ch 1 the nature & scope

PowerPoint Slides Prepared by Robert F. Brooker, Ph.D. Copyright 2004 by South-Western, a division of Thomson Learning. All rights reserved.

Slide *Chapter 1The Nature and Scope of Managerial EconomicsThe Scope of Managerial EconomicsThe Theory of the FirmFunction of ProfitsBusiness EthicsInternatl Framework & Managerial EconomicsAppendix: The Basic of D, S, and Equilibrium Chapter 1Karakteristik & Ruang Lingkup Ekonomi Manajerial


Slide *Management Decision ProblemsEconomic theory Microeconomics MacroeconomicsDecision Sciences Mathematical Economics EconometricsOPTIMAL SOLUTIONS TO MANAGERIAL DECISION PROBLEMSto examine how an organization can achieve its aims or objectives most efficiently.EKONOMI MANAJERIAL Aplikasi dari teori ekonomi dan alat pengambilan keputusan utk memecahkan masalah keputusan manajerial The Nature of Managerial EconomicsSOLUSI OPTIMAL UNTUK MASALAH KEPUTUSAN MANAJERIAL

MANAGERIAL ECONOMICS Application of economic theory and decision science tools to solve managerial decision problems

*MANAGERIAL ECONOMICS(EKONOMI MANEJERIAL)

Prof. DR. H. Nurzaman Bachtiar, MSc, DEA. May 2010

Penerapan teori ilmu ekonomi dan alat-alat analisa dari ilmu pengambilan keputusan (decision science) untuk mengetahui bagaimana suatu organisasi dapat mencapai tujuannya secara lebih efisien.

The application of economic theory and the tools of analysis of decision science to examine how an organization can achieve its aims or objectives most efficiently.

Matematika Ekonomi

Jumlah diminta: Q Dimulai dengan model: Q = f (P, Y, Pc, Ps) Pc, komplementer; Ps, substitusi Untuk meramal permintaan masa depan dari barang tertentu + Ekonometrika (regression analysis) Qd = 400 250 P Qs = - 200 + 500 PEquilibrium: 400 250 P = - 200 + 500 P P = $ 0.80 PowerPoint Slides Prepared by Robert F. Brooker, Ph.D. Copyright 2004 by South-Western, a division of Thomson Learning. All rights reserved.

Slide *Mathematical Economics

Quantity demanded Q Begin with a model: Q = f (P, Y, Pc, Ps) Pc, complementary ; Ps, substitute to forecast the future demand for the commodity + Econometrics (regression analysis) Qd = 400 250 P Qs = - 200 + 500 PEquilibrium: 400 250 P = - 200 + 500 P P = $ 0.80; Q = 200


Slide *200-200SD0,800400PQ


Slide *5 steps in Managerial Decision Making:Establishing the objective of the firm or organizationDefining the problem or obstacles that the firm or organization faces in trying to achieve its objectiveIdentifying the range of possible solutionsSelecting the best solution availableImplementing that decision.pp.6-7See: Case Application 1-15 langkah dalam membuat keputusan manajerial


Slide *Theory of the Firm

A Firm is an organization:Combines and organizes resources for the purpose of producing goods and/or services for sale. Proprietorships, firms owned by one individuals Partnerships = owned by two or more individuals Corporations = owned by stockholdersInternalizes all transactions (contracts): many functions within the firm; Saves on sales tax and avoids price control Reducing transactions costs.Maximizes the wealth or value of the firm.p.8


Slide *Teori PerusahaanA Firm is an organization:Menggabungkan dan mengorganisasikan sumberdaya untuk tujuan memproduksi barang atau jasa untuk dijual. Proprietorships, firms owned by one individuals Partnerships = owned by two or more individuals Corporations = owned by stockholdersMenginternalisasikan berbagai transaksi (contracts): berbagai fungsi dalam perusahaan Menghemat pajak penjualan dan menghindari kontrol harga Pengurangan biaya transaksi.Memaksimumkan kekayaan atau value of the firm.p.8


Slide *Nilai PerusahaanThe present value (PV) of all expected future profits (n)TR = Total Revenue; TC = Total CostsValue of the Firm


Slide *


Slide *DISCOUNTING & COMPOUNDING TABLEDISCOUNT FACTOR i = 8%How much $1.00 at a future date is worth today ?Tahun 1 = 1 : (1 + 0.08) = 0.925 926 Tahun 2 = 1 : (1.08)(1.08) = 1 : (1.1664) = 0.857 339Gittinger, p. 361t = 1, 2, ...., nN = jumlah tahuni = tingkat bunga diskonto (discount factor)

FV = 1

PVYEAR0.925.92610.857.33920.793.8323 0.735.03040.680.58350.630.17060.583.49070.540.26980.500.24990.463.193100.428.883110.397.114120.367.698130.340.461140.315.24215Source : Gitinger (1982 ) p.309


Slide *NET PRESENT VALUE (NPV)

INTERNAL RATE OF RETURN (IRR)Bt = manfaat yang diperoleh tiap tahunCt = biaya yang dikeluarkan tiap tahun

t = 1, 2, ...., nn = jumlah tahuni = tingkat bunga diskonto (discount factor)

B = TR; C = TC


Slide *Alternative Theories The objective of the FirmsSales Maximization p.11After an adequate rate of profit has been earned Strong correlation: executives salaries & sales, not salaries & profitsA Model of Management Utility Maximization: management/agent >< ownership/principalPrincipal-agent problem maximizing managers benefits rather than principals (owners) interest. A satisficing behavior: a satisficing rather than a maximizing value managers p.12 Satisfactory goal in sales, profits, growth, mkt share etc


Slide *Definitions of ProfitBusiness Profit: Total revenue minus the explicit or accounting costs of production.Economic Profit: Total revenue minus the explicit and implicit costs of production. Implicit costs = salary & return could earn from other firms. P.14Opportunity Cost: Implicit value of a resource in its best alternative use.p.14Profit rates differ among firms: steel, textiles, railroad earn low profitscomparing pharmaceutical, office equipment, high tech industries


Slide *The Economic Profit :Revenue econ costs (opportunity costs)A business profits = $ 30,000.-But the entrepreneur could have earned $ 35,000.- by managing another firm and $ 10,000.- by landing out his capital.Economic profits = $30,000.- $ 35,000.- $ 10,000.- = $ 15,000.- ( economic loss)$ 35,000.- = implicit or opportunity costp. 14

Econ Profit = Normal ProfitThe amount of profit required to keep an entrepreneur in particular line of production

A theoretical concept for the economist

In practiced it could not be precisely calculated

Earning more than normal profit = other firms will be attracted into that industryPowerPoint Slides Prepared by Robert F. Brooker, Ph.D. Copyright 2004 by South-Western, a division of Thomson Learning. All rights reserved.

Slide *


Slide *Theories of ProfitRisk-Bearing Theories of Profit above normal profit (i.e. econ profits): petroleum exploration because of the greater risk Frictional Theory of Profit in long run may earn a profit or incur loss = a normal return or zero (economic) profitMonopoly Theory of Profit can continue to earn profits even in the long run because can restrict output & charge higher pricesInnovation Theory of Profit profit is the reward for the introduction of a successful innovation. The patent system is design to protect the profit of successful innovatorManagerial Efficiency Theory of Profit if average firm tends to earn a normal return in the long run firms that are more efficient would earn above normal returns and economic profits.pp.15-16


Slide *Function of ProfitProfit is a signal that guides the allocation of societys resources.High profits in an industry are a signal that buyers want more of what the industry produces.Low (or negative) profits in an industry are a signal that buyers want less of what the industry produces.p.16


Slide *Business Ethics

The code or guidelines that prescribe acceptable behavior in business behavior & business transactions Identifies types of behavior that businesses and their employees should not engage in.Source of guidance that goes beyond enforceable laws.pp.17-19


Slide *The Changing Environment of Managerial EconomicsGlobalization of Economic ActivityGoods and ServicesCapitalTechnologySkilled LaborTechnological ChangeTelecommunications AdvancesThe Internet and the World Wide Web

pp.21-25


Slide *GLOBAL CORPORATIONS IN 2000p.22

CompanyCountryTotal Sales (billions $)Foreign Sales (%)Foreign Assets (%)Foreign Employment (%)NestleSwitzerland49.698.588.397.1British PeroleumUK148.171.376.482.4HondaJapan57.572.955.450.0VolkswagenGermany79.672.656.349.4FiatItaly53.666.955.150.1SonyJapan63.767.244.360.0UnileverNetherl/UK44.358.938.872.9IBMUS88.457.948.853.7


Slide *TEN ECONOMIC PRINCIPLES FOR MANAGERSThe Role of Managers Is to Make DecisionsDecisions Are Always Among AlternativesDecision Alternatives Always Have Costs and BenefitsThe Anticipated Objective of Management Is to Increase the Firms ValueThe Firms Value Is Measured by Its Expected ProfitsThe Firms Sale Revenue Depends on D for Its ProductThe Firm Must Minimize Cost for Each Level of OutputThe Firm Must Develop a Strategy Consistent with Its MarketThe Firms Growth Depends on Rational Investment DecisionsSuccessful Firms Deal Rationally and Ethically With Laws and Regulations T&T p.3-10


Slide *TEN ECONOMIC PRINCIPLES FOR MANAGERSThe Role of Managers Is to Make Decisions. No firm has unlimited resources managers must make decisions how the resources (material, human, financial) are employed. Decisions Are Always Among Alternatives whether to be open or closed; whether to buy new or the old one Choices are always among alternatives. Decision Alternatives Always Have Costs and Benefits The opportunity cost of any choice is measured by the forgone (next best) alternative. Increasing output would be a rational decision if the additional benefit exceeds the additional cost = the marginal or incremental approach to decision making.


Slide *The Anticipated Objective of Management Is to Increase the Firms Value The value of the firm = the profits; The Principal- Agent Problem: the objectives of the shareholders/principal and the managers/agents do not coincide the firm may not be run in a way that maximize its value. The Firms Value Is Measured by Its Expected Profits the present value = discounted measures.

The Firms Sale Revenue Depends on D for Its Product the ability to generate revenue from sales depends on the actions of the buyers source of D = individual consumer.


Slide *The Firm Must Minimize Cost for Each Level of Output minimizing cost: (1) technology of production & (2) input prices.The Firm Must Develop a Strategy Consistent with Its Market the number of sellers & how they behave; few sellers advertising, physical changes in products, improving conditions for customers. The Firms Growth Depends on Rational Investment Decisions capital project analysis: looking a long way into the future (10 or 20 years). Calculating stream of benefits public sector projects: metropolitan commuter railways, dams, stadiums, and irrigation projects risk is an important consideration, the rate of discount applied to future returns: projects riskiness


Slide *Successful Firms Deal Rationally and Ethically With Laws and Regulations managers do not always behave nicely. Monopoly firms have used predatory practices; produced dangerous product, pollution rules of the game: fair trade, antitrust, consumer protection, environmental protection. The message to managers: care must be taken to bahave ethically and to make certain the rules of game are followed. For ignorance is no excuse.

Improved by Nurzaman BachtiarImproved by Nurzaman BachtiarApril 2009Managerial Economics, Chapter 1*Managerial Economics, Chapter 1Improved by Nurzaman BachtiarNurzaman BachtiarApril 2009Managerial Economics 1st Edition*Managerial Economics, Chapter 1Improved by Nurzaman BachtiarImproved by Nurzaman BachtiarApril 2009Managerial Economics, Chapter 1*Managerial Economics, Chapter 1Improved by Nurzaman BachtiarImproved by Nurzaman BachtiarApril 2009Managerial Economics, Chapter 1*Managerial Economics, Chapter 1

ch 1 the nature & scope

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