SRI VENKATESWARA COLLEGE OF ENGINEERING AND TECHNOLOGY

(AUTONOMOUS)

MBA DEPARTMENT

CASE STUDY ON

MANAGERIAL ECONOMOICSDt: 26-11-2012

This case illustrates and integrates the scope of managerial

economics in real world. It explains how EICHER MOTORS tries to solve the

three basic questions faced by the company when introducing a new product. In

the primary stage, customer preferences are captured to decide what to produce.

They are translated into product design through “quality function deployment”.

The later stages of ‘house of quality’ take care of production and cost decisions,

thereby taking decision of how to produce. The development of a product for a

particular section of society considers the question for whom to produce. For

instance, manufacture of special vehicles for poultry segment and buses for

school children.

Appropriate business decision making with the help of economic

tools has gained recognition in view of complex business environment. Since

the macroeconomic environment is dynamic, it changes over time; managerial

decisions have to be reviewed constantly. In this context, concepts of consumer

behaviour, demand elasticity, demand forecasting, production and cost analysis,

market stricture analysis and investment planning help in making prudent

decisions.

Question:

What is the role of managerial economics in decision making?