Business Economics is the integration of economic theories for the purpose of facilitating decision making and forward planning by the management. The scope of Business Economics are many. It includes the many areas of business operations. They are shortly described below.
The Scope Of Business Economics
The scope of Business Economics in various areas of operations, are described below. It generally includes the following areas of business operations.
1. Demand Forecasting: Demand forecasting is an important topic studied in Business Economics. Every business firm initiates and continues its production process on the basis of the anticipation of more demand for its goods in the future. It makes research and conducts market survey with a view to know the tastes and fashions of the consumers. It pools up the resources and starts production for meeting the future demand. Business Economics analyses the demand behavior and forecasts the quantity of demand made by the consumers. So, in other way, demand forecasting is said to be the Demand Analysis which is all about understanding the nature of the consumer’s preferences and the effects of the changes in the determinants of demand.
2. Cost analysis : Business Economics deals with the analysis of different costs incurred by the business firms. Every firm desires to minimize its costs and increase its output by securing several economies of scale. But it do not know in advance about the exact costs involved in production process. Business Economics deals with the cost estimates and acquaints the entrepreneurs with the cost analysis of their firms.
3. Profit analysis : Every business firm aims to secure maximum profits. But at the same time it faces uncertainty and risk in getting profits. It has to make innovations in production and marketing of its goods. Business Economics deals with the matters relating to profit analysis like profit techniques and break-even analysis.
4. Capital management : Capital management is another topic dealt in Business Economics. It denotes planning and control of capital expenditure in business organization. It studies matters like cost of capital, rate of returns, selection or best project etc.
Thus, Business Economics deals with several matters relating to the business management like demand, costs, profits and capital. All these elements under the scope of Business Economics are variable. So entrepreneurs face risk, bear uncertainty and made innovations for boosting up the demand, sale, production and profits of their goods.
Business Economics analyses and applies the economic laws and theories to the problems faced by the entrepreneurs. It provides remedies for overcoming such problems in business. The nature and scope of business economics includes almost all areas of business operations.
