Need of the hour -26
Economics deals with the basic and best realities of life, economy and money. The four beautiful areas of wealth, welfare, scarcity and growth throw light on various aspects in an economy. I am trying to draw a parallel between economics and we being an economist in our daily life.
Let us make it clear to ourselves that economics is not just a subject which can be dealt by an expert in the field. With little involvement, every one of us needs to understand what the role of economics in our daily life. In fact, we deal with economics, economic thinking in every area of our life. Economics is the scarce use of available resources. It is the efficient usage of every resource available in the world. We can also state that it is the best utilization of resources, and find the alternate usage of resources for optimum benefit to the people in the world. Economics is an innate science with which all of us live up in this world.
All of us need to understand that diligence, efficiency and alternate usage of resources is the best way to act as a Managerial Economist in our lives.
Each one of us has to think like a Business Economist. It is becoming increasingly important to think like a BE as resource production and best utilization of the same is very important. One has a significant role to play in assisting the decision-making and forward planning by using specialized skills and techniques. In advanced countries, large companies employ Business Economist or Managerial Economist to assist the management.
The factors which influence the business over a period may lie within the firm or outside the firm. Generally, these factors are divided into two categories, viz., external factors and internal factors. External factors are beyond the control of the firm and these factors constitute Business Environment. The internal factors are within the control of the firm’s management and these are called Business Operations.
The same external and internal factors play a vital role in the success and failure of each of us even in our real life. It is like, we need to keep our physical and mental well being to be successful in our lives. Internal factors are taken care with good food habits, exercise and external factors are taken care if we indulge in good habits, time management and healthy friendships.
For example, a firm is free to take decision on matters of investment, employment, production of commodities, their pricing, etc. But all these decisions are taken within the framework of a particular business environment, the Government’s economic policy and the extent of competition faced by the firm, etc.
It is the primary duty of Business Economists to make extensive study of the business environment and the external factors affecting the firm’s interest, viz., general prices, national income and output, volume of trade etc. These factors have to be thoroughly analyzed and answers to the following questions have to be found out:
The Business Economist can help the management in making decisions regarding the internal business operations by studying and analyzing the following:
- What should be the production schedule and inventory policies for the coming year?
- What should be the appropriate price and wage policies?
- How much cash will be available in the coming months and how should it be invested?
- What should be a reasonable sales and profit budget for the coming year?
Besides making the above studies, the Business Economist should have to perform specific functions like (a) Sales forecasting, (b) Market research, (c) Analysis of competing firms, (d) Pricing problems, (e) Production programmes, (f) Investment analysis and environmental forecasting, etc.
It is the duty of the Business Economist to provide the necessary economic intelligence, besides statistical information to the management for effecting planning. The Business Economist has to keep in mind the main objectives of the firm and take decisions on the basis of these objectives.
Same way, we need to act as a Business Economist in our daily life too. Only then we will commit ourselves to remain ethically grounded to remain an ethical economist in this life.