The New Managerial Economics

by Boyes, William

• ISBN13: 9780395828359
• ISBN10: 039582835X
• Edition: 1st
• Format: Hardcover
• Copyright: 2003-04-01
• Publisher: South-Western College Pub

Summary

Boyes introduces non-majors to the power of economics in business decision making. The text's intuitive approach clearly highlights how economics influences marketing, management, and other business-related decisions. In addition to traditional principles of price theory, Managerial Economics examines organizational behavior, strategic management, human resource management, and emerging issues such as game theory, TQM, and information economics.

Table of Contents

PART I Introduction and Foundation	2	(62)
Economics and Management	4	(13)
Case: Lincoln Electric	4	(1)
The Successful Firm	5	(5)
Is It Just Luck?	5	(1)
Quality	5	(1)
First Mover	5	(1)
Size/Market Share	6	(2)
Globalization	8	(1)
Leadership	9	(1)
Management and Economics	10	(5)
The Role of Economics	10	(3)
How Management Theory and Economic Principles Relate	13	(1)
The Study of Managerial Economics: How Do We Proceed?	14	(1)
Case Review	15	(1)
Summary	15	(1)
Key Terms	15	(1)
Exercises	16	(1)
Chapter Notes	16	(1)
Exchange, Efficiency, and Markets	17	(26)
Case: Procter & Gamble: New Product Launch	17	(1)
Choices	18	(4)
Trade and Exchange	18	(4)
Market System	22	(6)
Allocation Mechanisms	22	(2)
Market Outcomes	24	(1)
Inefficiency	25	(2)
The Firm's Architecture	27	(1)
Markets and the Law of One Price	28	(6)
Market Boundaries	28	(1)
Law of One Price	29	(1)
Demand and Supply: Equilibrium	30	(4)
Case Review	34	(1)
Summary	35	(1)
Key Terms	36	(1)
Exercises	36	(1)
Chapter Notes	37	(2)
Appendix: Optimization	39	(4)
Performance	43	(21)
Case: The Enron Caper	43	(1)
Value	44	(3)
Adding Value	44	(1)
Economic Profit	45	(2)
Measuring Economic Profit	47	(3)
Cost of Capital	47	(2)
Economic Profit	49	(1)
The Relationship Between Economic Profit and Shareholder Value	50	(4)
Shareholder Value	51	(3)
Valuing the Dot.coms	54	(1)
The Practical Effect of a Focus on Economic Profit	54	(1)
Case Review	55	(1)
Summary	56	(1)
Key Terms	56	(1)
Exercises	57	(1)
Chapter Notes	58	(2)
Appendix: Calculating Economic Profit	60	(4)
PART II Seeking Competitive Advantage	64	(82)
Demand	66	(32)
Case: Knowing the Customer	66	(1)
Know Your Customer	67	(1)
Elasticity	67	(4)
Price Elasticity of Demand	69	(1)
Price Elasticity and Revenue	70	(1)
Other Demand Elasticities	71	(5)
Income Elasticity of Demand	71	(2)
Cross-Price Elasticity	73	(2)
Elasticity Estimates	75	(1)
Case Review	76	(1)
Summary	77	(1)
Key Terms	78	(1)
Exercises	78	(1)
Chapter Notes	79	(2)
Appendix A: Consumer Behavior	81	(11)
Appendix B: Market Research	92	(6)
Costs	98	(25)
Case: Mrs. Fields' Cookies	98	(1)
Costs and Output	99	(6)
The Law of Diminishing Marginal Returns	100	(1)
From Production to Costs	101	(4)
The Planning Horizon: The Long Run	105	(8)
Long-Run Cost Curves	106	(1)
Economies and Diseconomies of Scale	107	(2)
Large Scale Is Not Always Best	109	(1)
Economies of Scope	110	(1)
The Experience Curve	111	(2)
Interpreting Some Business Buzzwords	113	(3)
Downsizing	113	(1)
Joint Ventures	114	(1)
The Supply Chain	115	(1)
Case Review	116	(1)
Summary	117	(1)
Key Terms	118	(1)
Exercises	118	(2)
Chapter Notes	120	(1)
Appendix: Costs and Production	121	(2)
Profit Maximization: Seeking Competitive Advantage	123	(23)
Case: Kmart	123	(1)
Seeking Competitive Advantage	124	(3)
Profit Maximization: The MR = MC Rule	124	(2)
Is the MR = MC Rule Useful in the Real World?	126	(1)
Selling Environments: Market Structures	127	(11)
Perfect Competition	128	(3)
Monopoly	131	(2)
Comparing Monopoly and Perfect Competition	133	(1)
Monopolistic Competition and Oligopoly	134	(3)
Sustaining Economic Profit	137	(1)
Profit Maximization over Time: Present Value	138	(3)
Valuing a Stream of Payments	138	(3)
Case Review	141	(1)
Summary	142	(1)
Key Terms	142	(1)
Exercises	142	(2)
Chapter Notes	144	(1)
Appendix: Profit Maximization	145	(1)
PART III Sustaining Competitive Advantage	146	(104)
Creating Barriers to Entry	148	(14)
Case: Wal-Mart	148	(1)
Sustaining Profit with Size	149	(2)
Economies of Scale as a Barrier to Entry	149	(1)
Capital Requirements	150	(1)
Access to Distribution Channels	151	(1)
Differentiation	151	(6)
Reputation and Brand Name	152	(4)
Guarantees	156	(1)
Other Strategies to Deter Entry	157	(2)
Government as a Source of Strategic Advantage	157	(1)
Unique Resources	158	(1)
Internal Strategic Assets	158	(1)
Case Review	159	(1)
Summary	159	(1)
Key Terms	160	(1)
Exercises	160	(1)
Chapter Note	161	(1)
Price Strategies	162	(26)
Case: Pricing Chips	162	(1)
What Price?	163	(10)
The Internet, Auctions, and Pricing	163	(3)
Personalized Pricing	166	(2)
Self-Selection: Product-Line Extension	168	(1)
Peak-Load Pricing	168	(1)
Cost-Plus Pricing	169	(1)
Framing	170	(1)
Pricing to Deter Entry	171	(2)
More Complexities	173	(4)
Bundling	173	(3)
Joint Products	176	(1)
Profit Centers and Transfer Prices	176	(1)
Interdependencies Among Firms	177	(2)
Case Review	179	(1)
Summary	179	(1)
Key Terms	180	(1)
Exercises	181	(1)
Chapter Notes	182	(2)
Appendix: Pricing Problems	184	(4)
The New Economy: Technological Change and Innovation	188	(21)
Case: Winner-Takes-All	188	(1)
What Is the New Economy?	189	(11)
Technological Changes and the Supply Chain	190	(2)
Networks	192	(8)
Technological Change	200	(5)
Patent Races	200	(3)
Firm Size	203	(2)
The Old Versus the New Economy	205	(1)
Case Review	205	(1)
Summary	206	(1)
Key Terms	207	(1)
Exercises	207	(1)
Chapter Notes	208	(1)
The Firm's Architecture: Organization and Corporate Culture	209	(20)
Case: Culture Clashes	209	(1)
Organizational Change	210	(1)
The Evolution of the Firm	210	(1)
Vertical Boundaries	211	(4)
Make or Buy?	211	(1)
Transactions Costs	212	(3)
Horizontal Boundaries	215	(2)
Economies of Scope	215	(1)
Diversification	216	(1)
Relationship-Specific Assets	216	(1)
Internal Structure	217	(5)
U-Form	217	(1)
M-Form	218	(1)
Matrix	219	(1)
Network	219	(1)
Hierarchy	220	(2)
Culture	222	(3)
Creation of Culture	223	(1)
Performance and Culture	224	(1)
Case Review	225	(1)
Summary	226	(1)
Key Terms	227	(1)
Exercises	227	(1)
Chapter Notes	227	(2)
Personnel and Compensation	229	(21)
Case: Executive Compensation	229	(1)
Incentives Matter	230	(1)
The Principal--Agent Relationship	230	(2)
Relationships Between the Firm and Its Employees	232	(1)
Employee Compensation	232	(7)
Efficiency Wage	232	(1)
Backloaded Compensation	233	(2)
Piece-Rate Compensation	235	(1)
Teams	236	(1)
Subjective Evaluations	237	(1)
Risk	238	(1)
Executive Compensation	239	(6)
Stock Options	241	(1)
Market for Corporate Control	242	(1)
Corporate Governance	243	(1)
Tournaments and Superstars	243	(2)
Case Review	245	(1)
Summary	245	(1)
Key Terms	246	(1)
Exercises	246	(1)
Chapter Notes	247	(1)
Appendix: Productivity and Employee Compensation	248	(2)
PART IV Analytic Problem-Solving Tools	250	(38)
Capital Allocation: Real Options	252	(16)
Case: Merck and Medco	252	(1)
Intertemporal Decision Making	253	(11)
Present Value	253	(2)
Options	255	(3)
Valuing Real Options	258	(4)
Use of Real Options in Business	262	(2)
Case Review	264	(1)
Summary	265	(1)
Key Terms	265	(1)
Exercises	265	(2)
Chapter Notes	267	(1)
Strategic Behavior: The Theory of Games	268	(20)
Case: Unilever and P&G	268	(1)
Games	269	(4)
Sequential Games	269	(1)
Simultaneous Games	270	(3)
Components of the Game	273	(4)
Number of Players	274	(2)
Rules	276	(1)
Perceptions	276	(1)
Boundaries	277	(1)
Prisoner's Dilemma Revisited	277	(7)
Credible Commitments	278	(2)
Repeated Transactions	280	(1)
End-of-Game Problem	280	(2)
Uncertainty	282	(2)
Case Review	284	(1)
Summary	285	(1)
Key Terms	286	(1)
Exercises	286	(1)
Chapter Notes	287	(1)
PART V Looking Outside the Firm	288	(42)
Globalization	290	(22)
Case: The Automakers and the Yen	290	(1)
Exchange-Rate Fluctuations	291	(6)
Foreign Exchange	291	(3)
Arbitrage and the Law of One Price	294	(3)
Exchange-Rate Exposure	297	(5)
Types of Exposure	297	(3)
Using Financial Markets to Reduce Exposure	300	(2)
The Global Capital Market	302	(6)
The Asian Crisis	303	(1)
The Breakdown of Barriers	304	(1)
Emerging Markets	305	(1)
Tariffs and Other Restrictions	305	(3)
Case Review	308	(1)
Summary	308	(1)
Key Terms	309	(1)
Exercises	309	(2)
Chapter Notes	311	(1)
Government and Business	312	(18)
Case: Microsoft	312	(1)
Government Intervention in Business	313	(1)
Antitrust Policy	314	(6)
Defense Against Antitrust as a Strategy	317	(1)
Antitrust as Strategy	318	(1)
International Competition and Antitrust Strategy	319	(1)
Government Regulation	320	(7)
Economic Regulation	321	(2)
Social Regulation	323	(1)
Regulation as Strategy	324	(3)
Case Review	327	(1)
Summary	327	(1)
Key Terms	328	(1)
Exercises	328	(1)
Chapter Notes	329	(1)
PART VI Putting It All Together	330	(19)
Strategy and Management	332	(17)
Case: Edward Jones Brokerage	332	(1)
Strategy	333	(3)
Strategic Positioning	333	(1)
Imitation or Innovation?	333	(2)
Innovation Is Not for Everyone	335	(1)
The Strategic Audit	336	(4)
What Business Are We In?	336	(1)
Who Are Our Customers?	337	(1)
Costs	338	(1)
Strategic Assets	338	(1)
Fit	339	(1)
The Executives	339	(1)
Illustration of a Strategic Audit: Southwest Airlines	340	(6)
What Is Southwest Airline's Distinctive Capability?	340	(1)
What Business Are We In?	340	(1)
Who Are Our Customers?	341	(1)
Costs	341	(2)
Corporate Culture	343	(1)
Stategic Assets	343	(1)
Fit	343	(1)
Leadership	343	(1)
Economic Performance	344	(1)
New Economy	345	(1)
Strategic Directions	346	(1)
Summary of the Strategic Audit	346	(1)
Case Review	347	(1)
Summary	347	(1)
Key Term	348	(1)
Exercise	348	(1)
Chapter Notes	348	(1)
Glossary	349	(4)
Company Index	353	(4)
Subject Index	357