William B. Conerly - Businomics From The Headlines To Your Bottom Line: How to Profit in Any Economic Cycle

WILLIAM B. CONERLY, PH.D. In 1776, Adam Smith began his great book The Wealth of Nations with some observations from a visit to a pin factory. That may have been the last time that an economics professor actually visited a factory. My experience in over twenty-five years of applying economics to business problems has taught me that managers and owners need economics, but they need it from a business viewpoint. That is, they need Businomics . The goal of this book is to help business leaders make more profitable decisions through a better understanding of the economy.

Economics is not something different from business management; it is part and parcel of many everyday business decisions. Let's consider why economics is vital to business.

In 2001, bankruptcy filings by businesses totaled 40,000 cases, up from only 35,000 the year before. Corporate profits were $30 billion lower than in their 1998 peak. Companies were burdened with excess inventory and idle capacity.

Recession isn't the only problem that businesses have. In 2004, major steel producers were unable to provide product to all of their customers because of surging global demand for steel, primarily for construction. In 2005, tires were in short supply. Some purchasers of trucks and off-road mining equipment had to accept new trucks without tires the dealers told them they could buy the truck, but tires weren't immediately available. These tire companies and the customers that depended on them should have been able to see the changes in world economics that were impacting them. The signs of impending shortages were there, but they were not incorporated into critical business decisions.

In a perfect world, businesses would be able to serve their customers' needs, with neither excess capacity and inventory, nor insufficient capacity and inventory. Businomics was written to help businesses create that perfect world.

If you love the pure theory of economics, in all of its mathematical elegance, this is not the book for you. This book is neither mathematical nor elegant.

However, if you think you need to know something about the economy to run your business, division, or department, then I definitely have something to say to you. If your to-do list includes decisions about staffing levels, inventories, capital expenditures, or financial structure, then this book has much to offer. If your business is a nonprofit organization or a government agency, you too will find Businomics immensely valuable. If you want to understand your investments in real estate or stocks or bonds, this book will help you there, too.

In this book, I've tried to make economics painless. Businomics targets people who have chosen not to become professional economists, but who also know that they need to understand how the economy affects their enterprise and their investments. I don't pretend that you'll find economics elegant, beautiful, or enthralling. Personally, I find economics to be all of these things. So do most of my colleagues in the profession, and that is why we became economists.