As we all aware that business economics is the application of economic theory and methodology to business. Business economics is a field where it uses economic theory & quantitative methods to analyze business enterprises. Business involves decision making. Decision making means the process of selecting one out of two or more alternative courses of action. Business Economics is concern with economic issues & problems related to business organization, business management, and business strategy.
“What is happening” rather than “What will happen” is the key of Business Economics.
Business Economics means:-
1. “The addition of economic theory with business practice for the purpose of facilitating decision-making and future planning with the help of management.”
2. “Business Economics is the science, arts, and commerce which directs how scare resources to manage cost (price) effectively and to maximize profit of the business”.
The Scope of business economics is so wide that it holds almost all the problems & areas of the manager & company. It deals with demand analysis & forecasting, resource allocation, production function, cost analysis, inventory management, advertisement, price system, capital budgeting, etc.
Scope of business economics is discussed as under:
Demand analysis and forecasting provide the essential basis for business planning and occupies a strategic place in business economics.
Lets discussed how Business Economist plays an Important Role to take Business decisions:-
The business economist is expected to play a positive & Constructive role in modern business set up. A business is essentially involved in the process of decision making as well as forward planning. Business decision is an integral part of management. Management and decision making are to be considered as inseparable. Business decision is the selection of a particular course of action, based on some criteria, from two or more possible alternatives.
Role of Business Economist:
Also, it’s his duty to design various course of action to maintain & improve the existing systems.
Business economist helps in planning, production & marketing planning, employing the latest organizational model & develop management techniques to maximize output & minimize operating cost of the firm.
Business economist must be in touch with fast changing technological development and suggest the most suitable information technology to be adopted by the company.
1. Business Environment (External Factors)
2. Business Operations (Internal Factors)
Business Environment helps to study the all factors and forces and beyond the control of individual business enterprises and its management which will help to maintained the business as stable. Business operation helps to study those factors and forces, which operate, well within the company and influence its operations which can minimize the cost of the business.
Now, after discussing above aspects every business organization needs to appoint a Business Economist who have all the knowledge and fundamentals of the economics to run a business smoothly.