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Managerial Economics and Organizational Architecture , 5e Chapter 1: Introduction

Managerial Economics and Organizational Architecture , 5e Chapter 1: Introduction. Overall Purpose. Provide a framework for analyzing organizational problems Provide basic managerial economic concepts Apply these concepts to operational decisions. 1- 2.

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Managerial Economics and Organizational Architecture , 5e Chapter 1: Introduction

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  1. Managerial Economics and Organizational Architecture, 5eChapter 1: Introduction

  2. Overall Purpose • Provide a framework for analyzing organizational problems • Provide basic managerial economic concepts • Apply these concepts to operational decisions 1-2

  3. Organizational Architecture Objectives • Assignment of decision rights • Methods of compensation • Performance evaluation of individuals and units 1-3

  4. Managerial Economics Objectives • Which markets to enter • Product differentiation • Production choices • Pricing decisions • Market analysis and competitor behavior 1-4

  5. The Economic Perspective • Economics provides a framework for analyzing decisions • How do individuals make choices? • the role of incentives • How can managers structure organizational architecture to motivate employees? • incentive conflicts and opportunistic behavior 1-5

  6. Economic Darwinism • Only the fittest survive • competition encourages efficient decisions • maximizing shareholder value • firms must adapt or close 1-6

  7. Economic Darwinism • Firms “benchmark” successful practices • best practices are emulated • Appropriate organizational architecture can • lower costs • ensure high quality production 1-7

  8. Economic Darwinism • Existing architecture is not random • Surviving architectures are optimal relativeto competitors • As environments change, the appropriate architecture changes 1-8

  9. Book Overview • Basic concepts • Managerial economics • Designing organizational architecture • Application of organizational architecture 1-9

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