So, we’ve come full circle when we turn our attention back to the world of business. The managerial economy is just one facet of a larger economic environment. The broader economic environment includes the various economic forces that create price and value differences between the different goods and services we consume and the services we provide.
The broader economic environment includes the various economic forces that create price and value differences between the different goods and services we consume and the services we provide.
The managerial economy is a particular economic order, where people manage the costs of inputs into the economy. We’re all familiar with the various forms of labor, so managerial economics covers the management of the various inputs into the economy. It can also cover the management of the various outputs or final goods and services.
In a managerial economy we can see a particular output or final good or service is being managed by a particular person. For example, a baker may not be able to manage the actual baking process (the process of making bread), but they can manage the cost of inputs into the bakery, such as the cost of materials and labor.
A good example of a managerial economy is the Ford Motor Company. They do their work in a hierarchical manner (for example, the company produces a certain number of cars per year), but they also have a lot of input into the final product (such as sales volume) and they do it all from a single place (such as a factory).
How do you manage a bakery? Well, you just say ‘no’. That’s right, a lot of successful bakeries in the world do the exact same thing. Instead of you, the customer, having a say on how the process of your bread is handled, they just say “no.
It’s a little bit more complicated than that, but a lot of successful bakeries in the world do the exact same thing. Instead of you the customer, having a say on how the process of your bread is handled, they just say no.
Well, it isn’t just the baker that does this. Its the whole chain of bakeries that does it. In the UK it is the British Baking Federation (BBF) that does it. The BBF is the organization that manages the UK’s national bakery industry, but they also manage the whole food industry. They handle how you make bread, how you make cakes, how you make biscuits. It just so happens that the BBF also manages the whole food industry.
It is amazing to me that the BBF can do this. It is so well organized. It seems to me that its not just a bakery, its a whole part of the whole food distribution business.