Summary:

Baumol Model Critical assumptions Key contributions to managerial economies Direct relevance to decision making Baumol model vs. profit maximisation model -compare the difference -evaluate their contribution to managerial economies. Management models cant be simply reduced to diagram but rather they describe a process taking place within the modern firm -agree or not -support answer with specific examples drawn from either Baumol or Marris Constraint underpinning the Baumol sales revenue max model -application today?? -provide examples How unrealistic are the assumptions on which the management models are based? - nominate one model and examine the extent to which it is of limited value to modern management because of the assumptions Marris Model support with examples and case study materials

Key features Ways to max. growth of the company Its relevance to management decision making case to support Management models cant be simply reduced to diagram but rather they describe a process taking place within the modern firm -agree or not -support answer with specific examples drawn from either Baumol or Marris

Cost Leadership

-Economies goal of securing cost leadership -5 steps and proceed to evaluate the importance of both productivity and capacity in securing cost leadership position. How important is it for management to secure cost leadership in a product market? Examine the extent to which the production cost relationship can help management achieve CL status. Why cost leadership might be an objective for firms -CPT (contemporary production techniques) guarantee that a firm will achieve cost leadership -case study material

Profit Maximisation Model

The ability of managers to purse goals other then profit max is severely limited by internal and external constraints, profit max model provides the best explanation of firms behaviour, comment?? Profit max hypothesis key to understanding mgt decision Separation of ownership from management -usefulness of the profit maximisation model in explaining and predicting the behaviour of such firms

Make or buy (TCE)

Use TCE concept to critise the make-or-buy decision involves a calculated balancing of several benefits and costs of integration. Modern management are opting for strategic alliances as a method of entry into product market -trend -rationalise the trend towards alliance A central issue in business strategy is how to organise the vertical chain -agree or not? -why? Economies of scale -factors -how these motive for firms to merge? Define the principal-agent problem. Examine the relevance of TCE in the economies of strategy.