Managerial Economics & Organizational Architecture
McGraw-Hill Companies,Incorporated, 2007 - Architecture - 730 pages
With two distinct objectives, this text’s approach to managerial economics takes models from recent economics research and applies the research to the internal structure of a firm. After teaching basic applied economics, the authors look inside the firm and apply this analysis to management decision making. Authors Brickley, Smith, and Zimmerman contend that organizational architecture consists of three aspects of corporate organization: the assignment of decision rights within the company; methods of rewarding individuals; the structure of systems to evaluate the performance of both individuals and business units. These three components can be likened to a stool with three legs. If one of the legs is shorter, the stool is out of balance. These three elements must be in balance in the organization as well.
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actions Airbus analysis assets assignment average cost behavior benefits Boeing BusinessWeek centers Chapter choice choose compensation competitive consumer surplus consumers contracts corporate customers decentralization decision rights demand curve discussed economic effects efficient effort elasticity employees Enron equilibrium ethical example expected Figure firm firm's function given higher important incentive problems income increase indifference curve individual industry input instance investment isocost isoquant Journal labor lower managerial managers manufacturing marginal cost marginal revenue maximize Microsoft million monitoring motivate Nash equilibrium opportunity cost optimal organization organizational architecture output outsourcing owners payoffs percent performance evaluation potential profits publicly traded purchase quantity reduce regulation relative risk sell shareholders Source strategy suppliers tion transactions transfer price units utility wage Wal-Mart Wall Street Journal WorldCom