Managerial economics principles and applications

Managerial economics, there are variety of structures and philosophies that companies will use to maximize their profit margins. This is accomplished through taking these concepts and continually adapting them in order to achieve these objectives. To fully understand how this applies requires examining an employer. This will be achieved by providing a description of the company, describing any problems they are facing, analyzing the dimensions of the job and studying the executive / employee compensation packages. Together, these different elements will highlight the underlying strengths and weaknesses of the organization. It is at this point, when specific insights can be provided that will help the firm adapt with the challenges they are facing inside the marketplace.

Provide a description of the company that you work for. As part of your description include a discussion of the type of organizational structure.

The company that we work for is a large electronics retailer called Radio Shack. They are focused on marketing a wide variety of electronics to consumers. The most notable include: tablets, laptops, e-readers, wireless technology, electronics parts / toys / accessories, digital music players, residential telephones, global positioning systems, cameras digital televisions and cell phones. ("Radio Shack," 2012) The basic management structure that is utilized is product organizational design. (Subtle, 2012)

Under this approach all of the various stores are organized into a number of regions. Each area has a Vice President who is responsible for addressing the problems and improving the profit margins of the stores located inside them. They will report to President and CEO. These individuals have the responsibility for running the company and ensuring that all major challenges are addressed. (Subtle, 2012)

Describe an agency problem within the firm and discuss what you think is causing the problem and how the problem might be better controlled.

The biggest problems facing Radio Shack is being able to compete with firms such as: Wal Mart and Best Buy. This is because they can offer similar products to cliental at lower prices. At the same time, the consumer electronics markets have hit the top of the S curve. This when is there is rapid growth and innovation from changes inside the technology sector. Once a firm reaches the top, is the point they will have trouble growing at a similar pace. This is because everyone has made their purchases and there is no need to continue to upgrade. (Nunes, 2011) ("Radio Shack Reports Financial Results," 2013)

In the last 20 years, Radio Shack was able to take advantage of this with improvements in: TVs, telephones, cell phone and other electronics. This helped to increase demand for their services and a variety of products. However, recently they are having trouble thinking of ways to help themselves standout against competitors. Furthermore, it is difficult for the company to create strategies that will encourage consumers to shop inside their stores. ("Radio Shack Reports Financial Results," 2013)

The primary causes of these problems, is Radio Shack does not have anyone who is excellent at marketing. The best way the firm can make these adjustments is to locate top managers who understand how to succeed in companies that have reached similar plateaus. This will help them to continue to innovate and offer new reasons for people to continue shopping at their locations. ("Radio Shack Reports Financial Results," 2013)

Describe the job dimensions of the firm and discuss whether or not you believe the current design is appropriate for the firm. Discuss any suggestions you might have for improving the job design. Grouped by function or by product or geography or a matrix organization? Provide a diagram if helpful to illustrate. Is this organization effective?

The basic dimensions of the firm are it is focused on increasing sales through having stores located in various shopping malls and independent dealers. This design is becoming obsolete as more consumers are utilizing the Internet and other competitors to purchase electronics. One possible approach for improving the job design is to have staff members focus more on customer service. This can be accomplished by helping customers to solve their problems. ("Radio Shack Reports Financial Results," 2013)

What is happening is everyone can purchase electronic at low costs. The challenge is being able to find someone who can provide them with objective advice and assist them in dealing with critical issues. If Radio Shack can focus on these areas, they will help themselves to standout against competitors and online locations (which offer lowest cost merchandise with no service). ("Radio Shack Reports Financial Results," 2013)

These objectives can be achieved by restructuring the company in a way that will have electronic experts at each location. It is at this point that their functions and matrix of the organization will be transformed. This will help to make the company more effective in reaching out to new and existing cliental. ("Radio Shack Reports Financial Results," 2013)

Describe the compensation package for executives and employees within the firm. Discuss whether or not you believe that the compensation package is effective and any suggestions that you might have for improving the compensation package.

The basic compensation packages for executives, is they will receive a salary ranging from $100 thousand to $1.7 million per year. At the same time, they are provided with stock options and retirement benefits. While the employees, will be paid basic salary starting at $9.00 per hour plus commissions on select products. The longer they work at the corporation, the more they will earn based upon seniority. It is at this point when they will receive annual bonuses and are a part the of 401k plan. This is effective in keeping the underlying levels of compensation down. ("Radio Shack Corp," 2012) (Margo, 2008)