Managerial Economics and Demand Analysis for Airbus Services

Management
Economics
(Assessment-1)

Contents
INTRODUCTION.......................................................................................................................................3
TASK 1.......................................................................................................................................................3
TASK 2.......................................................................................................................................................4
TASK 3.......................................................................................................................................................7
Identifying Price elasticity of demand.....................................................................................................7
Optimum pricing policy...........................................................................................................................8
CONCLUSION.........................................................................................................................................10
REFERENCES..........................................................................................................................................11
Books and Journals................................................................................................................................11
Online....................................................................................................................................................11

INTRODUCTION
Managerial economics or Management economics is that branch of Management which
deals with concepts of Management and Economics both. Through combination of two, this
branch helps taking most important administrative decisions for a business in terms of their
economical efficiency as well.
In this report, different concepts of Managerial economics are studied from their basic
nature. Here, report first makes understanding of different literary works of Managerial
economics in field by various author and then discussed concepts of Managerial economics. For
this purpose, report has taken example of a very prominent multinational aircraft manufacturer
and service provider company, Airbus. Report has attempted to study positioning of demand and
market equilibrium for company in different situations, and then studies price elasticity of
demand. Also, the report has attempted to frame a suitable pricing policy while considering its
advantages for company.
TASK 1
TJ. Webster defined that, "Managerial economics is the synthesis of microeconomic
theory and quantitative methods to find optimal solutions to managerial decision-making
problems? In the opinion of author, this branch of Management is not dealing with concepts of
Management only, but involves concepts of Economics as well. Hence, efficiency in business
strategies is made assured by utilization of both. Further it was supported by Hirschey and
Pappas, who mentioned that "Managerial economics applies economic theory and methods to
business and administrative decision making." According to author, Managerial economics is
very supportive in administration related work of business and the strategies thus giving more
boost over planning and similar works. Another advantage of Management economics is that it
also supports management of assets in business and plans its usage (Managerial Economics
Definitions, 2018).
Airbus is one of the largest manufacturers and aircraft service provider of United
Kingdom, and also it is operational in many other countries of the world. Its headquarters are
situated in Netherland. As of 2019, Airbus has become that largest manufacturer of the aircrafts,

after surpassing its most competitive rival Boeing. The competency of company in
manufacturing aircrafts is remarked by many business analysts in both Civil and Military
aircrafts. This is very much supported by business model of company, where it has three
different dedicated divisions for Commercial aircrafts, Defense; and the third is the division for
Helicopter, which is largest one in terms of revenues for company. The purpose of choosing
Airbus company and aircraft products and services for this report, is the scale and size of
business operations of company and the diversification it has. However, for this particular report
Aircraft services of company are considered, but efficacy of airbus in this service is also
remarkable (Airbus SE, 2021).
TASK 2
Airbus is one the highest grossing aircraft brand of United Kingdom, with a huge market
share in this industry. This is why identification of its demand in the service it provides and the
manner in which consumers perceives its service is very complicated but a very necessary task as
well. These complexities are much because of the fact that demand in this sector is influenced by
multiple factors, which are either in control of company, these factors are internal to company,
and many of the time they are not. This is why identification of a certain demand is not possible,
and the manner is really complicated an important fact is that, each of the time a factor plays its
role, market equilibrium for the company is also seen disturbing (Sfeir-Younis, 2019). Hence, for
getting a good insight on this subjectivity of issue of Airbus, report have undertaken studying
demand and market equilibrium positioning for Airbus and its services, under the influence of
various market forces.
Prices of substitutes- Substitute products are those products that the consumers n the market has
the choice to choose and opt beyond taking and utilizing the services of Airbus. As, Airbus is the
company that is involved in providing services of Air transportations, then in case of substitution
consumers have well informed choice of taking other modes of transport, like by buses, trains
and private vehicles as well. Identifying demand in case of substitute product may seem easy but
it is complicate task, because it requires Airbus to keep keen watch over development in
substitute market and then quickly adopt favorable policies that suits its business. For example,
in case when prices of bus transport increases in future, where consumer starts finding buses