Management Economics’ Optimization of Enterprise Organizational Structure

Abstract

Managerial economics is concerned with decision-making within an organization and how the principles of economics can be applied to this endeavor. The current research sought to determine (1) how decision-making power is distributed within organizations, (2) what type of organizational structures firms employ, and (3) what factors affect the type of structure the organization will adopt. The research was desk research that took a case study perspective by analyzing a small number of firms. Four firms were chosen; Disney, Amazon, Netflix, and Genesis Healthcare. The results of the information synthesis showed that three factors were crucial in determining the type of organizational structure that was adopted, including the size of the company, the products of the company (including the number of products offered), and the characteristics of the customers. This research will be helpful to businesses on a practical level by helping them understand how their structure will be impacted and providing guidelines on how to employ managerial economics within the context of organizational structure. The findings have shown that two factors are critical in determining the ideal organizational structure; the size of the organization and the products or services offered. However, the latter appears to be more important than the former.