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BUS505 Managerial Economics Analysis & Report


In the world of changing business environment and certain uncertain risk, it leads to making various decision that has been taken for the benefit of the company’s progressive deals and matching up the problem diagnosed by the company official. In the alignment of the economic and financial growth of the company, the organization has been put forward to take a risk and manage the return with effect profitability for an organization. There is various problem that has been solved by the company that as assembling useful resources, managing cash and operational portfolio, stock management, and decision-based on the investment of the capital and accepting any project that will be beneficial for the company for a longer period aspect.  As the business longing attributes have been based on excellent decision and analytical aspects while assimilating the objective of the company. An organization needs to be more forward-looking to deal with future aspects of the problem and more active in taking a decision that meets future and present aspects and objectives. The increment in the problem may lead to efficient strategy formation and elimination of the hurdle that has been faced by the management. For instance, the example of the covid19 effect and rising problems within the business environment, and shortcoming in the exchange market stability has been encountered by every country’s financial business. The problem of this leads to recession in many country businesses. More people are unemployed, company profitability has been a breakdown and many companies are shut down. Hence, this is the kind of problem that is not pervasive but requires time to eliminate, after this pandemic. Many factors have been changing their strategy and standard to sustain their market in the ever-changing economy.  Thus, it is effectively done by taking a strong decision as per the unpredictable market trends. In this assignment, we talk and discuss this problem and issue and decide to solve the issue based on the selected case study.

Case study based on Woolworth company grocery market 

The case study is based on the Woolworth company grocery market, as we know the Woolworth industry is a longstanding company in the market. It is an Australia-based company that deals in the multi-diverse product, the company also deals in online market delivery. Woolworth Colloquially the company is known as Woollies, Woolworth has developed a supermarket chain of Australia operating stores in Australia. The company was formed in the year 1924 under the name of Woolworth Bazaar Limited and had its first store on Sydney’s Pitt Street. As per the current research Woolworth has been facing problems with the market change and a high impact on the retail market of Woolworth due to covid19 impact. The economic policies and certain restrictions inherited in Australia leads to a significant change in the working process and selling of the product to the customer. As this case study has been stimulating in this assignment because the sight that we mentioned discussed has been covered under the retail market change and changes that appeared with the implication of the sudden market changes and impact of the customer mindset change. As the company has an integrated team force that diligently indulges in market formation and resolving the problem that appeared in the environment. As the current problem that has been discussed in the case is “how to raise the financial portfolio with the engagement of increase in the customer base”.

 Through the following case, we will understand the decision that an organization can make to embed the changes and increase turnover efficiency. The research and literature review has been mentioned to ensure the decision that has been made is effective and increases the chance of resolving the problem.

Research framework 

The research framework is based on inductive research and delivered the outcome by using secondary data sources. As it is based on the case study framework, the main structure of the research is taking a strategic decision and implicating aspects of business economics. As the case is based on Woolworth for studying the retail market due to covid19 impact and change. The research is being conducted via using online channels and sites that delivered strategic aspects for decision-making on the asked problem in the case study. Through using the literature review research will conclude. In this research, we discussed the topic based on the economical nature of increasing the demand and supply in the market. The financial aspect for diagnosing the price structure and skimming capacity that an organization can put to grab the pricing for the market that increase the base of the customer for the retail market. The next point that can be assimilated is investment decisions on certain products and projects that enable Woolworth to reach the new benchmark. Hence, all the mentioned point has been discussed in the designed research framework based on a simulated case study.

Research aim and objective 

The research aims to demonstrate the strategical process and aspect to resolve the problem illustrated in the case study.

 The objective of the research

The research objective is based on the following things are as follows-

  • To understand the economic essence to resolve the problem
  • To understand the company decision-making aspect based on depreciation and overhead
  • To know how to decide on the critical problem that impacts highly the operational work process.
  • To know why the company, analyze the issue before taking a decision
  • To evaluate the marginal cost and marginal benefit to the company
  • To discuss the managerial economic aspect while resolving certain issues and problem

Hence these are the objective of the research that has been ensured to meet through the application of the literature review and analysis process

Research question 

  • What are the decision company is required to take in its business process?
  • Has marginal cost and opportunity cost been identified for better decision-making?
  • What is the factor that implicates the market condition?
  • What is the method of investment decision?
  • Discuss the opportunity costs and benefits of the decision.

Hence, these are the question that has been presumed for the literature review analysis and prospering the strategies for effective decision-making and planning the content and resource required for embedding the management stability and sustainability of the financial condition within the market.

Thus, in the following research, we are not using the quantitative methodology as the aspect is purely a theoretical base. That can be easily explained through the medium of qualitative research methodology and secondary source of data infrastructure and data analysis will be based on the result that has been drawn out of the following source of the data study. Therefore, the conclusion has been conducted as an overview of the qualitative research embedment (Grover, et al.,2018).

Literature review 

Types of retail business incline with associated problem  

According to Hameli, 2018 that state that there are various types of problem that has been faced by the retail industry. The retail sector is a very important sector of the economy as it directly engages with the customer and marked all the needs and wants of the customer to efficiently deliver it and make a long-standing relationship with them. The type of retail business that has been seen in the market is departmental stores, supermarkets, sole traders, factory outlets, and convenience stores. These are the retail store that specifically deals in retail product that is related to grocery, homeware, and other domestic goods. The relevant problem that has been based and relied on the following store is the coordinative management of all the activities indulged in the following store and making the effective customer ongoing to sustain the store for a longer period. The problem differs in the described types but the resolving process is always the same in the business that is discussion and analysis of the issue and market framework.

Analysis of overhead and cost behavior decision making 

According to Novák, et al.,2017 that states the analysis of the cost behavior and overhead functioning while taking decisions making based on them. For taking decision-making based on the overhead various cost function and method has been used to define the overhead incurred in the business. The reason for the analysis of the overhead mapping is to demonstrate the cost incurred in the operation and how much profit the company will be urged from the market manufacturing. The overhead cost is the hidden cost that cannot be easily seen. It is required to assemble to process the factory cost and indirect cost incurred by all the business departments and operations. An organization study and then allocate the cost and mend the overhead essence, for effective decision-making. The cost driver is also set out for entailing the behavior of the cost due to certain effects of the environment, market change, and new policies. Hence, that’s why the company is required to demonstrate the overhead for better financial standards as well as offering.

Marginal cost and marginal decision for retail business 

Siva, et al.,2013 state that the marginal cost of the product in the retail business will be considered as the variable cost. In the following research, the author has imputed the case based on Godrej an FMCG company that deals in various products based on furniture, hair color, etc. In this case, the preference of decision-making has been discussed, which is based on the marginal cost. As with relevance to the research case study, it truly emphasizes the opportunity that can be grabbed with the help of the marginal costing estimation. The overhead and other sunk costs can be demonstrated and the indirect variable that is come up through cost evaluation practices can be studied through marginal cost. The cost and the decision about the price skimming are eventually very effective and efficient. The company can take a favorable decision and the right decision with the help of a marginal costing structure. Its benefits cost, revenue, and net profit of the company. So, for developing the effective financial portfolio of the company, the marginal cost and its benefit to the company should be sought and analyzed.

Analysis of the investment decision 

Pak & Mahmood, 2015 state that the company has been indulging in various types of investment for recurring financial recovery and building effective financial portfolios. The investment can be done in the security market, any proposed project, and expansion of the business, etc. The business operation can be effectively carried out by urging the investors also. Hence, the investment decision is very appropriate for the business’s progress as well as the sustainability of the business. The investors will be approached by the company through building attractive business deals and proactive credentials. The business forecast its balance sheet to urge for more investment proposals. The tender filing and other approaches will be used to raise the financial collaborators and engage them with business decisions. Thus, for planning effective investment decisions, the management has used the method of expected return and risk portfolio for measuring the business risk and marginalizing them cost-effectively. Hence, choosing a better option is necessary to embed the investment decision expectancy and objective.

The managerial economic approach to business decision

According to Calvet, et al.,2020 that state that managerial economics is the best computational tool that helps in making efficient decisions on managing scarce resources and building more opportunities to praise the customer with the production of the equitable distribution of resources in the most optimizing ways. In the current global market, characterized by cutthroat competition, optimal use of the available resources is more important than ever for guaranteeing the economical sustainability of organizations and enterprises of any size. As per the case, the managerial decision is required for meeting the demand and supply of resources in the changing environment and uncertain risk management within the retail outlets of the company.  Hence, for effective decision-making for converting need into demand, it is the requirement of managerial economic theory implication that access the market optimization with the help of a simulation approach and effective planning.

Analysis and discussion 

As per the following learning and study, the analysis based on the simulated case study problem can be demonstrated by using the following aspect that has been outlined in the literature review. The case study problem reflects the strategic solution to raise their financial portfolio and customer base also (Albalaki & Majeed,2018). The method and process that have been used for solving the issue are-

The first process is based on identifying the issue market and then ensuring the solution is fulfilling all the aspects that settle the market obligation and access the financial growth. As in the case, we discussed the covid19 impact exclusively exploding the market structure and bumping up and down the profitability of the business. It is appropriate before taking any decision to know the market condition first.

The second process taking a decision based on the implicated issue. Financial stability can be done by using the marginal decision process. That helps in cutting costs and increasing the demand through offering quality money and a customer base that is already existing and will sustain for a longer period.

The third process is the decision-making process for effective management and coordination the decision-making and discussion should be intended to derive in the business. As per the illustrated method, another method will be the managerial economic implication for alertness toward the outside fluctuation and defining the strategy according to it.

The fourth process is the implementation of the decision that has been taken that through marginal cost we will manage to raise the financial growth and stability.

The fifth process will be monitoring the progress and growth and managing the changing environment by the external impact on the decision and keep changing as per the reflected change for the betterment of the economic scale.

Hence, this is the process through that the case study problem has been resolved with help of the following attribute illustrated above (Albalaki & Majeed,2018).


The recommendation based on the following research and case-based study is that if Woolworth wants to assemble the scarce resource in an order to meet the result. The company should require to refine the business prospect as per the prevailing problem. The company should urge the market by delivering safety and security. The financial condition will strengthen by previewing the mistake and nature of change in the money business. The company should ensure that invested money is giving good returns and make plans for it. If the market structure will be assembled as per the venues. The company will never break down even if the outside market is going upside down or not resonating any changes. Hence, for effective business strategic decisions, the company should be forward-looking, cost-effective, efficient, and customer-oriented and have the power to manage the crisis and makeup all the deals on time.


Albalaki, F. M. M., & Majeed, R. J. (2018). Customer Profitability Analysis, Cost System Purposes and Decision-Making Process: A Research Framework. Account and Financial Management Journal, S3(5), 1547-1552

Calvet, L., de la Torre, R., Goyal, A., Marmol, M., & Juan, A. A. (2020). Modern Optimization and Simulation Methods in Managerial and Business Economics: A Review. Administrative Sciences10(3), 47.

Grover, V., Chiang, R. H., Liang, T. P., & Zhang, D. (2018). Creating strategic business value from big data analytics: A research framework. Journal of Management Information Systems35(2), 388-423.

Hameli, K. (2018). A Literature Review of Retailing Sector and Business Retailing Types. ILIRIA International Review8(1), 67-87.

Novák, P., Dvorský, J., Popesko, B., & Strouhal, J. (2017). Analysis of overhead cost behavior: case study on decision-making approach. Journal of International Studies.

Pak, O., & Mahmood, M. (2015). Impact of personality on risk tolerance and investment decisions. International Journal of Commerce and Management.

Siva, S., DANIEL, M. J., & Shalini, S. (2013). A Study on Marginal Costing in Godrej Consumer Product Ltd. Asia Pacific Journal of Marketing & Management Review ISSN2319, 2836.

Woolworth, (2020) business problem and issue in Woolworth [online] retrieved from [accessed on 25 October 2020]

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