ALHAMD ISLAMIC UNIVERSITY

FINAL TERM EXAMINATION SPRING 2023 (Online)

MBA EX-II, MBA2-II
Managerial Economics
Max Marks: 40
Date: 21-06-2023

Case Study 2: Managerial Economics in a Manufacturing Company

Company XYZ is a manufacturing company that produces and distributes a wide range of products. The company is
facing challenges in optimizing its production processes, managing costs, and making strategic decisions in a
competitive market. As a managerial economics consultant, you have been hired to conduct a case study to analyze
the company's economic situation and provide recommendations for improving its managerial decision-making.
Scenario:
Company XYZ operates in a highly competitive market where prices are determined by supply and demand
dynamics. The company aims to maximize profits while considering factors such as production costs, market
conditions, and customer preferences. The case study will focus on applying managerial economics principles to
improve decision-making processes.
Questions:
1. Demand and Supply Analysis:
a) Analyze the demand and supply factors influencing Company XYZ's products. How do changes in price, income,
consumer tastes, and competitors' actions affect the demand and supply dynamics?
b) Discuss the elasticity of demand and supply for Company XYZ's products and their implications for pricing and
production decisions.
2. Cost Analysis and Production Decisions:
a) Evaluate the production costs at Company XYZ, including fixed costs, variable costs, and economies of scale. How
can the company optimize its production processes to minimize costs and maximize efficiency?
b) Discuss the concept of marginal cost and marginal revenue and how they can guide production decisions, such
as determining the optimal level of output.
3. Pricing and Market Structure:
a) Assess the market structure in which Company XYZ operates (e.g., perfect competition, monopolistic
competition, oligopoly). How does the market structure affect the company's pricing decisions and profitability?
b) Discuss different pricing strategies Company XYZ can employ to maximize its profits, such as cost-based pricing,
price discrimination, or value-based pricing.
4. Market Research and Consumer Behavior:
a) Discuss the importance of market research in understanding consumer behavior and preferences. How can
Company XYZ use market research to identify customer needs, preferences, and willingness to pay?
b) Recommend strategies for Company XYZ to segment its target market, tailor its product offerings, and
effectively position its products in the market.
5. Strategic Decision-making:
a) Analyze the strategic decisions Company XYZ needs to make to gain a competitive advantage in the market. This
can include product diversification, market expansion, cost leadership, or differentiation strategies.
b) Discuss the role of opportunity cost and risk analysis in making strategic decisions and recommend tools and
techniques that Company XYZ can utilize for strategic planning.
6. Government Regulations and External Factors:
a) Assess the impact of government regulations, such as taxes, trade policies, and environmental regulations, on
Company XYZ's business operations and decision-making.
b) Discuss how external factors, such as macroeconomic conditions, technological advancements, or industry
trends, can influence the company's decision-making processes.

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