The Society of Cost Management believes a good understanding of Economics is critical in the new paradigm, Micro, Macro, Managerial, and Industrial. Understanding how your business fits into the national and international marketplace is more important now than ever. Even medium sized businesses operate globally and as investment in capital assets, comparisons between manufacturing locations, and transfer pricing are important components of this, we urge you to brush up on your knowledge of economics.
You can do that with any of the fine titles in the Prerequisites category in our bookstore or browse the web for an online course.
What is Industrial Economics? The best definition I can find is from Dr. Caroline Elliott, University of Lancaster:
Industrial Economics is the study of firms, industries and markets. It looks at firms of all sizes – from local corner shops to multinational giants such as WalMart or Tesco. And it considers a whole range of industries, such as electricity generation, car production and restaurants.
When analysing decision making at the levels of the individual firm and industry, Industrial Economics helps us understand such issues as:
- the levels at which capacity, output and prices are set;
- the extent that products are differentiated from each other;
- how much firms invest in research and development (R&D)
- how and why firms advertise
Industrial Economics also gives insights into how firms organise their activities, as well as considering their motivation. In many micro courses profit maximisation is taken as given, but many industrial economics courses examine alternative objectives, such as trying to grow market share.
There is also an international dimension – firms have the option to source inputs (or outsource production) overseas. As such, while industrial economics more frequently uses skills and knowledge from micro courses, macroeconomic concepts are sometimes employed.