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Applications of Managerial Economics for ADNOC

Table of Contents

1. What is Managerial Economics?

2. Applications of Managerial Economics

3. Applications of Managerial Economics for ADNOC

3.1 Demand Analysis and Forecasting:

3.2 Cost and Production Analysis:

3.3 Inventory Management:

3.4 Pricing Decision, Policies and Practices:

3.5 Profit Management:

3.6 Capital Management:


1. What is Managerial Economics?

Managerial economics has been for the most part characterized as the investigation of monetary speculations, rationale and devices of financial examination, utilized as a part of the methodology of business choice making. It includes the comprehension and utilization of monetary hypotheses and strategies of financial investigation in breaking down and taking care of business issues.

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It empowers the business official to accept and investigate things. Each firm tries to get tasteful benefit despite the fact that economics stresses amplifying of benefit. Thus, it gets to be necessary to overhaul monetary thoughts to the viable world. This capacity is generally done by managerial economics. Managerial economics is a science connected to choice making. It crosses over any barrier between theoretical hypothesis and managerial practice. It focuses all the more on the strategy for thinking. In short, managerial economics will be “Economics connected in decision making” (Stengel, 2012).

2. Applications of Managerial Economics

Devices of managerial economics can be utilized to attain essentially all the objectives of a business association in a proficient way. Regular managerial choice making may include one of the accompanying issues:

  • deciding the cost of an item and the amount of the thing to be created
  • deciding whether to make an item or to purchase from an alternate producer
  • choosing the generation method to be utilized in the creation of a given item
  • deciding on the level of stock a firm will keep up of an item or crude material
  • deciding on the publicizing media and the power of the promoting battle
  • making job and training choices
  • making choices with respect to further business venture and the mode of financing the speculation.

Separated from these choices, managerial economics primary centre is about settling on the choices with respect to the interest, supply and acquiring the balance position (Siddiqui, 2009).

ADCON: it was established in 1971 to work in every aspect of the gas and oil industry and from that point forward has relentlessly grown its movement making organizations and backups and making an incorporated gas and oil industry in UAE. Today, the organization oversees and administers oil generation of more than 2.7 million barrels per day which positions it among the main ten oil and gas organizations on the planet (ADNOC, 2014).

3. Applications of Managerial Economics for ADNOC

Each association obliges a few procedures to contend in the aggressive world and to satisfy the needs of the clients and making them fulfilled is the primary target of the organization. Concentrating on the managerial economics and applying it in the association helps the organization in acquiring the objectives.

3.1 Demand Analysis and Forecasting:

Like all the organizations, ADNOC is a monetary association which changes inputs into yield that is to be sold in a business sector. Precise estimation of interest, by breaking down the strengths following up on interest of the item delivered by the firm, structures the imperative issue in taking successful choice at the firm level. In the event that ADNOC is not able to take care of the demand of the business sector, an issue will emerge and the clients will move towards the contenders. This is on account of, clients are reliant on the supply from the ADNOC, and by nay error, if ADNOC is not ready to take care of the demand of the business sector it will linger behind the contenders and will misfortune the clients.

Accordingly, a real piece of managerial choice making in ADNOC relies on upon precise evaluations of interest. At the point when interest is assessed, the chief at ADNOC does not stop at the phase of evaluating the current request yet evaluates future request also. This is what is implied by interest determining. This helps ADNOC in keeping up and orchestrating the generation offices to take care of the demand which is relied upon to emerge later on.

This figure can likewise serve as an issue to ADNOC for keeping up or reinforcing business position and amplifying benefit. This can be fulfilled by minimizing the expenses and loss of the clients, as the interest will be proficiently and adequately met, the clients will be fulfilled and ADNOC didn’t need to face a misfortune because of not taking care of the demand. Demand Analysis helps in distinguishing the different components impacting the interest for an association’s item and hence gives rules for demand manipulation (Chand, 2014).

3.2 Cost and Production Analysis:

Analysis of cost is yet an alternate capacity of managerial economics matters connected in ADNOC. In choice making, expense appraisals are exceptionally key. The elements bringing on variety in expenses must be perceived and took into account if administration is to touch base at expense gauges which are noteworthy for arranging purposes. By discovering the components expanding the expense and varieties in the expense, ADNOC can uproot and additionally enhance them so the expense which at one time was progressive can be lessened. This step can prompt the low cost leadership.

The determinants for assessing expenses, the relationship in the middle of expense and yield, the figure of expense and benefit are extremely fundamental for ADNOC (Singh, 2010). As the benefit is figured by discovering the distinction between the expense and the cost at which the item is sold, a firm can deal with this distinction by applying the ideas of managerial economics. A component of expense instability exists in light of the fact that all the variables deciding expenses are not generally known or controllable. Managerial money matters touches these parts of expense investigation as a compelling information and the application of which is foundation for the accomplishment of ADNOC.

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Generation investigation often moves ahead in physical terms. Inputs assume an essential part in the commercial concerns of generation. The variables of generation overall called inputs, may be joined in a specific manner to get the greatest yield. On the other hand, when the cost of inputs shoots up, a firm is compelled to work out a blend of inputs in order to guarantee that this mix turns into the minimum expense mix (Chand, 2014). Thus, it minimizes the expense of generation for a firm and additionally it minimizes the expense of the item delivered at the firm. Managerial trading and lending permits the firm to discover the ideal match of inputs which will deliver most extreme yield in any event measure of expense.

3.3 Inventory Management:

A stock alludes to a load of crude materials which a firm keeps. Presently the issue is how a significant part of the stock is the perfect stock. On the off chance that it is high, capital is ineffectively tied up. In the event that the level of stock is low, creation will be influenced. In the event that a firm need to be practical, then the firm ought to dependably concentrate on the expense of putting away and dealing with the stock, this connections with the interest idea of the trading and lending, if the firm has determined the interest wrongly and has delivered more units of the item then required, then it will need to keep it in the stock which will build certain expenses for the firm.

Subsequently, managerial mass trading helps ADNCO to utilize such techniques as ABC examination, Economic Order Quantity (EOQ) approach with a perspective to minimizing the stock expense (MCGUIGAN, MOYER, & HARRIS, 2011). It likewise goes deeper into such viewpoints as intentions of holding stock, expense of holding stock, stock control, and fundamental routines for stock control and administration. By utilizing these routines and applying them with the assistance of managerial matters of trade and profit, a firm can deal with the stock in a superior manner.

3.4 Pricing Decision, Policies and Practices:

Pricing is essential range of managerial mass trading and it helps ADNOC by giving certain systems to compute and settle on the choices in regards to what cost to set for the clients. The control capacities of ADNOC are preparations as well as evaluating also. At the point when evaluating a thing, the expense of creation must be considered. Business choices are enormously affected by plaguing business sector structure and the structure of businesses that has been advanced by the way of rivalry existing in the business (Chand, 2014).

Evaluating is really guided by attention of expense arrangement estimating and the strategies of open undertakings. The learning of the estimating of an item under states of oligopoly is likewise key. The value framework manages the chief to take substantial and beneficial choice.

3.5 Profit Management:

Like each business firm, ADNOC is an association intended to make benefits. Benefits are corrosive test of the individual association’s execution. In assessing an organization, ADNOC should first see how benefit emerges. The idea of benefit expansion is exceptionally valuable in selecting the options in settling on a choice at the firm level.

Benefit estimating is a vital capacity of the administration at ADNOC. It identifies with projection of future profit and includes the examination of genuine and expected conduct of firms, the deals volume, costs and contender’s methods, and so on. The principle perspectives secured under this range are the nature and estimation of benefit, and benefit strategies of exceptional hugeness to managerial choice making (Siddiqui, 2009).

Managerial money making concerns tries to figure out the circumstances and end results relationship by genuine study and consistent thinking. For instance, the announcement that benefits are at a most extreme when minimal income is equivalent to peripheral cost, a generous piece of monetary investigation of this deductive suggestion endeavours to achieve particular decisions about what ought to be carried out.

The rationale of straight writing computer programs is reasoning of numerical structure. In fine, managerial money making concerns is a limb of regulating matters of trade and profit that draws from distinct trading and lending and from settled deductive examples of rationale.

3.6 Capital Management:

Arranging and control of capital consumptions is the fundamental official capacity of ADNOC. The managerial issue of arranging and control of capital is inspected from a monetary outlook. The capital planning procedure takes distinctive structures in diverse commercial ventures.

It includes the equi-negligible standard. The target is to guarantee the most productive utilization of trusts, which implies that finances should not be connected when the managerial returns are not exactly in different employments (Stengel, 2012).

Along these lines we see that ADNOC has instabilities to shake on with. Accordingly, we can reason that the topic of managerial mass trading comprises of applying financial standards and ideas towards altering with these instabilities of the firm. By this, ADNOC can have the capacity to deal with its capital all the more productively and can settle on a decent choices in putting the capita in the ranges which will create more benefit.


ADNOC. (2014). Abu Dhabi National Oil Company. Retrieved from http://www.adco.ae/en/adnocgroup/pages/aboutadnoc.aspx

Chand, S. (2014). Managerial Economics: Meaning, Scope, Techniques & other Details. Retrieved from http://www.yourarticlelibrary.com/managerial-economics/managerial-economics-meaning-scope-techniques-other-details/24730/

MCGUIGAN, J. R., MOYER, R. .., & HARRIS, F. H. (2011). Managerial Economics: Applications, Strategy, and Tactics. Retrieved from www.cengagebrain.com/…/mcguigan79234_1439079234_01.01_toc.pd...

Siddiqui, F. (2009). Managerial Economics – How it is important for Business Managers . Retrieved from http://fareedsiddiqui.expertscolumn.com/article/what-managerial-economics-how-it-important-business-managers

Singh, S. (2010). Managerial Economics. Retrieved from http://www.slideshare.net/snigdhamatrix/introduction-to-managerial-economics-6273679

Stengel, D. N. (2012). Principles of Managerial Economics. Retrieved from http://catalog.flatworldknowledge.com/bookhub/reader/5572


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