A managerial economist has been regarded as one of the most important to the executives of the company. He is an expert in decision-making and forward planning and also in the world economic environment. He is specialized in basic economic theory and with this knowledge, he solves the problems of business management.
The primary functions of a business economist are making decisions, and organizing and processing information. These functions can take the following two general forms:
- Specific Decisions: There are several specific decisions that managers might have to take, e.g., whether or not to close down a branch of a firm that has recently been unprofitable; whether or not a store should stay open more hours a day; or whether to pay for outside computing or copying services rather than install an in house computer or copier. After conducting a survey of British industry, Alexander and Kemp came to the conclusion that the managerial economist undertakes the following specific functions: (i) Producing scheduling, (ii) Demand forecasting, (iii) Market research, (iv) Economic analysis of the industry, (v) Investment appraisal, (vi) Security management analysis, (vii) Advice on foreign exchange management, (viii) Advice on trade, (ix) Pricing and the related decisions, and (x) Analyzing and forecasting environmental factors. All of these including other business decisions require the use of basic economics.
- General Tasks: Economic theory helps decision-makers to know what information is necessary to make an intelligent decision to find the correct solution to a problem and to learn how to process and use that information. After obtaining the desired information or as much information as is economically feasible to obtain, the manager must analyze this information and use it in correspondence with the theoretical and statistical tools available to make the best decision possible under the circumstances.
