Economics of Strategy (EC0082)

? Credit Points : 10 ? SCQF Level : 11 ? Acronym : MSE-P-EC0082

The Economics of Strategy provides a basis for the analysis of the economic roles and interactions of the stakeholders of the firm, and so it is an essential aid to the development of strategy, and a guide to tactics. Within this framework we will consider the use of economics to help managers make decisions with regard to: cost and demand, pricing including optimal mark-ups and price discrimination; product differentiation or cost based strategies; strategy in relation to rival firms; the make or buy decision and vertical integration; diversification and the implications of mergers, and the sustainability of profits. There will be an emphasis on the problems created by lack of information and how this affects contracts and hence control of suppliers or distributors (and their management).

The emphasis on the motivational analysis of each party is one way of looking at many of the problems of strategy, marketing, and public policy. The course is therefore of particular relevance to those who need to understand the workings of market competition. This would include those giving advice as consultants, investment bankers or at senior management levels.

Entry Requirements

? Pre-requisites : PGs Only

Subject Areas

Home subject area

Business Studies, (Management School and Economics, Schedule H)

Delivery Information

? Normal year taken : Postgraduate

? Delivery Period : Semester 2 (Blocks 3-4)

? Contact Teaching Time : 2 hour(s) per week for 10 weeks

Summary of Intended Learning Outcomes

Knowledge and Understanding:
- Marginal Cost, Average cost, Sunk Costs, Economies of Scale
- their influence on decisions in the short and long run
- their relationship to market structure
- the nature of demand functions, for both differentiated and undifferentiated products
- the role of cost and differentiation advantage in strategic decisions
- issues involved in the make or buy decision including monopoly power and the trade-off between technical efficiency and agency costs
- Factors leading to the sustainability of profits

Cognitive Skills:
- Further development of the analytical skills required in the consideration of complex systems
- Development of analysis of cause and effect
- Ability to scan a range of scenarios and the supporting information to sift evidence logically
- Structuring of arguments both verbally in class discussion and in writing