7 Reasons Why Real Estate Is the Worst Investment
Owning a house is a dream for most people around the world. This is the reason why investment in housing is disproportionately higher amongst the middle class. The middle class seldom invests in stock markets. On the other hand, almost every middle-class salaried person in America and even across the globe owns real estate. Also, […]
Five Reasons Why Real Estate Increases in Value
Real estate is probably the single largest investments in the portfolio of every family across the globe. Most middle class families invest the maximum amount of money in their residential homes. In many parts of the world, this belief has been reinforced by the fact that houses have exponentially risen in value. Stories of 100 […]
Impact of Political Stability on Businesses and Working Professionals
The Perils of Political Instability and Uncertainty If there is one thing that business leaders and entrepreneurs hate that is instability in the macro environment. Businesses operate according to forecasts and scenarios about the future that comprise surprises as well as certainties. However, as much as businesses factor in uncertainty, the one thing that wants […]
Is Less Government the Answer in Market Economies or the Other Way Around ?
The Debate between Neoliberalism and Socialism An ongoing debate in the United States and in Europe is whether there must be less government or more government. This means that there are proponents of the government extending its sphere of influence into all sectors and opponents of this view who see this as socialism creeping into […]
What is Shadow Labor ?
Shadow work is not an official term that has been coined by mainstream economists. Instead, it is a term used to loosely refer to services that humans have to provide for each other without being paid. For all of economic history, shadow work has not found any mention in economic history. This is because it […]
For much of the 20th century, if you had wanted to study business management, you probably would have enrolled in a course in economics. This was because of the prevailing wisdom at that time that businesses are run according to economic concepts and hence, any aspiring manager would have to study economics as a means of actualizing their aspirations.
However, in the 1960s and 1970s, there was an emerging trend of offering business management programs by leading universities in the world as by then, the field of business management had spawned several sub disciplines like Marketing, HRM, Operations Management, and Finance.
Indeed, it can be said that these sub-disciplines grew out of the basic economics courses that we mentioned earlier. In the current context, many aspiring managers study economics as a compulsory course in the first year of their b-school education, managerial economics, and business economics in other basic courses.
Indeed, managerial economics and business economics are now taught in b-schools distinct from pure economics because the application of economics to business management is what these courses are all about. Whereas the basic economics course introduces the student to micro and macroeconomic concepts, managerial economics and business economics are geared towards equipping the student with the economic concepts necessary to run firms.
This module on business economics is organized around the four themes as described below:
Considering the fact that there is a separate module on managerial economics, this module deals with the economic issues faced by the firms at a macro level instead of the micro decisions that are taken by managers.
Further, given the fact that entrepreneurship is central to the setting up of new businesses, there is a need to discuss how entrepreneurs make economic decisions. The next aspect of business economics is how consumers make purchasing decisions.
Indeed, the motivations and the decision making process that underlies consumer behavior is an aspect that can be studied through the lens of economics.
The point here is that whereas marketing and other branches of management deal with these aspects according to behavioral and other theories, business economics focuses on how consumer behavior is influenced by economic aspects.
At the macro level, the firms must know how to survive and thrive in intense competition and hence the study of this decision making process helps us gain insights into how firms can earn more profits even during recessionary times.
As mentioned in the bulleted point list, the key decisions confronting the firm right from inception to operation to growth is themes that business economics can explore and which are useful for entrepreneurs and business leaders.
With increasing globalization, the fact that firms now operate in a global arena means that they must have the knowledge of how macroeconomic trends affect microeconomic decisions and hence, one of the topics that business economics studies is the interplay between international trade, exchange rates, and globalization.
As students of management, many of you would have intimate knowledge of these aspects. However, for many professionals well into their careers, sometimes they would need to be refreshed about these concepts. Hence, this module is designed in a manner that would help students engage with the concepts and for professionals to get a primer of these concepts.
Finally, the field of business economics owes a lot to the contributions of Alfred Marshall, Joseph Schumpeter, and Alfred Chandler. Hence, we would be covering their theories in detail in this module. With this brief overview, we welcome the readers to this module on business economics.
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