Managerial Economics
Introduction
Managerial decisions are a major component of success in any organization. These decisions are
complex and come in different forms and challenges. These decisions are greatly influenced by
the economic conditions, the status of the organization and the financial position of the company.
The rapid changes and development of technology has brought its own share of challenges.
These have made it difficult to precisely evaluate and determine the output of some information
systems without proper audit of the entire management of the information system in the
organization.
- What are the potential sources of the problem?
The Interwest Healthcare Corp suffers from mistrust among its management team and the
employees. Singh, the chief financial officer doubts the financial records as entered by the data
entry team in the organization while the staff accuses him of being bureaucratic and insensitive
to the needs of the patients in his role as the financial chief administrator of the organization.
The potential source of the problem is the lack of clear guideline policies and procedures in the
management of information system. The need for checks and balances in the data entry methods
Economics 2
and the system of verification process seems to be flawed or lacking all together.(Keat and
Young, 1996) Singh feels that she cannot verify the audit trail of all the inputs in the system and
as such doubts the outputs of the system. The source of the employee problems with Singh
originate from the lack of clear job description of his department and the clear definition of his
scope of authority concerning the financial department. These makes the employees develop a
hard feeling against him when maybe he’s only operating within his scope of authority.
- What information would you want to analyze?
The information that I would analyze are the primary source of the information entered on the
computers and the output of the computer information system. These would make it possible to
determine the authenticity of the information system regarding the data entry and the
subsequent processing of the input data and the ultimate output of the system. The grievances
of the staff and some of the regular patient’s views and comments would also form an important
basis for auditing of the general finance department and its overall budgeting process. - What actions might you recommend to increase the accuracy of the data entry?
The accuracy of the data entry can greatly benefit from a feedback system where the output of
the data entry system goes through a verification process to counter check the entered data and
the primary source document which should not be discarded or destroyed until a set period of
time has elapsed. (Damodaran, 2006) Clear structures should be created to provide a control
system where the data entry clerks work is also checked by another department before the
primary sources of data are filed. Constant mistakes on the part of the data entry clerks should be
met by punishment or dismissal of the employee.
Economics 3
- How does your view of behavior affect how you might address this consulting
assignment?
The actions of the staff towards Singh only reflect the feelings towards her behavior while
discharging her duties as the chief financial officer. This behavior makes the staff feel that she’s
bureaucratic and insensitive towards the staff and the needs of the patients in the organization.
Where there’s a behavioral change in most instances is a normally as a result of a reaction to a
certain change of events. These changes might be positive or negative and it calls for further
investigation to find out the causes for these changes.
Singh’s suspicious behavior also calls for further investigation as maybe his concerns are
genuine.
The records should be counter checked by an independent person to verify if these suspicions
are true or false.
Finally, to conclude the problems existing at the Interwest health Corp are usually common in
organizations where the internal control systems are weak. The management should introduce
clear policies and procedures to streamline the operations of the whole organization. The
company should also introduce an internal control department that’s independent that’s charged
with the responsibility of constantly analyzing and reviewing the work of each department. The
organization should also introduce an internal audit department that reports directly to Singh as
the head of the finance department. These will allay all the fears and suspicion she has on
some sections or departments.
Economics 4
References
Keat, P.G., Young, K.Y. (1996) Managerial Economics, Prentice Hall.
Damodaran, S. (2006) Managerial Economics. Oxford; Oxford publishers.
