Behavioral Economics Essay

IntroductionBehavioral Economics is an super important field of psychology it seeks to expand the current tools that researchers use in economics and finance to creationduce new models of human conduct that be adequately founded in psychological research. The Behavior Economics is crucial in business decision making process. The knowledge in Business and fiscal Literacy is very important for their direct application to Business and Consulting Psychology. Understanding monetary circumspection which includes profit & loss, cash flow, balance sheets, ratios, ROI, working capital, ciphering, pecuniary planning, and corporeal finance and Business Management that includes business strategy, strategic grocery management, micro-economic analysis, sustainable competitive favor, strategic positioning, diversification, acquisitions, unions, and technology management, impart allow the adviser to divine service businesses enlarge their profits and improve their bon tons culture. Business Management and StrategyBusiness Strategy is a management plan of fulfill that an organization put in place in order to deliver the goods a particular purpose or a set of goals and objectives, this strategy can help the organization differentiate itself from its competitors. In order for a company to differentiate itself from their competitors, they need to successfully implement a strategy that go out determine the market that the business will compete, the investment needed, the strategies requisite to compete in that specific market and the strategic resources or competencies that emphasize the strategy by providing a important sustainable competitive advan get overe (SCA) (Aaker, 2001).Budgeting and Financial readyingThere atomic number 18 many springy managerial tools that assist in managing a successful business. Budgeting is the around common and wide employ tool for planning and control it is essentially a signpost that focuses on spending, it can break s down all the business expenses in different categories, per example, utilities, payroll, taxes, materials, equipment, etc, also all the income that the business expect to receive in a certain period of time, this period of time is usually yearly, monthly or sometimes weekly.Once the manager has all the estimated income and expenses for that period of time, the budget will start to suck up shape. The budget goal is to subtract all the expect expenses from the expected income for the same period and still have a confident(p) cash balance. A budget should not be a situated and fixed tool from which you may never deviate (Wood, 2012). The Financial Planning focuses on allocating resources efficiently, specifically achieving long range goals. In summary, while the budget focuses on the daily functioning of the organization, the future depends greatly on the financial planning which in turn relies on budgeting in order to be effective.Corporate FinanceThe Corporate Finance addresses how organizations face their financial obligation, to intelligently invest their resources, achieve the correct combination of financing to fund their investments and founder a profit to the investors hence achieving value maximization. When a company invests in a go steady or multiple projects, this project will give back expenses and will create tax income for the company, but what is a project? barf is any activity that generates a series of cash flows for the organization. The company uses the revenue in excess of expenses to fund new projects, improve existing projects or pay its investors (Spiegel, 2000). Per example, applying a low-cost strategy, businesses can remove all frills and extras from its products and function (Aaker, 2001), making the organization more competitive and profitable.Financial ratiosThe Financial Ratios are practical indicators of a companys financial and performance situation. The or so important indicator of a business performance is profits. Profits ply the basis for the internally or externally generated capital that the organization need to follow its growth strategies, to replace out of dated plants and equipments, and to absorb market risk (Aaker, 2001). But how can we mea genuine the profitability of an organization? The most basic and important tool to measure profitability is the Return on Assets, which is calculated by dividing the organizations profits by the assets confused (Aaker, 2001). The ROI measures how much profit the organization can produce with the capital that is open to them (Gitman, 2009). The companys goal is to increase the ROI, because higher the ROI, the better. Thats wherefore the ROA is so important for managers, investors and other business that may sell to this company.strategic MarketingThe Strategic Marketing includes creating a marketing plan that describes in detail the marketing mix, segmentation, and discolourationing decisions. Branding is not just to increase sales in one pro duct, but to any product that is associated with that brand. Thats why engagement matters it pulls customers back into the business and at the end of the twenty-four hours leads to repeat sales (Goodman, 2012). There are many different ship canal to use branding to support the organizations growth strategy, but for each specific growth strategy that are different approaches that can be used in order to achieve success (Aaker, 2001). Sustainable Branding will also increase customer loyalty where customers will recognize the part of the product or service every time that they see the brand (Aaker, 2001).Downsizing, Mergers & AcquisitionsMergers & Acquisitions essentially have the same features where the end result is one company where two existed. As stated by Shook & Roth (2010), during a merger and acquisition process, the organization will try to eliminate any overlap positions and this process can cause downsize, which is the process of restructuring a organization in a way tha t brings reduction of a part of the companys employees. If the M&A is successful, the new company will be more cost effective, efficient and mostly important, profitable (Holden, 2010). Mergers and acquisitions can also overthrow significantly the competition and the overhead for both companies (Holden, 2010).Consultants can be identify facilitators of a smooth transition (during a M&A) by ensuring that on that point is sufficient generaliseing and buy-in at the leadership level about the be of not addressing the culture issue early in the M&A process. There is plenty of empirical evidence suggesting the failure rate of M&As due to issues with the unsuccessful meshing of a impudently merged corporate culture. During an M&A, cultural sort often represents the well-situated side of the transaction. Everybody agrees about its importance but it seems too frequently to take a rear seat in the stated price tag synergies to be accomplished, as well as, how the new administrative tr ack that needs to be alertly put in practice.ConclusionThe main goal of a business advisor is to provide a professional or/and expert advice, but in order to do it, its vital that consultants understand the need to become an expert on their clients business and industry its also very important that consultants understand the need to communicate in their clients language. Also, in order to be effective, the consultant should be able to use motivation to trigger the organization members to change their behavior in order to achieve the organization goals (Fernandez-Huerga, 2008). As a consultant, my goal is to support the companys administration to resolve management, manufacturing, marketing, or other issues by providing* Focus and direction,* Expert analytical skills,* Objectivity, and* Knowledge and regard obtained from earlier assignmentsAlso as a professional I will help clients to define a projects goal and capacity, and unitedly with administration prepare a comprehensive pr oposal to document how the project will be implemented in order to achieve the desired objectives and steps along the way. Also I will make sure that the proposed changes are approved by the client before put in practice. Another very important issue is to maintain confidentiality during and after the assignment. My crowning(prenominal) goal as a consultant will be to fix a concept of a sustainable competitive advantage (SCA) and to neutralise the SCAs of competitors (Aaker, 2001). Using the Game Strategy, which is a study of strategic decision making, the consultant will be able to develop important insights concerning the strategy and how it should be addressed providing a rational choices for businesses dilemmas (Wood, 2012).ReferencesAaker, D. (2001). Developing business strategies (6th Ed.). New York, NY tooshie Wiley and Sons, Inc. Berman, K. & Knight, J. (2008). Financial Intelligence For HR Professionals. Boston, MA Harvard Business Press. Fernandez-Huerga, E. (Sep2008). The economic behavior of human beings The institutional/post-Keynesian model. Journal of Economic Issues (Association for Evolutionary Economics, 42 (3), 709-726. Gitman, L. J. (2009). Principles of managerial finance. (12 ed.). Boston, MA Addison-Wesley. Goodman, G. F. (2012). Engagement marketing How small business wins in a socially connected world. Hoboken, NJ John Wiley & Sons. Holden , P. (2010). Economies of scale a quick explanation Video file. Retrieved from YouTube website http//www.youtube.com/watch?v=AZshS761WsE Marks, M. (2003). Surviving MADness. HR Magazine, 48(6), 86. Marks, M., & Mirvis, P. H. (2012). Applying OD to deem Mergers and Acquisitions Work. OD Practitioner, 44(3), 5-12. Shook, L., & Roth, G. (2010). Downsizings, mergers, and acquisition Perspectives of human resources development practitioners. Journal of European industrial Training 32(2), 135-153. Spiegel, M. (2000). Principles of corporate finance. Unpublished raw data, Yale School of Management, Ret rieved from http//som.yale.edu/spiegel/intro/sampread.pdf Teamtechnology.co.uk. (n.d.). Retrieved from http//www.teamtechnology.co.uk/changemanagement.html Wickramasignhe, V. & Karunaratne, C. (Mar2009). People management in mergers and acquisitions in Sri Lanka employee perception. Journal of Human imaginativeness Management, 20 (3), 694-715. Wood, N. (2012). Behavioral Economics. PowerPoint slides. Retrieved from http//www.nancywood.org/Business/Behavior/Behavioral.pptx