Ksbm - Managerial Economics..

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Managerial Economics

Case Study 1: Economic Analysis of Organization ABC

Organization ABC was one of the leading organizations in manufacturing soaps. After a certain point of time, the organization found that there was an increase in its cost and reduction in profits. However, the economy of the nation was at boom. Apart from this, the manufacturing industry was also enjoying high profits. Therefore, Chief Executive Officer (CEO) of the organization decided to take suggestions from economists regarding the deteriorating condition of the organization. The economists first analyzed the problem and collected relevant data. They found that the price of the organization’s product was quite high as compared to the market price. Moreover, substitute products were easily available in the market. Therefore, consumers were not willing to purchase ABC’s product due to the availability of similar products at cheap prices. To overcome the problem, economists suggested the organization to lower down its prices and observe the effect on demand. In addition, economists recommended the organization to organize promotional campaigns. Based on suggestions, the organization reduced the prices by 5% and organized various promotional campaigns, As a result, the demand for the organization’s product increased by 3%. This helped the organization to come back to its previous position.

Questions:

Q1. Which economic theory is used to solve the problem in the case study?

Q2. Which economics concept is used in this case study?

Case Study 2: Kingfisher Airlines Pricing Strategies

Kingfisher Airlines (KFA), India-based airline group, is a wholly owned subsidiary of United Breweries (UB) Group. The parent organization is India’s largest producer of beer and established its operations in India in 2005. KFA is positioned...