Know About Importance of Economics in Business Management

Every company, business or industry requires managers to look after the normal functioning of the organization. Perhaps this is why a degree in business management courses is becoming so popular these days.
If you are a person with good leadership qualities and have a knack for solving problems and making important decisions, then you should think of making a career in management. What’s more, the demand for managers is only going to increase in the future.
This is true because the U.S Bureau of Labor Statistics predicts that the serviceof administrative service managers is expected to grow by 8% in between 2014 to 2024.
What is Business Management?

  • According to the National Center for Education Statistics, a major in business “prepares individuals to plan, organize, direct, and control the functions and processes of an organization.
  • This means that you as a manager in a company must oversee the planning and execution of tasks pertaining to the growth of your company or the company that you work in. This may require you to be involved in the marketing, sales or even the finance department.
  • In addition to this, the manager also has to assign each departmentalduty and also see to hiring new people.
  • Some of the popular jobs held by business management graduates include –
  • Human Resources Director.
  • Office Manager.
  • Human Resource Generalist.
  • Retail Store Manager.
  • Operations manager.
  • Executive Assistant.
  • General course topics in the major of business management include business law and ethics, economics, financial management, accounting and human resources management.
  • In simple sense, if you want to increase the sale of the company product and make decisions accordingly –
  • You must know thy customer.
  • Understand the buying trends in the market.
  • What does future hold for you and your company and does it require any change?

Hence, one must definitelyshouldhave a good knowledge of the business plan and economics.
Economics – An Ordealfor Students
Economics has been considered a hard subject to study by most students. The reasons could be:

  • Vast syllabus and limited time.
  • Complex analysis of graphs,theorems
  • One major reason is the use of mathematical tools like integral and differential calculus, matrix algebra, mathematical programming and other computational methods. This is a great put-off for students having poor math skills.

Definition of Economics
To understand the importance of economics, we must first understand what this subject deals with.
Wikipedia defines economics as the social science that describes the factors that determine the production, distribution and consumption of goods and services.So here economics basically guides us how to distribute and properly utilize the available resources amongst the people in the society.
How important is Economics?
Economics being a vast subject in itself and has various areas or disciplines within it. One such discipline is Managerial economics that combines economic theory with managerial practice. This area helps in bridging the gap that occurs between problems of logic and problems of policy.
Speaking in layman terms – if you propose a policy it may not be applicable practically, or if you have an idea that may cause problems in the policy of your company. Normally this would be a two man job which can cause problems due to a communication gap not to mention the delay caused in implementing a decision.
Since managerial positions demand making decisions and planning way into future,economics will be of great help then. You may ask how?

  1. Economics will help provide a logical and experiential framework when faced with a problem. It can be something like – how much should you manufacture a product, will it be accepted in the market, who you will sell it to, etc. Having knowledge of economic concepts will help you come up with answers depending upon the demand and supply of the product, competition, market segmentation

In thecase of various alternatives available, a manager has to see which is the most efficient among them all.

  1. Managerial Economics ensures that the business decisions undertakenshould meet their intended goal. This may include
  • Accessing and utilizing scarce resources and how to make the best out of it.
  • A market research (which is a part of theeconomic theory) will help the company understand what additional features can be provided in their product that can surpass their rival company’s product as well as boost their sales.
  1. Economics also helps assess various other economic issues and problems related to business organizations like–the emergence of new firms, how do they stabilize and expand or fall, thesignificance of organizational structure, relation between the employees and the firm, customers, capital providers, the government, interactions between different firms.
  1. Future of business is affected by uncertainty as changes in business environment or a new government policy can bring about complexity in business decisions. Since there is also no information about the future sales, profits and losses the decision has to be made on the basis of previously available data. Economic models play an important role here in the forecasting too.
  1. Forecasting is of great use when it comes to capital budgeting. It also helps in minimizing the risk factors involved. Accordingly, it then can be decided as to how much cash should be made available and how much invested depending upon the economic feasibility of various production lines.

Looking at the various benefits, future students must take their economics subject seriously as it will give you an edge over others.

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