Coca Cola

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Ashford University

BUS 640: Managerial Economics

Instructor: Steve McQueen

March 25, 2013

The Skinny on Coca-Cola from a Managerial Economic Perspective

Most important decisions in a company can have economic significance. Managerial economics is an integral, relevant part of business management processes that involves cost, revenues and profits, considering not only the monetary costs, but nonmonetary costs as well. They can be monetary, in terms of cash flow in and out and any excess revenue over costs or profit or nonmonetary, in terms of benefit for the consumer. Its affect psychically is good or bad causing utility or disutility of the product. “Costs can be classified by behavior. Managers who understand how costs behave can predict how costs will change under various alternatives” (Noreen, Garrison and Brewer, 2010). “The profit concept is central to the pursuit of business and is thus central to the study of managerial economics.

As discussed previously, profit is defined as the excess of revenues over costs. For not-for-profit and public-sector organizations, an excess of revenues over costs is called a “surplus.” Conversely, if costs exceed revenues, there is a loss, which is known as a “deficit.” Regardless of the terms used, no firm or organization can sustain losses or deficits forever. The decision-making problems facing managers of for-profit firms and not-for-profit organizations are essentially similar, involving revenue enhancement if possible and cost control wherever possible” (Douglas, 2012).

Analysis of the economics within a firm becomes a primary analytical tool used to help managers assess where an organization stands and what direction it should take in the future. For companies today to make sound managerial decisions, a viable strategy needs to be in place that analyzes various ways to increase consumer demand and defines what it takes to produce the product at value to the consumer.

The Company

The Coca-Cola...