Essential Economics for Management Consultants

Asen Gyczew

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Asen Gyczew

As a management consultant, you will have to deal with complex businesses operating in many segments and markets. To be able to analyze them and find potential solutions, you will have to simplify the reality you witnessed and identify the most important drivers. In such situations, a good understanding of economics will be extremely useful. It will help you see the big picture and focus on vital elements. In this course, I will teach you the essential economics that you will need during consulting projects.

Thanks to this course, you will learn the following things:

How to model supply and demand in Excel
How to set prices using analyses in Excel
What are and how to analyze externalities
What is the difference between perfect competition, monopoly, oligopoly, and monopolistic competition?
What is and how to deal with inflation and unemployment
How to increase the size of the economy

This course is based on my 15 years of experience as a consultant in top consulting firms and as a Board Member responsible for strategy, performance improvement, and turn-arounds in the biggest firms from the Retail I have carried out or supervised over 90 different performance improvement projects in different industries that generated in total of 2 billion additional EBITDA. On the basis of what you will find in this course, I have trained in person over 100 consultants, business analysts, and managers who are now Partners in PE and VC funds, Investment Directors and Business Analysts in PE and VC, Operational Directors On top of that, my courses on Udemy have already been taken by more than 315 000 students, including people working in EY, McKinsey, Walmart, Booz Allen Hamilton, Adidas, Naspers, Alvarez & Marsal, PwC, Dell, Walgreens, Orange, and many others.

I teach through case studies, so you will have a lot of lectures showing examples of analyses and tools that we use. To every lecture, you will find attached (in additional resources) the Excel files, as well as additional presentations and materials shown in the lectures. So, as a part of this course, you will also get a library of ready-made analyses that can, with certain modifications, be applied by you or your team in your work.

Why have I decided to create this course?

Most consulting projects will require a decent knowledge of essential economics. This will help you understand and analyze businesses. You will also be able to identify the impact of the changes in the economy on the business. Most firms assume that you will master those issues on your own. This may lead to huge frustration during consulting projects and a lot of inefficiencies.

Therefore, I have decided to create this course that will help students understand or refresh the main skills and tools related to economics that they need during consulting projects. The course will give you the knowledge and insight into real-life case studies that will make your life during a consulting project much easier. Thanks to this course, you will know how and when to use essential concepts from economics. You will master how to analyze data and draw conclusions from the analyses.

To sum it up, I believe that if you want to become a world-class Management Consultant or Business Analyst, you have to have a pretty decent understanding of essential economics. That is why I highly recommend this course to Management Consultants or Business Analysts, especially those who did not finish business school or schools of economics. The course will help you become an expert in essential economics at the level of McKinsey, BCG, Bain, and other top consulting firms.

In what way will you benefit from this course?

The course is a practical, step-by-step guide loaded with tons of analyses, tricks, and hints that will significantly improve the speed with which you understand and analyze businesses. There is little theory – mainly examples, a lot of tips from my own experience, as well as other notable examples worth mentioning. Our intention is that, thanks to the course, you will learn:

How to model supply and demand in Excel
How to set prices using analyses in Excel
What are and how to analyze externalities
What is the difference between perfect competition, monopoly, oligopoly, and monopolistic competition?
What is and how to deal with inflation and unemployment
How to increase the size of the economy

You can also ask me any questions either through the discussion field or by messaging me directly.

How is the course organized?

The course is currently divided into the following sections:

Introduction. We begin with a little introduction to the course, as well as some general information on how the course is organized
Demand and Supply. During many projects, you may be asked to model the supply or demand for a specific good. In this section, we will look at those concepts and we will see how to use them in practice.
Pricing. We have mentioned that the Prices are set by comparing the Demand and the Supply. In practice, this issue is much more complicated. In this section, you will learn more about the price.
Price Elasticity. In this section, we will briefly discuss an important issue – price elasticity. It shows you the impact of changes in price on demand.
Externalities. Economics deals with complex systems. In such systems, your action can cause unintended consequences to other members of the system. We call them externalities. We will discuss them in this section as well, and we will analyze case studies with externalities.
Other Micro Concepts. 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
Essential Macro Concepts. 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

You will also be able to download many additional resources

1. Useful frameworks and techniques

2. Analyses shown in the course

3. Additional resources

4. Links to additional presentations, articles, and movies

5. Links to books worth reading

At the end of my course, students will be able to…

Model supply and demand in Excel
Analyze price changes and price policies in Excel
Analyze externalities in Excel
Understand the impact of changes in the economy on the market and a specific business
Understand different market structures
Avoid sunk cost fallacy
Estimate the opportunity cost
Understand and predict changes in the economy

Who should take this course? Who should not?

Management Consultants
Business Analysts
Managers without formal education in economics
Startup Founders
Project Managers

What will students need to know or do before starting this course?

Basic or intermediate Excel
Basic or intermediate knowledge of finance & accounting

Enroll now

Or start a personal plan

And upskill with Udemy

What's inside

Learning objectives

Model supply and demand in excel
Analyze price changes and price policies in excel
Analyze externalities in excel
Understand the impact of changes in the economy on the market and a specific business

Understand different market structures
Avoid sunk cost fallacy
Estimate the opportunity cost
Understand and predict changes in the economy

Model supply and demand in excel
Analyze price changes and price policies in excel
Analyze externalities in excel
Understand the impact of changes in the economy on the market and a specific business
Understand different market structures
Avoid sunk cost fallacy
Estimate the opportunity cost
Understand and predict changes in the economy

Syllabus

Introduction

We begin with a little intro to the course as well as some general info on how the course is organized.

A few words about your humble teacher

Let's see how the course is organized

Here, I will show you what to do if a blurry image appears

Here, I will show you how to find additional resources attached to the course like Excel files, presentations, links, etc.

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

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

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.

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.

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

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

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

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

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

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.

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.

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

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

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

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.

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.

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Essentials of Economics

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This introductory textbook provides a comprehensive overview of microeconomics and macroeconomics. It is written in a clear and concise style, making it a good choice for students who are new to economics.

Essentials of Economics (MindTap Course List)

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