Behavioral Economics Essay

IntroductionBehavioral Economics is an extremely master(prenominal) matter of psychology it seeks to expand the current tools that researchers use in economics and finance to introduce new models of human behavior that are adequately founded in psychological research. The Behavior Economics is crucial in seam decision making process. The knowledge in rail line and Financial Literacy is precise important for their direct lotion to military control and Consulting Psychology. Understanding Financial Management which includes profit & loss, specie flow, balance sheets, ratios, ROI, working capital, work outing, financial planning, and corporate finance and Business Management that includes business strategy, strategical market management, micro-economic analysis, sustainable competitive advantage, strategic positioning, diversification, acquisitions, mergers, and technology management, volition completelyow the adviser to function businesses increase their profits and impr ove their telephoners culture.Business Management and StrategyBusiness Strategy is a management plan of action that an plaque position in place in methodicalness to hand a particular goal or a set of goals and objectives, this strategy gage help the organic law differentiate itself from its competitors. In order for a company to differentiate itself from their competitors, they need to successfully implement a strategy that will determine the market that the business will compete, the investment needed, the strategies required to compete in that specialised market and the strategic resources or competencies that underline the strategy by providing a important sustainable competitive advantage (SCA) (Aaker, 2001).Budgeting and Financial Planning in that respect are many vital managerial tools that assist in managing a successful business. Budgeting is the to the highest degree common and widely used tool for planning and misrepresent it is essentially a guideline that focus es on sp terminaling, it can breaks down all the business expenses in different categories, per example, utilities, payroll, taxes, materials, equipment, etc, too all the income that the business expect to adopt 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 take shape. The budget goal is to subtract all the expected expenses from the expected income for the same period and still progress to a dogmatic cash balance. A budget should not be a rigid 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 FinanceT he Corporate Finance addresses how organizations face their financial obligation, to intelligently invest their resources, achieve the illuminate combination of financing to fund their investments and return a profit to the investors hence achieving value maximization. When a company invests in a project or binary projects, this project will generate expenses and will create revenue for the company, but what is a project? Project 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 services (Aaker, 2001), making the organization more competitive and profitable.Financial ratiosThe Financial Ratios are practical indicators of a companys financial and performance situation. The most important indicator of a business per formance is profits. Profits provide the basis for the internally or externally generated capital that the organization needs to postdate its growth strategies, to replace out of dated plants and equipments, and to absorb market risk (Aaker, 2001). But how can we measure 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 involved (Aaker, 2001). The ROI measures how much profit the organization can produce with the capital that is available to them (Gitman, 2009). The companys goal is to increase the ROI, because higher the ROI, the better. Thats why 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 branding decisions. Branding is not just to increase sales i n one product, 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 day leads to repeat sales (Goodman, 2012). There are many different ways 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 quality 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 overlapping positions and this process can cause downsize, which is the process of restructuring a organization in a way that bring s 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 reduce significantly the competition and the overhead for both companies (Holden, 2010).Consultants can be key facilitators of a smooth transition (during a M&A) by ensuring that there is sufficient understanding and buy-in at the leadership level about the costs 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 newly co-ordinated corporate culture. During an M&A, cultural change often represents the soft side of the transaction. Everybody agrees about its importance but it seems too frequently to take a backbone seat in the stated price tag synergies to be accomplished, as well as, how the new administrative track that needs to be quickly put in practice.ConclusionThe main goal of a business consultant 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 experience obtained from earlier assignmentsAlso as a professional I will help clients to define a projects goal and capacity, and together with administration prepare a comprehensive proposal to document how th e 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 ultimate goal as a consultant will be to develop a concept of a sustainable competitive advantage (SCA) and to neutralize 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.). youthful York, NY John 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 be ings 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 translation 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 Make 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, Retrieved from http//som.yale.edu/spi egel/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 Resource Management, 20 (3), 694-715. Wood, N. (2012). Behavioral Economics. PowerPoint slides. Retrieved from http//www.nancywood.org/Business/Behavior/Behavioral.pptx