This new approach to managerial economics takes models from recent economics research and applies this research to the internal structure of the firm. After teaching basic applied economics, the authors look inside the firm and apply this analysis to management decision making. The general model used for this application is organizational architecture. Organizational architecture consists of three aspects of corporate organization: the assignment of decision rights within the company; methods of rewarding individuals; the structure of systems to evaluate the performance of both individuals and business units. These three components can be likened to a stool with three legs. If one of the legs is shorter, the stool is out of balance. These three elements must be in balance in the organization as well.
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Four New Chapters Added: These chapters on pricing, creating and capturing value, game theory, and the economics of regulation (7, 8, 9, 20) expand Brickley's coverage of managerial economics. The student is now given a better applied economics foundation for the organizational architecture materials in the later parts. Extensive reviews indicated this new material would be an aid to teaching and learning.
Pricing With Market Power: This new chapter (7) presents a basic analysis of pricing with market power. It uses topics such as how managers should set prices, the value of coupons and rebates, variable pricing, bundling, give-aways, and volume discounts to illustrate the complexities associated with product pricing. It then examines the underlying objective of pricing decisions, analyzes a benchmark case, and discusses briefly several other issues, including multi-period consideration, strategic interactions, and legal issues.
Economics of Strategy: Creating and Capturing Value: This new chapter (8) is unique among managerial economics texts. It addresses the fundamental question of how firms capture value, what industries they should compete in, and how they should compete. It will be particularly useful to business students and managers.
Economics of Strategy: Game Theory : The new chapter (9) on Game Theory is both theoretically sound and replete with realistic examples. Virtually all the game theory discussions are framed in managerial terms and the game theory tools are explicitly used to understand business problems. This is a topic all modern applied economics texts include and will be popular with instructors.
Economics of Regulation: This flexible new chapter (20) covers the impact of government regulation on managers, the role of government in commerce, the economic theory of regulation, cartels, competitive advantage, trade policy, and an optional section on the organizational architecture of government organizations. It can be treated as another application of organizational architecture or taught earlier in the course as one of the key microeconomic concepts.
Management Innovations Chapter: This mostly new final chapter (22) examines the economics of management innovations and fads (e.g. T.Q.M., re-engineering, empowerment) how they work an how they are impacted (both negatively and positively) by innovation.
Updated Examples and Expanded Minicases: The extensive examples throughout the book have been updated with dozens of business applications drawn from the late 1990s. Much of the boxed material is new or revised. The end of chapter mini-cases have been expanded to including a stronger focus on e-commerce and international topics (e.g. pricing over the internet in the pricing chapter (7) and contracting problems on e-bay in the contracts chapter (10)). The mini-cases allow the student to apply the book's organizational architecture framework to realistic problems faced by the typical manager. The lively mini-cases and up to date examples contribute to high student and manager interest.
Careful Text Development. In addition to a thorough updating and the inclusion of new material, the writing style, notation, graphs, and illustrations have been thoroughly edited for consistency.
New Organization: A new four-part organization of the 22 chapters allows for more instructor flexibility.
Theme of Organizational Architecture: This theme consists of the assignment of decision rights, the performance evaluation system, and the reward system. Well-designed organizations assign decision rights to people with relevant knowledge and provide incentives for them to take productive actions. A dysfunctional organization can often be traced to a faulty organizational architecture. This well tested organizational architecture framework is widely used at important business schools throughout the world and is employed by managers in the real business world.
Basic economic tools of analysis: Economics tools (e.g. supply and demand, basic contract theory, marginal analysis) help the manager design organizations that motivate individuals to make choices that will increase firm value.
Separate Ethics Chapter: Considers five basic arguments that address the foundational ethical issues found in a number of business school curricula.
Jerry Zimmerman (Rochester, N) is Alumni Distinguished Professor of Accounting at the William E. Simon Graduate School of Business Administration, University of Rochester.
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Book Description Mcgraw-Hill College, 2000. Paperback. Book Condition: New. 2 Signed. Bookseller Inventory # DADAX0072314486