and law of supply

Law of demand
if the price of a commodity falls (rises), the quantity demanded of it rises (falls). Thus, according to the
law of demand, there is inverse relationship in between price and quantity demanded