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Managerial Economics: Introducing New and Innovative Vehicle

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Can you help me get started with this assignment?

I need to write a 1,500 - 2,000 word research paper discussing a current topic in the field of Managerial Economics (the economics of the firm).

Justify why you believe the topic is appropriate for Managerial Economics, and provide a rough outline of how you plan to proceed.

Follow the APA format. Both in-text citations and a general reference list at the end of the paper MUST be used. See Course Guide Appendix

Topic: The Managerial Economics of Introducing New and Innovative Vehicles in Today's Auto Market

Then I need to write the paper exclusively from the perspective of the auto industry and write about how the auto companies go about making their decisions based upon the economics involved.

Again, do not comment on the impact on the economy or on consumers, and do not present the government's point of view on anything. Think of yourself as a CEO/Manager and you are presenting a paper to fellow CEOs/Managers at a symposium.

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The response addresses the queries posted in 1556 Words, APA References

Managerial Economics & Decision Making Process


Managerial Economics is a branch of economics, in which various economic theories, concepts, tools and logics are studied to use in the business decision making. These theories are applied for the analysis of the business problems, business options or opportunities to reach at an appropriate business decision. Managerial economics integrates various economic theories with the business practices. The decision making process is an important task for a business because an appropriate decision selects the best alternative from the various alternative opportunities. All the problems related to the production, as well as the sales problems are also analyzed in the managerial economics, which helps in the decision making process (Baumol & Blinder, 2005).

Concepts of Managerial Economics

The different theories of Managerial economics like theory of demand, production and market structure analysis, pricing theory and profit management and capital & investment decision are the important concepts that are used in the business decision process. The concept of profit management, theory of demand and theory of production is used in the many industries widely, to make an effective business decision. The new product innovation for an organization is also based on the managerial economics.

Auto Industry

The current trend in auto industry shows that the demand of the automobiles is increasing continuously. The production in the global auto market is increasing with a rate of 5%. In some regions, the growth rate is stronger than the growth rate in the global auto market (Automotive, 2009). The automobile business is growing because of the increasing merger activities between car and parts manufacturers. The people are frequently changing their brands because bigger car manufacturers are providing financial facilities to them. The large brands are expanding their business activities globally.

Managerial Economics in Auto Market

E-commerce provides better information to the consumers about the various models of cars. They analyze the cost and quality of the car by comparing it with others and it causes an increase in the demand of the consumers, for the new technology and quality in the products of the company. The increase in the demand is causing for the new and innovative vehicles in the current auto market. The auto industry is a large segment in the US economy. The growth in the industry is because of the change in the preference of the consumers. ...

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The response addresses the queries posted in 1556 Words, APA References

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Option or combination of options as best course of action

Discuss the option or combination of option you selected as the best course of action for Ford Motor Company and detail your reasons for selecting that option or combination of options


Ford Motor Company, Dearborn, Michigan. As you look out the window of the "Glass House" headquarters, you comment to yourself that it has not been a fun place to work these past few years. As you contemplate the future opportunities for the company, you are left with the thought that this company will look radically different in the next few years. An icon of U.S. manufacturing, Ford Motor Company has been one of the most prominent automobile producers in the world for almost 100 years. Founded by Henry Ford and eleven business associates in 1903, Ford Motor Company pioneered the moving assembly line, in which workers remained in place performing the same job on each automobile that came down the line. Henry Ford's vision was the production of cars that were affordable to the masses. Today, Ford's product lines include Ford, Lincoln, Mercury, Mazda, Aston Martin, Jaguar, Land Rover, and Volvo.

Despite the proliferation of nameplates, Ford Motor has been losing money for years, particularly in its North American operations. Ford produces more vehicles than it can sell and does so under very difficult personnel conditions that are part of the industry's history. The United Auto Workers (UAW) represents most of the company's production employees, and the contract terms over the years have been designed to provide significant long-term support to those employees. Generous conditions for retirement, benefits, and job protection, developed when the industry was doing well, now weigh down company operations. Another issue that has you concerned is the Premium Automotive Group (PAG), which makes the company's Aston-Martin, Jaguar, Land Rover, and Volvo brands. Originally intended as the platform for the company to enter the luxury car market, this group has lost billions year after year. Although the company has substantial cash reserves (over $20 billion), operating losses are steadily diminishing the company's financial safety net.

You've identified four options for the company. The first is to close down older plants in an effort to realign production and sales. You don't want to produce more cars than you sell; in fact, it might be good to produce a bit less than you could actually sell. There is an enormous cost to buying out the workers, shuttering the plants, and dealing with the political implications of a closure. Furthermore, you are concerned that a resurgence of buying would leave you with so little capacity that consumers would move to competitors' products. A second option would be to move the company to produce only smaller cars, eliminating or sharply reducing the SUV and truck lines. This has the advantage of getting back to Henry Ford's vision for the company as well as dealing quickly with products that are simply not selling in today's expensive gas environment. Third, you could take the dramatic step of dramatically reducing your North American presence and focus your efforts on international markets where Ford has been very successful. Europe, South America, and China have been very receptive to Ford vehicles and the company is doing well in these markets. The fourth option is to sell the entire PAG group, letting someone else figure out how to make money selling so few vehicles a year. The hand-built PAG automobiles don't fit the Ford way of doing things anyway.

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