Role of Management Economics in Ikea Business and Products

MANAGEMENT
ECONOMICS

TABLE OF CONTENTS
INTRODUCTION......................................................................................................................3
MAIN BODY.............................................................................................................................3
1. Ikea Business and Products....................................................................................................3
Role of Management of economics in an economy...............................................................3
Chosen product/services.........................................................................................................3
Rationale behind selection of product or service...................................................................3
2. Demand and Market Equilibrium...........................................................................................4
Price of substitutes.................................................................................................................4
Price of Complements goods.................................................................................................5
Consumer Income..................................................................................................................6
Consumer taste and Preferences.............................................................................................6
Consumer Expectation of price..............................................................................................7
Demographic..........................................................................................................................7
3. Price Elasticity of Demand.....................................................................................................7
Substitute Product..................................................................................................................7
CONCLUSION..........................................................................................................................9
REFERENCES.........................................................................................................................10

INTRODUCTION
Managerial economic basically refers to the management studies which is mainly
involved into solving the business problems and thus, undertaking decision through the
application of theories. In this report, Ikea is taken as an organization, which is a Swedish
multinational company which is into designing and selling furniture, kitchen and home
appliances and other home services. This report illustrates the significance of the
management economic on the business functioning which helps in undertaking sound
business decisions. It involves analyzing the impact of various factors over the demand and
the Price Elasticity of Demand.
MAIN BODY
1. Ikea Business and Products.
Role of Management of economics in an economy
According to Ke (2021) managerial economics basically accounts for the
management of business with the help of the economic theories and concepts. It is the
combination of management and economic theories pertaining to solving the problems and
undertaking better and effective decisions. It monitors and ensures that the key scare
resources are utilized in an optimum way which resulted into deriving better outcomes. This
outcome results into bringing overall growth and development of the economy. There are
three major role which is played by management of economics is in respect to the demand
analysis and forecasting, capital and profit management. As per Tien (2019) in respect to the
first role, it involves effectively analysing the external environment within which the business
operates and helps in identifying the factors which are having the potential to affect the
decisions and policies of the business. In the second role, it works on effectively managing
the capital of the economy by preparing the schedules within which the all the production
activities and the estimates of the future demand are estimated and decisions are taken so as
to avoid any unnecessary capital expenditure to the business.
Chosen product/services
Ikea offers wide range of products and services and of all this, furniture is taken as
the product which will be studied.
Rationale behind selection of product or service
The rationale behind the selection of furniture product is that the Ikea is well known
for its furniture’s and is the world’s largest furniture retailer. The furniture is given unique for
its modernist designs for different kinds of appliances (Products. 2021). Bring a big