Responsibilities of Managers

1. Primary responsibilities of managers today are to proactively solve problems: Why is the knowledge of economics so important to these managers?

Answer:

In order to proactively solve the problems for a manager, understanding the basics of concept of economics to measure the product and/or service value is highly important. Products and services add values only when those have scarcity in the market or demand to the people.

To conduct an example, let say Bangladesh which is a developing country. With 6.1% GDP growth rate it is a very small but contains huge population. Considering these factors a manager of KFC may easily assume that there is a good opportunity for KFC to spread all over the country. But the fact is this famous food court is mostly available in the capital city- Dhaka and in some few other contemporary cities. Now if we try to dig into the reason why KFC couldn’t spread as it should be, the only answer will be revealed because of people’s need, want and demand. KFC is doing well in major cities and it is famous in modern society of Bangladesh. But there are still big number of areas where KFC has no demand, means people in those rural places have no need of KFC or any fashionable food court like that because of affordability.

To create a potential customer, manager has to understand the way to increase the value or decrease the availability of the product or service in the market. By informing people the reason they need it or by making them feel it has a great scarcity in the market, a person can be turned into a potential buyer of the product or service.

For example, Forbes’s number one company in the world- Apple Inc. has been very successful to inform people why the need Apple products. For a very long period of time Apple had very least numbers of products (Mac, iPad, iPod, iPhone and related accessories) to offer people. But now are extending their product line by introducing Apple Watch. Now Apple is trying to make people feel that their demand is a very tiny piece of machine which will make their life way easier.

Another example can be taken from a retail grocery shop called Shaws. It is seen that the sells volume increase more when their deals are limited, may be 10 pieces per person. Researches have showed that this kind of offers make customers feel that the products have a scarcity in the market.

At the end, it is determined that a manager, who proactively solves the instance issues, needs to have a core or basic learnings on economics in order to take the rational decision and to get the best outputs for the company from the given inputs.

2. What are some of the fundamental microeconomic concepts used for analysis by managers?

Answer:

There are some very