1

IMPORTANCE AND RELEVANCE OF MANAGERIAL ECONOMICS

As a manager in our company, I can relate to the video as it discussed the everyday life of

a manager in making decision. Especially when it comes to the allocation of resources, pricing

strategies, forecasting demand, and assessing risk. This is what I am doing right now in our

company. Being a manager, the management expect me to allocate the resources of the company

when it comes to budgeting. I am expected to know the trend and movement of our daily

operations, monthly expense movement, and what month should we point for any unexpected

increase of cash outlay. In determining price strategies, this is crucial for us to have a

competitive price compared to our competitors, we are studying the market’s want and the value

for money of our customers. This might have an impact the demand for our product when we

priced it much higher. When it comes to forecasting, management wants to know the months the

sales will come up and what month is the most profitable. We conduct forecasting to boost our

promotions as the demand for our products spikes. We also analyze the market trends on what

products are saleable here in the Philippines. As our products are made from Malaysia, we see to

it that it will be marketable for Filipino’s taste, especially the coffees that we are selling. Another

is we analyze where should we penetrate the market and build a new branch or to cater new

service centers nationwide. Lastly, we assess risk in every decision we make, and we study the

impact of our decision for the better standing of the company.

Managerial economics can have a great impact for our everyday life in our company as

we need to have a sound decision. As discussed in the video, and as we are in the finance

department, we:
 2

1. Study the supply and demand for our pricing of the products we sell.

2. Cost analysis to identify our cost drivers and allocate our resources in every branch we

have nationwide.

3. To have a competitive price, and the economics can have an impact to us to understand

our consumer behavior and most especially, our competitors.

4. Us our market is in perfect competition; managerial economics can play a vital role for us

to place ourselves in a good position in the market.

5. Managerial economics are useful for us to assess the risks of our every decision and what

can we expect from it and how we can react if there would be a negative outcome.

As a manager in our company, I am expected to bring sound decision as it may impact

our revenues and costs. We are now targeting on how to further decrease our operating costs

and to boost our monthly revenues to have a higher net profit compared to our last fiscal

year.