Question

A. One of the most important skills to learn in managerial economics is the ability to identify a good business. Discuss at least four characteristics of a good business.

B. Identify and talk about at leash four companies that you regard as having the characteristics listed here

C. Suppose you bought common stock in each of the four companies identified here. Three years from now, how would you know if your analysis is correct

CASE Study Is Coca-Cola the "Perfect" Business?3 What does a perfect business look like? For and old alike. It would be cold rather than hot Warren Buffett and his partner Charlie Munger, so as to provide relief from climatic effects. It vice chairman of Berkshire Hathaway, Inc., it must be ordered by name-a trademarked name. looks a lot like Coca-Cola. To see why, imagine Nobody gets rich selling easy-to-imitate generic going back in time to 1885, to Atlanta, Georgia, products. It must generate a lot of repeat business and trying all of your friends rich. ensure widesprea to invent from scratch a nonalcoholic beverage that would make you, your family, and through what psychologists call conditioned reflexes. To get the desired positive condi reflex, you will want to make it sweet, rather Your beverage would be nonalcoholic to d appeal among both young than bitter, with no after-taste. Without any after- taste, consumers will be able to drink as much of

Answer 1

Answer (A) : Managerial economics has been the latest buzz among the modern studies of economy. Managerial economics specializes in the management of the economy and stresses the need to set up a good business. A good business can be termed as the firm that makes good or handsome profits and has very minimal negative impact on the social or ethical culture of the society. Let us discuss some characteristics of a good business. The First characteristic of a good business is having the vision for what needs to be produced. This is the key constituent of starting a business. A good and vision to what the producer actually wants to do motivates him to further work towards the other key constituents of the business. The vision should be clear and positive and must be something the producer can aim to achieve. The Second key characteristic of a good business is The Plan. A good and clear vision must have a good plan to back it up. The producer must formulate the plan for the investment, production and distribution of the product in a detailed manner so as to focus on each and every perspective of the business set up. Another important character of a good business of to know the customers for whom the product is to be manufactured. It is of prime importance that the prouder should know which bracket of customers would get impacted by his product and what products would be most suited to their needs and demand. Only once the producer knows his customer base, he can aim for a good product. Another important characteristic of a good business is the marketing of the product. By marketing, it means making the product known to every consumer in the market. This involved strategies such as promotion of the product at places, where is most desirable by the consumers, or advertising it in those areas where people are most likely to acknowledge it and so on.

Answer (B) : There have been many giants in different industries affecting and controlling the business in their respective markets. However very few among them have been the starters of a good business. Some of these firms whose work can be classified under the good business are Walmart, Amazon, Apple and Microsoft. All these firms have been the giants in their territory. However, if we close examine their business models, we will notice that they have been very particular about their business strategies and its execution. These firms have brought bout a revolution in their own markets and changed the dynamics of the current business standard. All these firms had a very clear vision as to what they wanted to do, they back it up with an excellent plan , they knew which customers are they going t target by their product and how they need to propagate the details of their product in the market so that it appeals to the maximum number of consumers. Along with theses necessary characteristics, these firms have not compromised on the ethical part of the business standard. Moreover, they have also ensured that the after sales service of their product remains excellent. This after sales service is perhaps the most critical part of sustaining in the market. The customer wants a very good after sales service to buy that product again and again. These firms have to some extent ticked all the boxes of a good business.

Answer (C) : A very clear indication to whether our choice of buying the common stock in these four companies has been successful or not , is by looking at the value of the stock and the amount of return we would get from the selling of the same stocks. Stock market reflects the current situation of a firm or a conglomeration of firms. If the firms are doing good business, the stocks of the firms would keep on going higher, and if the firms are not doing good, their stocks would dip. Therefore, if the value of our stock increases, it is a clear indication that out decision to invest in the common stock of these firms was correct.