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Role and Responsibilities of Business Economists
The role of Business Economist becomes increasingly important in view of the different objectives of the firm. He has a significant role to play in assisting the management of the firm in decision-making and forward planning by using specialized skills and techniques. In advanced countries, large companies employ Business Economist or Managerial Economist to assist the management.
The factors which influence the business over a period may lie within the firm or outside the firm. Generally, these factors are divided into two categories, viz.,
- External factors and
- Internal factors.
External factors are beyond the control of the firm and these factors constitute Business Environment. The internal factors are within the control of the firm’s management and these are called Business Operations.
For example, a firm is free to take decision on matters of investment, employment, production of commodities, their pricing, etc. But all these decisions are taken within the framework of a particular business environment, the Government’s economic policy and the extent of competition faced by the firm, etc.
Business Economists should study the Environment
It is the primary duty of Business Economists to make extensive study of the business environment and the external factors affecting the firm’s interest, viz., general prices, national income and output, volume of trade, etc. These factors have to be thoroughly analyzed and answers to the following questions have to be found out:
1. What is the trend in the economy? Is it ebbing or showing signs of recession?
2. What will be the nature of the Money Market?
3. What will be the price trends of raw materials and finished products in general?
4. Is competition likely to increase or decrease with reference to the materials produced by the company?
5. What will be the policies of the Government?
Answers to these questions will throw more light on the prospective business nature and the Business Economist can make effective contribution through scientific decision-making.
Business Economists should make decisions regarding Business Operations
The Business Economist can help the management in making decisions regarding the internal business operations by studying and analyzing the following:
1. What should be the production schedule and inventory policies for the coming year?
2. What should be the appropriate price and wage policies?
3. How much cash will be available in the coming months and how should it be invested?
4. What should be a reasonable sales and profit budget for the coming year?
Besides making the above studies, the Business Economist should have to perform specific functions like
- Sales forecasting,
- Market research,
- Analysis of competing firms,
- Pricing problems,
- Production programmes,
- Investment analysis and environmental forecasting, etc.
It is the duty of the Business Economist to provide the necessary economic intelligence, besides statistical information to the Management for effecting planning. The Business Economist has to keep in mind the main objectives of the firm and take decisions on the basis of these objectives.