Undergraduate Course: The Economics of Corporate Strategy (BUST10021)
||College||College of Humanities and Social Science
|Credit level (Normal year taken)||SCQF Level 10 (Year 3 Undergraduate)
||Availability||Available to all students
|Summary||This course aims to help students obtain a comprehensive understanding of the major strategic behaviours and decisions of the modern corporation. The discussion is generally non-mathematical, and real cases will be examined in all sessions.
We will consider market policy in relation to decisions as to whether to pursue a strategy of product differentiation or cost reduction, and whether these are indeed mutually exclusive approaches. We discuss issues of sustainability of profits, and policies towards innovation. We then discuss such decisions as whether to make or buy inputs or channels of distribution. These issues are shown to depend critically on Transactions Costs, and following that line we examine the reward structure in the company. Having looked at the decisions relating to the component units of the corporation, we then round off the course by analysing strategic interactions between firms. Throughout the course, the issues of managerial interests and the conflict with shareholders' interests and the implied information asymmetry and reputation concern provide an underlying theme.
1. Basic Economic Principle and Competitive Advantage
2. Creating and Sustaining Competitive Advantage
3. Strategic Interactions between Firms
5. Agency Problems and Incentive Design
6. Vertical Boundaries: Transaction costs and Vertical Integration
Student Learning Experience
Much of the student's learning will be achieved through reading and classroom activities. The reading list specifies the most important and less important items. For each topic on the reading list, a question is specified which helps students to focus their thoughts whilst carrying out the reading. Also, each topic contains at least one classroom activity, in which students have the chance to practice the theories that they learn from lectures and reading.
Classroom activities are designed to promote more student engagement and are closely related to Lectures. Lectures provide a detailed synthesis of the literature with illustrative examples. Because the class is typically small and the scheduled time for each lecture is quite long, students are given ample opportunities to both discuss the results of classroom activities and the ideas put forward by the lecturer.
Information for Visiting Students
|Pre-requisites||Visiting students should have at least 3 Business Studies/Management courses at grade B or above (or be predicted to obtain this). We will only consider University/College level courses.
|High Demand Course?
Course Delivery Information
|Academic year 2017/18, Available to all students (SV1)
|Learning and Teaching activities (Further Info)
Lecture Hours 20,
Summative Assessment Hours 2,
Programme Level Learning and Teaching Hours 4,
Directed Learning and Independent Learning Hours
|Assessment (Further Info)
|Additional Information (Assessment)
||Assessment will be by degree exam (50%), one 500-word individual essay (15%), one 2,000-word limit group project essay (25%) and in-class practical activities (10%).
||1. Feedback on your COURSEWORK ESSAYS, together with individual marks, will be posted on Learn within 15 working days from the submission deadline.
2. Direct feedback through classroom discussion and the 'classroom activities' of role-playing economic games.
3. Your EXAMINATION marks will be posted on Learn (together with generic feedback and examination statistics) as soon as possible after the April/May Diet Board of Examiners' meeting (normally early-mid JUNE). During the summer months (i.e. mid/end June - end August), you may come into the Business School UG Office (Room 1.11, Business School, 29 Buccleuch Place) to look at your examination scripts. Note that you will not be able to remove any examination scripts from the UG Office as they may be required by the Board of Examiners.
Continuing students will also be given the opportunity to review their examination scripts early in the new academic year in Semester 1 (i.e. in October).
||Hours & Minutes
|Main Exam Diet S2 (April/May)||2:00|
On completion of this course, the student will be able to:
- Understand and critically discuss what determines the internal structure of the firm in relation to vertical integration and diversification, and how both of these are largely determined by transactions costs.
- Understand and discuss the factors that determine the type of pay structure for senior management.
- Understand and discuss critically the underlying factors affecting strategy in relation to differentiated products or cost advantage, and the implications for management style of these two directions.
- Understand and discuss critically the factors which enable firms to remain profitable for relatively long periods, and those which give only temporary advantage.
- Understand and discuss critically the way in which information asymmetry and the structure of the firm, in terms of vertical or horizontal integration, affects the managerial structure of the company.
|The course follows the textbook: |
D. Besanko, D. Dranove, M. Shanley, S. Schaefer, Economics of Strategy, 6th Edition, Wiley, 2013. (Students are strongly advised to buy a copy of this outstanding text.)
Other useful reading:
1. Sharon M. Oster ( 1994 ) Modern Competitive Analysis, OUP, Oxford;
2. M. Porter (1985) Competitive Advantage, Free Press, New York;
3. H. Simon (1996) Hidden Champions, Harvard Business School Press, Boston Mass;
4. R. Simons (1994) Levers of Control, Harvard Business School Press, Boston Mass.
|Graduate Attributes and Skills
On completion of the course students should
a) be able to evaluate the rationale of the economic hypotheses behind corporate decisions, including being able to
b) detect assumptions, identify inconsistency in arguments and interpret empirical evidence;
c) be able to evaluate the appropriateness of the arguments to different situations;
d) be able to effectively and concisely communicate their ideas;
e) be able to efficiently read academic articles and synthesise the contents of a collection of references.
a) Interpersonal skills arising from practice in classroom activities and discussion.
b) Articulate convincing arguments in writing.
c) Develop self-awareness through active written reflection.
|Additional Class Delivery Information
||One 2-hour class on Tuesdays at 9.00.
|Course organiser||Dr Tong Wang
Tel: (0131 6)51 5551
|Course secretary||Ms Patricia Ward-Scaltsas
Tel: (0131 6)50 3823