MANAGERIAL ECONOMICS IN THE 21ST CENTURY
Managerial economics refers to the use of economic concepts and the analysis of problems economically to come up with rational and operational managerial decisions. At times, managerial economics is referred to business economics as it is a branch of economics that uses micro economic analysis to come up with business decisions. Some of the areas that call for managerial decisions include funds assessment, business area selection, and product choice, optimum out determination, price determination, and sales promotion among others. It is worth nothing that majority of business decisions employ managerial economics way of decision making, however, it is commonly applied in analysis of risks, products, prices, and capital budgeting. In risk analysis, it’s used in risk quantifying to come up with a decision. In production analysis, it supports in production efficiency analysis. In price analysis, it supports in various price decisions such as transfer of pricing and in capital budgetary it supports in firm’s decision on capital.
Just like the center of gravity as far as economics is concern diversity has been significant and most of the current managerial practices will be no more in the 21st century’s second decade. The global economy is rapidly changing with several people aiming at working in places that offers the desired meaning of working.It is worth nothing that failure to sense the economic trend leads to enormous economic down fall in two centuries.It is essential to have new management practices that will consider varied stakeholders and knowledge by people at the various levels in the organization. In addition, it should put in place new management system that encourages participation of all parties in decision making. The incorporation of new management practices in the 21th century will not only benefit profit making organizations, but also nonprofit organizations.
Majority of managerial practices today, are those, which Taylor imitated at the beginning of the 20th century. Then, it was necessary for the workers to leave their minds at the gate and only come to work with their hands. This practiceis just like communism common of traditional commands and mechanisms of control of budgetary process. This is a situation, which assumes that few people can work better than many, that is way, in most cases few people engage in planning then execution is done by the other majority. Currently, people are working towards meaningful working experience as no one wants to be a cog.