MGT6128: Economic Analysis Report: Organisation and Market Overview

This document is a comprehensive report for the MGT6128 Managerial Economics module, focusing on an economic analysis of an organization. It covers key aspects such as the organization's characteristics, its markets, and the broader macroeconomic environment. The report emphasizes the application of economic principles to business decision-making, including microeconomic and macroeconomic concepts like supply, demand, market structures, trade, and policy. The assessment requires students to use evidence from company reports, market data, and academic articles to assess the firm's performance. The report is designed to enhance students' economic literacy and skills, enabling them to make optimal and economically efficient decisions based on an understanding of the factors of production, market forces, and productivity. The module content includes lectures, tutorials, and workshops covering topics such as competitive markets, consumer behavior, supply decisions, imperfectly competitive markets, business growth, regulation, macroeconomic environments, international trade, and multinational firms. The report is a 2,500-word individual submission that constitutes 100% of the module mark. The report is designed to help students understand economic concepts and apply them to business and management decision-making.

MGT6128:
Managerial Economics
2020-21
Introduction: Week 1
whole group tutorial

Module teaching staff
Me (Professor Anthony Glass)
[e-mail]
Office hours during term time:
Tuesday 10:00am-noon (UK time)
Professor Don Webber
[e-mail]
Contact Don via email for his office
hour(s)

What is managerial economics?
Management economics is concerned with the
application of economic principles and
methodologies to business and management
decision-making, in order to make the most
effective use of an organisation’s scarce
resources

Two pillars of economics
• Microeconomics: analyses the decisions of
individual consumers, firms & industries
related to buying, producing, & selling goods
& services
• Macroeconomics: focuses on the overall level
of economic activity, inflation, unemployment
etc. by analysing aggregate economic
behaviour

Module aims
Primarily focused on microeconomics but with
an appreciation of national policy setting and
governmental strategies, the module aims to
equip management students with the economic
literacy and skills that will enable them to make
optimal and economically efficient decisions
based on an understanding of the factors of
production, market forces and productivity

Module learning outcomes
On successful completion of this module students will:
• Appreciate the need to understand the nature of the
market for different products & services;
• Be able to apply economic theory to different business
situations;
• Understand basic concepts of microeconomics
including supply, demand, price and income elasticities
and alternative market structures;
• Understand basic concepts of macroeconomics
including trade, policy, the role of government and
growth.

Module content and whole group activities: 1st
half of module before Easter vacation
• Introduction (week 1, live & interactive whole group
Blackboard Collaborate tutorial- AG)
• Workings of competitive markets (week 1 recorded
lecture- DW)
• Consumers and demand (week 2, recorded lecture- DW)
• Supply decisions in a perfectly competitive market (week
3, recorded lecture- DW)
• Price and output decisions in imperfectly competitive
markets (week 4, recorded lecture- DW)
• Business growth and strategy (week 5, recorded lecture-
DW)

Module content and whole group activities: 2nd
half of module after Easter vacation
• Regulation and public policy (week 6, recorded lecture- AG)
• Macroeconomic environment 1 (week 7, recorded lecture-
AG)
• Macroeconomic environment 2 (week 8, recorded lecture-
AG)
• International trade (week 9, recorded lecture- AG)
• Review of module material relating to the assessed report,
assessment support and Q&A (week 9, live & interactive
whole group Blackboard Collaborate tutorial- AG)
• Multinational firms & strategy in a global environment
(week 10, recorded lecture- AG)
• Short review of the module and of a broad case study /
analysis of a paper applying various components of the
module (week 10, live & interactive whole group
Blackboard Collaborate tutorial- AG)

Small group live & interactive tutorials
before Easter vacation
All tutorials will be on Blackboard Collaborate. Tutorial
questions must be completed in advance of the class
• Tutorial on the workings of competitive markets (week
2, live & interactive- DW)
• Tutorial on consumers and demand (week 3, live &
interactive- DW)
• Tutorial on supply decisions in a perfectly competitive
market (week 4, live & interactive-DW)
• Tutorial on price and output decisions in imperfectly
competitive markets (week 5, live & interactive-DW)

Small group live & interactive tutorials
after Easter vacation
All workshops will be on Blackboard Collaborate. Tutorial
/ Workshop tasks must be prepared in advance of the
class
• Workshop on a case study / analysis of a paper on
‘Business growth and strategy’ (week 6, live &
interactive- DW). Before the class read the case study /
paper and prepare answers to the case study questions
/ prepare a review of the paper.
• Tutorial that goes over the answers to the three online
tests (week 7, live & interactive-DW)
• Workshop to prepare you to write your assessed report
(week 8, live & interactive-DW)

Assessment
2,500 word individual report which will
account for 100% of your module mark.
2,500 is the absolute maximum. Submissi
deadline for this report is Tuesday 25 May
2021, 12:00pm (noon). Reports should be
submitted online via Turnitin. Some detail
are already on Blackboard and full details
will be placed on Blackboard well in advan

Report Requirements
Prepare a report undertaking an economic analysis of an
organisation of your choice, its markets and the wider
macroeconomic context using evidence including
company reports, market reports, market data and
academic journal articles, etc.
It is advisable to choose a large company to analyse as
there is more information available about such
companies. I advise you not to choose a large company
that you think a lot of other students will choose, e.g.,
Apple, Huawei, etc. This is so your report will stand out as
being different from those of other students.

Report Requirements
The report should include:
i. a description of the organisation’s basic
characteristics;
ii. an analysis of the markets and economic
environment in which it operates;
iii. an assessment of the firm’s recent and likely
future performance.

Report Assessment CriteriaAssessment criterion Hard Fail
(0-39)
Soft Fail
(40-49)
Pass
(50-59)
Merit
(60-69)
Distinction
(70-79)
Distinction
(80+)
Structure and focus Minimal or no structure, with
little or no focus/logic to
selection and sequencing of
material.
Rudimentary structure, albeit
with limited and/or confused
focus/logic to selection and
sequencing of material.
Solid, mostly coherent
structure, with broadly
consistent focus/logic to
selection and sequencing of
material.
Clear, fully coherent
structure, with consistent
focus/logic to selection and
sequencing of material.
Very clear, highly coherent
structure, with fully
consistent focus/logic to
selection and sequencing of
material.
Superbly clear, highly
coherent structure, with
exceptionally consistent
focus/logic to selection and
sequencing of material.
Knowledge and
understanding
Little/no knowledge/
understanding evident in
relation to key economics
concepts.
Limited but partial
knowledge/ understanding
evident in relation to key
economics concepts.
Broadly satisfactory
knowledge/ understanding
evident in relation to key
economics concepts.
High level of knowledge/
understanding evident in
relation to key economics
concepts.
Very high level of
knowledge/ understanding in
relation to key economics
concepts.
A fully comprehensive and
deep knowledge
/understanding of key
concepts, with some
evidence of advanced
material/ideas.
Application and research Little or no application of
economic theory in the
specific business and market
context.
Extremely limited/no
engagement with relevant
literature.
Little/no presentation and
analysis of relevant data to
inform discussion and
support arguments made.
Some, albeit poor application
of economic theory in the
specific business and market
context.
Limited but superficial
and/or descriptive
engagement with relevant
literature.
Limited presentation and
analysis of relevant data to
inform discussion and
support arguments made.
Adequate application of
economic theory in the
specific business and market
context
Solid engagement with
relevant literature in an
occasionally analytical
manner.
Satisfactory presentation and
analysis of relevant data
from a limited range of
sources to inform discussion
and support arguments
made.
Good application of
economic theory in the
specific business and market
context.
Draws upon a range of
relevant literature in a
mostly analytical manner.
Good presentation and
analysis of relevant data
from a wide range of sources
to inform discussion and
support arguments made.
Excellent application of
economic theory in the
specific business and market
context.
Draws upon a wide range of
relevant literature in a
sustained analytical manner.
Skilful presentation and
analysis of relevant data
from a wide range of sources
to inform discussion and
support arguments made.
Outstanding application of
economic theory in the
specific business and market
context.
Draws upon an extensive
range of relevant literature in
a sustained and authoritative
analytical manner.
Sophisticated presentation
and analysis of relevant data
from an extensive range of
sources to inform discussion
and support arguments
made.
Presentation and style Poor presentation with many
errors in syntax and spelling.
Little or no signposting and
poor/no linkages/flow. Lack
of appropriate referencing
and/or inaccurate use of the
Harvard system of
referencing.
Minimally acceptable
presentation with a number
of errors in syntax and
spelling. Limited signposting
and weak linkages/flow.
Incomplete referencing
and/or sometimes inaccurate
use of the Harvard system of
referencing
Solid presentation with
satisfactory syntax and
spelling. Reasonable use of
signposting and mostly clear
linkages/flow. Mostly
complete referencing and
largely accurate use of the
Harvard system of
referencing.
Good presentation with good
syntax and spelling. Good
use of signposting and clear
linkages/flow.
Complete referencing and
mostly accurate use of the
Harvard system of
referencing.
Excellent presentation with
good syntax and spelling,
with very clear signposting
and linkages/flow.
Complete referencing and
sustained accuracy in use of
the Harvard system of
referencing.
Superb, professional level of
presentation. Skilful use of
signposting and exemplary
linkages/flow. Complete
referencing and absolute
accuracy in use of the
Harvard system of
referencing.

Online multiple choice test to evaluate
your progress
• In week 6 on Tuesday 20 April 2021 you will all be
required to take a 50 minute online multiple
choice test.
• The test will consist of 20 questions. Your mark
on the test does not count towards your final
module mark. The test is so you and I can
evaluate your progress on the module.
• Students on the module will be split up into 3
equal sized groups and will be directed to
complete test A, B or C. The three tests are of the
same degree of difficulty.

Resources
• Blackboard
- Module details
- Lecture slides and recordings
- Tutorial exercises / discussion sheets
- Practice multiple choice questions
- Weblinks to extra reading, case studies, etc.
- Discussion board

Resources
• Textbooks
- Main text:
Sloman, J. and Jones, E. (2019) Essential Economics
for Business (6/e), Pearson

Reading
• Reading
– Main text:
• Sloman, J. and Jones, E. (2019) Essential
Economics for Business (6/e), Pearson
– Secondary texts:
• Brander, J.A. and Perloff, J.M. (2019) Managerial
Economics and Strategy (Global ed., 2/e), Pearson
• Farnham, P.G (2014) Economics for
Managers (Global ed., 3/e), Pearson
• Journal articles & case studies

Some Economics background
• Opportunity cost
– The cost of undertaking an activity in terms of
the foregone activity the factors (of
production – land & raw materials, labour &
capital) could have alternatively been used
for
• E.g. an hour of labour to make a loaf of
bread, 30 minutes to make a pizza
• The opportunity cost of making a loaf of
bread is 2 pizzas

Some Economics Background
• Economics
– Considers the key economic questions of:
• What is produced?
• How is it produced?
• Who it is it produced for?
• Can be answered by market forces of supply &
demand (in a free market), by the government
(in a planned economy) or by a combination of
the two (in a mixed economy)

Types of economy

The ‘wealth’ of a nation
• Produced through work/skill and/or
time/processes combined towards the
development of raw materials or into finished
or semi-finished products or the provision of
services

The ‘wealth’ of a nation

The ‘wealth’ of a nation

The aims of the firm
• The traditional theory of the firm:
– Assumption of profit maximisation
π = PQ - C
where:
PQ is total revenue
P is price
Q is quantity of output (sales)
C is total costs
– Profit margin is 𝜋
𝑄 = 𝑃- 𝐶
𝑄 , so if P↓ or average cost 𝐶
𝑄 ↑ ,
margin ↓
• Key for managers is to act on each side, i.e.,
growing revenue or reducing cost

The aims of the firm
• Reading
– The divorce of ownership from control (especially in
UK/US which operate widely dispersed share
ownership (‘outsider’ systems, compare to
continental Europe/Japan))
– Managerial objectives
• Sales (Baumol)
• Growth (Marris)
• Managerial utility (Williamson)

The aims of the firm
• The principal-agent relationship
– The principal-agent problem
– Asymmetric information
– Dealing with imperfect information
• Monitoring
• Incentives
• The goal of staying in business
– Willingness of firms to take risks
– Problems of being over-cautious

The influencing environment

The external business environment
• STEEPLE analysis
– Extension of the PEST analysis
• Social
• Technological
• Economic
• Environmental
• Political
• Legal
• Ethical
• Business increasingly affected by questions of
the environment and social responsibility

Industrial structure
• The economy of a country can be divided into 3
broad sectors:
– Primary – extractive industries (e.g., agriculture, oil,
minerals)
– Secondary – processing industries (e.g.,
construction, manufacturing)
– Tertiary – services (e.g. banking, retail, tourism)

Employment by sector
(UK, % of total employees)

Employment by sector
(China, % of total employees)

Understanding structure
• Classifying firms into industries
– Industrial sectors
• Classification helps analyse trends
• Specific needs can be identified
• To understand the relationships between firms
– Importance of defining the boundaries of an industry
• Nature of the system of classification
– Sections, subsections
• Divisions, groups & classes

Business performance
• Structure-conduct-performance
– Relationship between business structure & business
conduct (behaviour)
• Competitive markets & competitive behaviour
• Limited competition & collusion
• Importance of consumer tastes & technology
– Relationship between business conduct &
performance
• Indicators for measuring performance
• Profitability, market share, growth, etc.

The SCP framework

What Next?
• The week 1 lecture topic is ‘Workings of competitive
markets. See Blackboard resources for this topic