Macro- and Micro- Economics
Economicsstudies the way people deal with a fact of life: resources are limited, but our demand for them is certainly not. Resources may be material things such as food, housing and heating. However there are such resources we cannot touch, such as time and space. Thus if a person spends more time working, he/she makes more money, but will have less time to relax. Every decision people make is a trade-off and economists the reasons for the trade-offs and the effects the decisions have on people`s lives and society.
The two most general fields in economics are microeconomics and macroeconomics.
Microeconomics is a branch ofeconomics that studies how individuals, households, and firms make decisions to allocate limited resources, typically in markets where goods or services are being bought and sold. Microeconomics deals with people and private businesses and how their behavior determines prices and quantities in specific markets. Microeconomics focuses on supply and demand and other forces that determine price levels for specific companies in specific industry sectors. For example, microeconomics would look at how a specific company could maximize its production and capacity so it could lower prices and, better compete in its industry.
Macroeconomics is the field of economics that studies the behavior of the economy as a whole and not just on specific companies, but entire industries and economies. This looks at economy-wide phenomena such as Gross National Product(GDP) and how it is affected by changes in unemployment, national income, rate of growth, and price levels. Gross National Product (GDP) refers to the market value of all final goods and services produced within a country in a given period. For example, macroeconomics would look at how an increase/decrease in net exports would affect a nation's capital account or how GDP would be affected by unemployment rate. Macroeconomic models and their forecasts are used by both governments and large corporations to assist in the development and evaluation of economic policy and business strategy.
Microeconomics and macroeconomics are closely related. For example, increased inflation (macro effect) would cause the price of raw materials to increase for companies and in turn affect the end product's price charged to the public (micro effect).Both micro- and macroeconomics provide fundamental tools for any finance professional and should be studied together in order to fully understand how companies operate and earn revenues and thus, how an entire economy is managed and sustained
- What does economics study?
- How can you explain the phrase “Every decision people make is a trade-off”?
- What are the two most general fields in economics?
- What does microeconomics deal with?
- What is microeconomics primarily focused on?
- What are the subjects of macroeconomics study?
- What does the term GDP mean?
- Why are macroeconomic models and forecasts used by governments and large corporations?
- Why are microeconomics and macroeconomics actually interdependent and why do they complement one another?
- Why should microeconomics and macroeconomics be studied together?
Management is the process undertaken by one or more persons to coordinate the activities of other persons to achieve high-quality results. We believe the job of managing is one of the most exciting and personally rewarding positions a person can possibly hold. The manager's job is critically important because managers make a difference in how our society functions and in the standard of living we enjoy. Each organization can be represented as a three-story structure. Each story corresponds to one of the three general levels of management: top managers, middle managers, and first-line managers. At the basic levelof this pyramid there are operating employees.
Top managers are upper-level executives who guide and control the overall activities of the organization. They are President, Vice President, Chief Executive Officer.
Middle managers develop tactical plans, policies, and standard operating procedures and they coordinate and supervise the activities of first-line managers.
A first-line manager is a manager who coordinates and supervises the activities of operating employees.
Operating employees are qualified and non-qualified persons working for the organization. For their labor or services they get salaries or wages. They represent the work force of the organization. Managers at every level of the organization do planning. Through their plans, managers outline what the organization must do to be successful.
An organizational structure can also be divided more or less horizontally into areas of management. The most common areas are finance, operations, marketing, human resources, and administration. Also may include research and development or risk management.
The horizontal classification can be displayed the following way: a financial manager, a marketing manager, an operating manager, a human resources manager, an administrative manager.
A financial manager is primarily responsible for the organization's financial resources. An operating manager creates and manages the systems that convert resources into goods and services. A marketing manager is responsible for the exchange of products between the organization and its customers or clients. A human resources manager is in charge of the organization's human resources programs. An administrative manager provides overall administrative leadership. An administrative manager coordinates the activities of specialized managers in all these areas of the company.
Managers must carefully diagnose situations; use their abilities, skills, and knowledge to weigh all facts. Managers can't give “maybe” answers. They usually have to say yes or no and then defend their response. A good manager has to have such categories of skills as: conceptual, decision making, analytic, administrative, communicational, interpersonal and technical. For example, decision making skills are the ability of a manager to choose the best course of actions of two or more alternatives.
A manager must decide the following:
- What objectives and goals must be reached?
- What strategy must be implemented?
- What resources must be used and how must they be distributed?
- What kind of control is needed?
Conceptual skills are very important for top managers because they help them plan “super goals”. The job of managing and working with people is difficult. But few careers are as stimulating as of a manager.
1. What are the levels of management?
2. What are the common titles associated with top management?
3. Who is at the bottom of management?
4. What are the most common areas of management?
5. What is a financial manager responsible for?
6. What is an operating manager traditionally equated with and what are the changes in recent years?
7. What is a marketing manager responsible for?
8. What does an administrative manager coordinate?
9. What categories of skills do you know?
10. Explain the types of skills that managers need to achieve their goals?
Managers need information in order to introduce products and services that create value in the mind of the customers. Market research allows companies to learn more about past, current and potential customers, including their specific likes and dislikes. Various methods of market research are used to find out information about markets, target markets and their needs, competitors, market trends, customer satisfaction with products and services, etc.
Consumer research is an essential element of marketing research. It is used to discover behavior patterns (how people act) and customer needs.
There are two main sources of consumer research - primaryandsecondary.
Primary or field research involves talking to people and finding out what they think about a market, a product, a business sector, etc. There are many ways to conduct primary research:
1. Interviews, which can be telephone, face-to-face, or over the Internet.
2. Mystery shopping – when a person poses as a consumer and checks the level of service and hygiene in restaurant, hotel or shop;
3. Focus groups made up from a number of selected respondents;
4. Product tests are often completed as part of the 'test' marketing process. Products are displayed in a mall of shopping center. Observers will contemplate how the product is handled, how the packing is read, how much time the consumer spends with the product, and so on; 5. Omnibus Studies: a market research institute carries out for several companies at the same time. This research is far cheaper, and commits less time and effort for a company than conducting its own research.
Secondary or desk research is relatively cheap, and can be conducted quite quickly. This research is an analysis of the information you can find easily without leaving your desk. Examples include the internet, books, newspapers, magazines and government statistics, published company accounts, business libraries.
Consumer research can be either qualitative or quantitative.
In qualitative research small group discussions or in-depth interviews with consumers are used to understand a problem better. The qualitative method investigates the why and how of decision making, not just what, where, when.
Quantitative research involves collecting or gathering large samples of data followed by statistical analysis. This type of research deals in numbers, logic and the objective, while qualitative research deals in words, images and the subjective.
Qualitative research is usually better for exploring, understanding, and uncovering, while quantitative research is generally better for confirming and clarifying.
Motivation research investigates the psychological reasons why individuals buy particular goods or why they respond to specific advertisements. The three major motivational research techniques are observation, focus groups, and depth interviews. Generally, observation must be supplemented by focus groups or depth interviews to fully understand why consumers are doing what they do. The focus group in the hands of a skilled moderator can be a valuable motivational research technique. To reach its full motivational potential, the group interview must be largely nondirective in style. The heart and soul of motivational research is the depth interview, a lengthy (one to two hours), one-on-one, personal interview, conducted directly by the motivational researcher.
Market research is a key factor to get advantage over competitors. It provides important information to identify and analyze the market need, market size and competition. Based on market research data, businesses can develop a “target audience”.
1. What is the purpose of market research?
2. What type of research is consumer research?
3. What are the main sources of consumer research?
4. What does primary or field research involve?
5. What are the ways to conduct primary research?
6. What does secondary or desk research involve?
7. What does qualitative research involve?
8. What does quantitative research involve?
9. What does motivation research investigate?
10. What is the heart and soul of motivational research?
Image of a Company. Image of a Leader
Image of a company has no concrete monetary value, but it is worth much. People who are planning to create an organization (they are usually called promoters or incorporators) take measures to create a positive image of it even before its foundation. They give the organization a deserving name which as they think will help get a profitable position in a row of similar organizations and a positive reply in general public consciousness. Moreover, an apt name disciplines the employees, an unsound name makes the employees lose interest to their job. Knowledge of psychological mechanism of perception of the names can solve this from the first sight insignificant but in reality a very important problem. When you choose a company's name it is useful to answer the following questions: How will people percept this company among another companies? What social groups will deal with this organization? What kinds of associations will people have on hearing the name of the organization?
The image of the company depends on the image of its leader. Familiarization with the type of the character of the leader of the company provides better understanding of the image of the organization. Let's scrutinize the types of leaders, who have balanced and steady character. They are: Specialist, Integrator and Player.
If the leader of the organization is Specialist, we can say he is task-targeted. He believes in success, knows how to reason his position, he makes the employees act within the frame of approved standards. The image of such organization is positive if to be viewed from aside. General public values such company for its stability, thoroughness and high ethic standards. In such company there is exact division of duties, strict control over the fulfillment of the plans and obligations. Though workers often feel psychological discomfort and think of leaving the company. An observer from aside can say that in this organization managers are tough-minded and aggressive.
Integrator follows people-targeted strategy, he likes good human relations, respects the employees' desire to be involved in running the company, when he makes decisions he takes his employees' opinion into consideration. Long practice of such leader makes him do what he is expected to do, he has an image of "a soft democrat".
If the leader of an organization is Player, he is project-targeted, his main purpose is power. He is not afraid of competition, and his employees always follow his orders. The company's image depends on the quality of the products or services this company provides. Companies do all their best to meet the requirements of the customers, they produce the goods which are in demand in the market, improve the quality of the goods. Management of every company develops Continuous process improvement (CPI) concepts and Total quality management (TQM) programs, makes business process designing and reengineering.
The company's image also depends on its location,or what district it is located in, how many buildings it occupies,if the offices are equipped and how they are equipped. Allthese factors form positive or negative impression andpeople can make conclusions if the organization is reliable,what its position in the market is, if it is possible to dealwith this organization. If the premises, offices havearchitectural variety, positive attitude to the organizationincreases, a good porch, an entrance and a staircase improvethe image of organization too. The internal interior must bediverse, harmonious and psychologically comfortable.
Every organization acts in the social environment. Success of the organization depends a lot on the quality of its image. The purpose of PR is to form positive opinion about the organization. Special press-releases, publications in local and central newspapers and magazines, excursions, advertising campaigns are organized by PR specialists. Corporate advertising can be of two types: direct action advertising and double-action advertising, directed to consciousness and subconsciousness of people. The structure of double-action advertising is the modified formula of behaviorists: "background - symbol - action" which includes technique "attention - interest - desire - craving - reaction to immediate action".
1. Do incorporators take measures to create a positive image of a company before or after its foundation?
2. Does image of a company depend on the image of its leader?
3. What are the types of leaderswho have balanced and steady character?
4. Why do workers sometimes feel psychological discomfort?
5. What does the image of the company depends?
6. Does success of organization depend on the quality of its image?
7. What is the purpose of PR?
8. What is corporate advertising?
9. What is direct action advertising directed to?
10.What is double-action advertising directed to?
Image and Reputation
Image and reputation are closely related. Reputation is the opinion that people have about someone or something. In business context, reputation is the general long-term impression of an organisation. Reputation is perhaps the most important goal of any public relations program, and one of the vulnerable aspects of any organisation. Here are interesting sayings referring reputation "Glass, china, and reputation are easily cracked, and never well mended." Benjamin Franklin said: "It takes a lifetime to build a reputation, and only a short time to lose it all."
Image is the perception people have of a business when they hear a company name. A business's image is composed of a variety of facts, events, personal histories, advertising and goals that work together to make an impression on the public. Image is based on the verbal, visual and behavioral messages that come from an organization and leave an impression. There should not be ‘image’ with little or no attention on reputation.
Here are a few aspects that help explain the differences:
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