Essential Economics for Management Consultants

You may be asked to model the supply or demand for a specific good. Let's have a look at concepts and how to use them in practice

Demand is one of the key elements that we need to predict what will happen in the market. It shows you the situation on the consumer side. Let’s see what economists mean by demand.

We will start from the customer base that we will use to get to the Demand. Now, let’s see how in practice we will estimate Demand.

Supply is the second key element that we need to be able to predict what will happen in the market. It shows you the situation on the side of producers. Let’s see what economists mean by supply.

We will start with an average firm that has a certain, defined capacity. This will help us estimate the whole industry. Now, let’s see how in practice we will estimate Supply.

We will discuss the so-called Market Equilibrium. Now, let’s see what we get when the Supply meets the Demand.

You were asked to estimate the supply and demand in the apple market. Let’s see what we know about the customers and producers.

In this lecture, I will show you the solution to the previously introduced case study. Let’s see what we know about the problem.

In this lecture, I will show you the solution to the previously introduced case study.

Supply and demand in practice is greatly differ from the theoretical approach. Let’s see how we can compare supply and demand in practice.

We will try to improve the relationship between supply and demand. Now, let’s analyze the demand and supply of doctors in the whole country.

In this lecture, I will show you the solution to the previously introduced case study. Let’s see what we know about the problem.

In this lecture, I will show you the solution to the previously introduced case study.

In many situations, despite overall market equilibrium, you can have a lot of surpluses and shortages. Let’s see what makes this situation possible.

Apart from optimizing the production you have to think strategically and know when you have to add new capacity / factory. In this section I will show you how you can do that

Here I will show you how to manage capacity depending on your industry and demand forecast. 

Locations of some factories depend on the so-called supplier catchment area. You are looking for an area where you have a sufficient amount of resources or suppliers. Here, we will see how the catchment area influences the decision on capacities

The customer catchment area is important in picking the right location for the factory. Both B2B as well as B2C. Here I will show you how to approach this subject

In this lecture, we show how you can measure and analyze the maximal reach of your B2B business, having in mind transportation costs and markups. We will provide you with a fast way to identify potential customers and measure your targeted price on a specific foreign market

Let’s have a look at a car producer that is wondering which plant should supply to which country

In this lecture, I will show you how to use the solver to find an optimal solution to the case of planning the flow of finished goods between factories and markets

In this lecture, I will show you how to use the solver to find an optimal solution to the case of planning the flow of finished goods between factories and markets

You were asked to estimate the supply and demand for supercharging stations devoted to electric cars. Let’s see what we know about the market.

Let’s see what kind of drivers we can define for the demand and the supply.

In this lecture, I will show you the solution to the previously introduced case study.

In this lecture, I will show you the solution to the previously introduced case study.

Supply and Demand look a bit different if you are dealing with less standard markets than the traditional physical goods that classical economics is based on.

Let's see how we can increase supply or demand

In many cases, your demand is limited by something that you cannot control directly. In such cases, you may be interested in enabling investments

Enabling investment can be done in different places, depending on where the bottleneck is

• Demand-side

• Supply-side

• Distribution side

Let’s have a look at how a retail chain for kids’ products can do enabling investments to support the sales of its products and in Tesla

We have mentioned that the Prices is set by comparing the Demand and the Supply. Let's have a look at concepts and how to use them in practice.

Let's see why prices is so important in practice in businesses

Pricing quite often depends on the value/benefit that the customer gets from the product. Let's see 3 main options of benefits.

The price also has to be perceived as fair. A fair price must be expressed by the right number. Let's check how it works.

When we are talking about prices, we have to remember that there are different concepts involved. Let's see some of them.

We will briefly go through the theory, but we will mainly concentrate on short case studies that will help you understand different techniques. Now, let’s have a look at different ways to set prices.

Let's have a look of 3 main approaches to price setting.

There are some ways in which you can implement Value-Based Pricing. Let's see how it works.

Implement the Value-Based Pricing is a 5-step proces. Let's check how it works.

Checking the willingness to pay can be described using a 5-step process. Let’s have a look at the process.

In Value-Based Pricing, you set the prices using the value that the product gives your customer. Let's talk briefly about the customer surplus that you should leave.

In many cases, similar products are available at different prices next to each other in the same store. Those different prices we call price points.

Let’s see what the impact will be on the Gross Margin of introducing a new price point in a coffee shop chain. A few information about the chain

• 100 locations in Eastern Europe

• Currently, they sell 2 sizes

• They want to introduce 3rd size

• Estimate the impact on Gross Margin

In this lecture, we will solve the case study that we have introduced in previous lectures.

In this lecture, we will solve the case study that we have introduced in previous lectures.

In this lecture, we will solve the case study that we have introduced in previous lectures.

Certain needs require the customer to buy a few products together to fulfill their needs. Those products we call complementary.

In some cases, you want to bundle two or more products and sell them as one set. Usually, the bundle costs less than individual products. Let's check how it works.

Now we will have a look at a cosmetics producer, and we will try to see what the impact of creating a new bundle is. Let's see what we know about them:

• They sell face creams & shampoos

• They consider creating a bundle of those 2 products

• They will 10% discount on products in the bundle

In this lecture, we will solve the case study that we have introduced in previous lectures.

In this lecture, we will solve the case study that we have introduced in previous lectures.

In this lecture, we will solve the case study that we have introduced in previous lectures.

In some industries, especially B2B, the pressure on prices is so big that firms decide to unbundle their services and prices. Let's see what we recommend doing.

Imagine that you are working for a Drugstore Wholesaler that wants to unbundle its services (provide direct distribution instead of wholesaling service). Let's see how to estimate the impact.

Let’s see what we know about the firm that we will be analyzing.

In this lecture, I will show you the solution to the previously introduced case study.

In this lecture, I will show you the solution to the previously introduced case study.

Let’s have a look at 3 approaches to managing the price & discounts.

Let’s see how the price of a product will change in the Product Life Cycle.

Imagine that you are working for a video game producer. You have to decide on the pricing strategy in each and every stage of the Product Life Cycle.

In this lecture, we will solve the case study that we have introduced in previous lectures.

In this lecture, we will solve the case study that we have introduced in previous lectures.

In this lecture, we will solve the case study that we have introduced in previous lectures.

Price discrimination is an old concept that can be fully used thanks to technology. In Price Discrimination, we start with the notion that the product has a different value for different customers. If this is the case, then it makes sense to have different prices for different customers or groups of customers. Price Discrimination can be achieved in many different ways

Imagine that you are working for a PE fund that has just bought a fashion Retailer. You have to estimate the impact of introducing special discounts for cardholders.

In this lecture, we will solve the case study that we have introduced in previous lectures.

In this lecture, we will solve the case study that we have introduced in previous lectures.

In this lecture, we will solve the case study that we have introduced in previous lectures.

In this lecture, we will solve the case study that we have introduced in previous lectures.

In Dynamic Pricing, you set flexible prices based on current or forecasted demand. In other words, there is a big fluctuation in the prices.

Let’s imagine that an airline is considering moving from a single price to dynamic pricing. Check under what conditions it makes sense.

In this lecture, we will solve the case study that we have introduced in previous lectures.

In this lecture, we will solve the case study that we have introduced in previous lectures.

In this lecture, we will solve the case study that we have introduced in previous lectures.

Let's discuss segmentation methods that may be useful to you

In this section, we will briefly discuss an important issue – price elasticity. It shows you the impact of changes in price on demand.

Let’s start with a short definition. Price Elasticity of demand:

• Shows how the demand will change if you move the price

• It gives the percentage change in quantity demanded in response to a 1% change in price

The impact of the price change on your profit will depend on a few factors. I will discuss in this lecture what you should take into account and how to calculate it.

In this lecture, I will show you how to solve the case shown in the previous lectures

In this lecture, I will show you how to solve the case shown in the previous lectures

Economics deals with complex systems. In such systems, your actions can cause unintended consequences to other members of the system. We call them externalities.

Externalities can drastically change your view on certain activities. Let’s see how we define them and what we should do with them.

A surprising number of people die or have health problems due to air pollution. Let’s see how we can address this problem and whether it will make sense.

In this lecture, we will solve the previously introduced case study.

In this lecture, we will solve the previously introduced case study.

Let’s imagine that you have decided to keep the schools open longer during the working week, and on top of that during the weekend. Let’s see what will be the impact of this policy.

In this lecture, I will show you how to solve the case shown in the previous lectures

In this lecture, I will show you how to solve the case shown in the previous lectures

In this lecture, I will show you how to solve the case shown in the previous lectures

Let’s imagine that you have decided to offer free lunch to all kids at school. Let’s try to analyze whether it makes sense or not.

In this lecture, I will show you how to solve the case shown in the previous lectures

In this lecture, I will show you how to solve the case shown in the previous lectures

Now let’s discuss other concepts related to microeconomics. They will prove useful both in decision making as well as in defining the strategy for firms. In this section we will discuss sunk costs, opportunity costs and market structures

Now we will look at 4 different types of market structures that you may come across. A specific market can move from one type to another.

In many situations, we have to deal with things that we did not experience to make the optimal choice. One of such things is the opportunity cost.

Some costs should not have been taken into account when making a decision. In this group, we have the so-called sunk costs. Let’s look at them.

You should also have a good understanding of basic concepts related to the whole economy. This part of economics we call macroeconomics. In this section, you will learn about inflation, unemployment, GDP, GDP growth, and fiscal and monetary policies.

One of the biggest problems that many countries have to deal with is inflation. Let’s see what causes inflation and how it can be stopped.

Let’s see what causes the inflation

Finally, let’s look at the main tools that countries use to deal with inflation

Unemployment is the second biggest problem for a lot of countries. It means lost income but also increased costs for the country.

Let’s see what causes the unemployment

Let’s see how you can fight different types of unemployment

Economics tries to simplify the complex reality to find relationships between things. This enables you to see the big picture. Let’s look at groups of actors that participate in the economy.

In many situations, you will want to measure the size of the whole economy. One of the most often used measures is Gross Domestic Product (GDP).

Fiscal policy is one of the 2 main tools that the government can use to influence the economy. Let’s see what it is and how you can use it.

Monetary Policy is the second biggest group of tools that are used by countries to influence the economy. Let’s see what we can do with these tools.

Every country wants to grow its economy (usually measured by using GDP). Let’s look at how they try to achieve that.

Let’s see what tools you can use to grow GDP, depending on the selected path