Managerial Economies

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Managerial Economies

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Introduction

• This is the application of economic concepts and
  evaluation of organizational issues.
• It has to come up with goal oriented managerial
  decisions.
• This focuses on curbing expenses in an
  organization

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Ericsson Company

• The firm made a decision on cost cutting
  outsourcing the manufacture of its products to
  another company (Flextronics).
• This was for a purpose of saving on its
  production and remaining competitive in the
  market.
• The decision was a great step to guaranteeing its
  clients of innovative and high quality products.
• It was also because Flextronics would be
  responsible for cell phones manufacturing and
  accountable for any low quality product
  production.

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• The companys decision on outsourcing also
  offered a guarantee of
• flexible product volume
• increased capacity
• This meant it would have to sell a lot and make
  huge profits.
• Due to new technologies in the market,
  Flextronics also had a great responsibility.
• This was to employ the technologies on the
  products.
• This would act as a way of enhancing reliability
  and quality of handsets.

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Effects of the Move

• Ericsson to introduce advanced technologies which
  was also costly.
• The company hope to sell more of its products .
• This was to attract new clients by the end of the
  next financial year too.
• It was not the case as it had expected in terms
  of sales.
• Flextronics, dealing with manufacture of
  different products for other companies for
  example Siemens and Nokia, Flextronics
  confidentiality for either of the companies based
  on product quality and what makes other products
  exceptional is relatively low.

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• The company as a result, lost its knowledge on
  what clients want .
• They also lost knowledge of improvements they
  wish to be made on the products for maximum
  satisfaction.
• The company in the end closed down.
• This is because of loss of knowledge of customer
  needs and production expertise

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References

• Soderman, S. (2013). Football and management
  Comparisons between sport and enterprise.
  Houndmills, Basingstoke Palgrave Macmillan.

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