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Managerial Economics Analysis


In the world of changing business environment and certain and uncertain risk, it leads to make various decision that has been taken for the benefit of the company progressive deals and matching up the problem that diagnose 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 organziation. There is various problem that has been solved   by the company that is 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 beneficial for the company for longer period aspect.  As the business longing attributes has been based on the excellent decision and analytical aspect while assimilating the objective of the company. An organization need to be more forward looking to deals with future aspects to problem and more active to take a decision that meet future and present aspect and objective. The increment in the problem may lead to efficient strategies formation and elimination of the hurdle that has been facing by the management. For instance, the example of the covid19 effect and rising of the problem within in the business environment and shortcoming in the exchange market stability has been encountered by every country financial business. The problem of this leads to recession in many country businesses. More people are unemployed, company profitability has been breakdown and many companies are shut down. Hence, this is the kind of problem that is not pervasive in nature, but require time to eliminate, after this pandemic. Many factors have been changing their strategy and standard to sustain their market in the over-changing economy.  Thus, it effective done through taking strong decision as per the unpredictable market trends. In this assignment we basically talk and discussed about these problem and issue and make decision to solve the issue based on the selected case study.

Case study based on Woolworth company grocery market 

The case study based on the Woolworth company grocery market, as we know the Woolworth industry is longstanding company in the market. It is the Australia based company that deals in multi-diverse product, the company also deals in online market delivery. Woolworth Colloquially the company is known as Woollies, Woolworth has been developed the 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 their first store at Sydney’s Pitt Street. As per the current research the Woolworth has been facing problem with relation to the market change and high impact on the retail market of the Woolworth due to covid19 impact. The economic policies and certain restriction inherited in the Australia leads to significant change in the working process and selling of the product to the customer. As this case study has been stimulate in this assignment because the sight that we mention to 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 indulge in the 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 engagement of increase in the customer base”.

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

Research framework 

The research framework is based on the inductive research and delivered the outcome through using secondary data sources. As it is based on the case study framework, the main structure of the research is taking strategical decision and implicating aspect of business economics. As the case is based on the Woolworth for studying the retail market due to covid19 impact and change. The research is being conducted via using online channel and site that delivered strategical aspect for decision making on the asked problem in the case study. Through using the literature review research will reach the conclusion. In this research we discussed about the topic based on the economical nature for 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 retail market. The next point that can be assimilate is investment decision on the certain product and project that enable Woolworth to reach the new benchmark. Hence, all the mentioned point has been discussed in the designed research framework based on stimulated case study.

Research aim and objective 

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

 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 make a decision on the critical problem that impact highly on the operational work process.
  • To know why the company, analyse the issue before taking decision
  • To evaluate the marginal cost and marginal benefit to the company
  • To discuss on 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 required to take in their business process?
  • Has marginal cost and opportunity cost been identified for better decision making?
  • What is the factor that implicate 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 theorical 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 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 the various types of problem that has been faced by the retail industry. The retail sector is the very important sector of the economy as it directly engages with the customer and marked all the need and wants of the customer to efficiently deliver it and make a long-standing relationship with them. The type of retail busines that has been seen in the market is departmental store, supermarket, sole trader, factory outlets and the convenient store. These are the retail store that specifically deals in the retail product that is related to grocery, homeware and the other domestic goods. The relevant problem that has been based and relied on the following store is the coordinative management of all the activities indulge in the following store and making the effective customer ongoing to sustain the store for the longer period of time. The problem differs in the described types but the resolving process always same in the business that is discussion and analysis of the issue and market framework.

Analysis on overhead and cost behaviour decision making 

 According to Novák, et al.,2017 that state the analysis of the cost behaviour and overhead functioning while taking decision 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 analysis of the overhead mapping is to demonstrate the cost incurred in the operation and how much the profit that 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 assembled in an order through process the factory cost and indirect cost incurred by all the business department and operation. 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 behaviour of the cost due to certain effect of environment, market change and new polices. Hence, that’s why the company required to demonstrate the overhead for better financial standard as well as offering.

Marginal cost and marginal decision for retail business 

 As per Siva, et al.,2013 that state that marginal costing of the product in the retail business will be considered as the variable cost. In the following research author has been imputed the case based on the Godrej an FMCG company that deals in the various product based on furniture, hair colour and etc. In this case the preference of decision making has been discussed, that is based on the marginal cost. As with relevance to the research case study it is truly emphasis the opportunity that can be grab with the help of the marginal costing estimation. The overhead and other sunk cost can be demonstrated and the indirect variable that is come up through cost evaluation practices can be studied through marginal cost. The costing and the decision with relation to the price skimming is eventually very effective and efficient. The company can take the favourable decision and right decision with the help of 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 on the company should be seek and analysed.

Analysis of the investment decision 

As per the Pak & Mahmood, 2015 that state that the company has been indulge in various type of investment for recurring the financial recovery and building effective financial portfolio. The investment can be done on security market, any proposed project and expansion of the business etc. The business operation can be effectively carried out through urging for the investors also. Hence, the investment decision is very appropriate for the business progress as well as sustainability of the business. The investors will be approached by the company through building attractive business deals and pro-active credentials. The business forecast their balance sheet to urge for more investment proposal. 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 decision, the management has been used the method of expected return and risk portfolio for measuring the business risk and marginalised the cost effectively. Hence, choosing better option is necessary to embed the investment decision expectancy and objective.

Managerial economic approach to business decision 

 According to Calvet, et al.,2020 that state that managerial economic is the best and computational tool that helps in making the efficient decision on managing the scarce resources and building more opportunity to praise the customer with the production of the equitable distribution of resource in most optimizing ways. In the current global market, characterized by a cut throat competition, an 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 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 demonstrate through using the following aspect that has been outline in the literature review. The case study problem reflecting the strategical solution to raise their financial portfolio and customer base also (Albalaki & Majeed,2018). The method and process that has been used for solving the issue is-

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

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

The third process is the decision-making process as for effective management and coordination the decision making and discussion should be intending to derive in the business. As per the illustrated method, another method will be 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 managed to raise the financial growth and stability.

The fifth process will be monitoring the progress and growth and manage the changing environment in accordance to external impact on the decision and keep changing as per the reflected change for betterment of the economy scale.

Hence, this is the process through that the case study problem has been resolve 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 want to assembled the scarce resource in an order to meet the result. The company should require to refine the busines 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 return and make plans for it. If the market structure will be assembled as per the venues. The company will never breakdown even the outside the market is going upside down or not resonating any changes. Hence, for effective business strategical decision, the company should be forward looking, cost effective and efficient, customer oriented and having the power to manage the crisis and make up all the deal 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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