Managerial Economics ()

Author: Li Baoshan
Publisher:
Publish Date: 2004-01-01
Features: Based on the spirit of "taking oneself as the main, drawing from all, integrating and refining to form one's own style," the cases in this book are primarily selected from experience introductions of national-level enterprise management innovation awards in recent years, aiming to provide readers with an easy-to-understand and concise, practical textbook on economic theory. Through learning, readers should establish the concept of "where there is reason, there is a way; where there is no reason, no progress," strive to enhance their awareness of theoretical learning, and embrace new challenges.
III. Basic Content
From the description of the definition of managerial economics and its comparative analysis with microeconomics, we can see that the research content of managerial economics is mainly rational decision-making, i.e., making decisions on economic issues in enterprise management based on economic theory to seek the best solution for achieving predetermined goals. The focus of managerial economics lies in the thought process and analytical methods rather than the specific content of work. Therefore, strengthening the study of economic analytical methods that are based on and yet higher than economic business knowledge will be beneficial in improving the level of rational design in management decision-making, promoting a qualitative transformation of management decisions from subjective experience to scientific and modern approaches.
(1) The Thought Framework of Economic Analysis
In the process of developing a socialist market economy, Chinese enterprises not only face old problems left over from the traditional planned system but also encounter new issues as they step into the market economy. The intertwined old and new problems leave many enterprise leaders at a loss. Based on more than 20 years of enterprise reform practice, one important reason why some enterprises fail to develop quickly or even struggle to survive is that their management executives have not kept pace with the times in terms of concepts, knowledge, and methods. The reform and innovation of management decision-making concepts, knowledge, and methods have been pushed to the forefront by the development of the situation. Faced with a multitude of new and old problems, our management decisions often resort to reductionism, i.e., Bacon's philosophy of scientific research. This method involves breaking down a problem into smaller parts, further dividing them if necessary, until the problem is resolved. While this method can solve some problems, it often overlooks the intricate interconnections between issues, leading to a situation where "pressing down one gourd makes another float up." Therefore, it is essential to adopt a "holistic" perspective, considering and analyzing problems as a whole, i.e., establishing a thought framework for management decision-making based on economic laws or concepts.
1. The Thought Framework Method
Whether it is the abstract theoretical research of microeconomics or the specific management decision-making of managerial economics, profit maximization is the primary goal. A key indicator of profit levels is the capital profit rate. Below, we will use the economic concept of "capital profit rate" combined with the method of rectangular coordinate graphs to explain what the thought framework of economic analysis is and its role in management decision-making.
The capital profit rate reflects the input-output relationship between capital occupation and the results achieved. Although capital does not create profits, profits can only be obtained in the production and operation process through the rational and effective use of capital. The more effectively capital is used, the greater the input-output results in production and operation. Therefore, the capital profit rate comprehensively reflects the level of capital utilization efficiency and the quality of capital management, as well as the requirement to shift from extensive to intensive management.
Herbert Simon, a renowned American economist and the 1978 Nobel laureate in Economics, believed that management is decision-making, and correct decision