EMBA
ECON 611 Managerial Econonomics
Page 1
EMBA COURSE SYLLABUS
ECON 611
Course Title
Managerial Economics: Competitive Analysis in a
Global Economic Environment
Instructor
Professor Ingo BÖBEL, Dr.rer.pol., Dr.rer.pol.habil.
Contact Information
+377 97986986
Office Room 215
ibobel@monaco.edu
Course
(and
Personal)
Website at:
http://ibobel.pbwiki.com
(for
detailled
readings
and
supplementary
information click on « EMBA Information» in the
« Sidebar » on my personal website)
ECON 611
3
For exact details see course outline below
January 4-6, 2010
TBA
Course Number
Credits
Course Schedule
Course Length
Location
Course Description
Professor Dr. Ingo Böbel
Sound economic analysis has never been more important
- regardless whether the decision-making unit is an
individual, household, firm, non-profit organization, or
government. We use a modern treatment of economic
theory to help students both understand and improve the
managerial decision-making process whereby we
concentrate on microeconomic and macroeconomic
topics of particular importance. The integrative approach
used in this course demonstrates that important
managerial decisions are interdisciplinary as effective
management is seen to involve an integration of the
accounting, finance, marketing, personnel and production
functions. Therefore, the business firm is treated as a
unified whole, rather than a series of discrete, unrelated
parts.
We start out to cover basic microeconomic theories, i.e.,
the underlying economic behaviour of actors participating
in individual markets (theory of markets, especially the
theories of supply and demand), firms (production, cost
and pricing), and industries under different forms of
IUM – EMBA Program
Jan. 2010
EMBA
ECON 611 Managerial Econonomics
Page 2
market structure (competition vs. monopoly). Then we
look at a practical case study-example (Intel case). Intel's
internet strategy can be used to introduce basic ideas on
corporate strategy and industry analysis and
transformation, competitive strategy, and competitive
dynamics. Finally, we shall broaden our knowledge of
economics by expanding the scope of inquiry to cover the
economics of the nation in a global economy. The case
study used (Finland and Nokia) will illustrate the success
of a nation, a cluster within a nation, and an individual
firm using the concepts of industry analysis (Porter’s Five
Forces), Strategy and global strategy, the Diamond model
and the Cluster model.
Objective
Provide a solid foundation of economic understanding
and the “economic way of thinking” for use in strategy
and managerial decision making. It is our ultimate
objective to help you develop a framework for analyzing
both opportunities and risks in a global economic
environment. In the end you should be able to respond to
economic developments at local, national and
international levels.
Teaching Philosophy
The course is taught through a combination of readings
(including online reading preparation starting in
November 2009), lectures, case discussions and exercises.
The participation grade is based on each student's class
preparation prior to class, active class participation during
class (added value contribution), and class attendance.
Attendance is compulsory. One percentage point may, at
the discretion of the professor, be deducted from the
student's final grade for each absence. It is ultimately the
student's responsibility to make sure all of the
work for each course is completed.
Attendance
Grading
Professor Dr. Ingo Böbel
 Class Participation (attendance, punctuality, added
value, online preparation) (50%)
 INDIVIDUAL Take-Home Exam (50%)
(The individual take-home examination is due by
email/fax/mail. Details will be given in class. There
will be no credit for work submitted after this
deadline).
IUM – EMBA Program
Jan. 2010
EMBA
ECON 611 Managerial Econonomics
Page 3
Grading Scale
Grades
Grades are reported at the end of each term.
Grade points are assigned to letter grades for each unit of
course credit:
.
Letter Percentage Grade
Quality of work
Grade
Points
Points
95-100%
4.0
Outstanding performance,
A
works shows superior
command of the subject.
90-94%
3.7
Very good work showing
Aunderstanding and
mastery of all concepts.
87-89%
3.3
Good work showing
B+
understanding and
mastery of most concepts.
83-86%
3.0
Fairly good work that
B
shows an understanding of
the main concepts.
80-82%
2.7
Fairly good work showing
Bunderstanding of several
important concepts.
77-79%
2.3
Uneven understanding of
C+
the concepts with
occasional lack of clarity
73-77%
2.0
Work that barely meets
C
modest expectations for
the class
70-72%
1.7
Work that is below
Cmodest expectations for
the class
67-69%
1.3
Poor performance with
D+
lack of understanding of
several important
concepts
63-66%
1.0
Work that is marginally
D
above the minimum
expectations for the class
60-62%
0.7
Work that barely meets
Dthe minimum expectations
for the class
< 60%
0.0
Work does not meet the
F
minimum expectations for
the class
Professor Dr. Ingo Böbel
IUM – EMBA Program
Jan. 2010
EMBA
Course Material
ECON 611 Managerial Econonomics
Page 4
Textbook:
Paul G. Farnham, Economics for Managers, 2nd. Ed.,
Pearson International Edition, Boston 2010 (F)
Mandatory Reading:
Ingo Böbel, Global Strategy and Competitive
Analysis, (draft – work in progress) Monaco 2009 (to
be sent to students as pdf-file) (B)
Cases:
"Pricing for Profit: The U.K. Credit Card Industry in
the Late 1980s (A)." (HBS Case No. 9-897-168)
“A Note on Microeconomics for Strategists” (HBS
case 9-799-128)
“Intel Corporation 1968-1997” (HBS Case 9-797-137)
“Finland and Nokia” (HBS Case 9-702-427)
Recommended Reading:
Ghemawat, P. "Building Strategy on the Experience
Curve." Harvard Business Review 63 (March-April
1985): 143-49.
“Competitive
Strategy”,
Harvard
Business
Fundamentals Series, HBS Publ. 2002 (the publication
is available in the IUM library)
M. Porter, On Competition, HBS Press 2008 (P)
Course Outline
Part I:
Pre-Study: 18 course hours; Complete Reading and
Pre-Course Assignments (for detailed information see
the
course
page
on
the
sidebar
at
Professor Dr. Ingo Böbel
IUM – EMBA Program
Jan. 2010
EMBA
ECON 611 Managerial Econonomics
Page 5
http://ibobel.pbwiki.com)
Part II:
On-campus session Day 1 (Jan 4, 2010):
Foundations of Microeconomic Analysis
In order to prepare for class sessions read (see also
“Sidebar”
on
my
Course
Website
at
http://ibobel.pbwiki.com – click on EMBA-link)
1. (F): ch. 1
2. (B)
3. HBS case “A Note….”
General Principles of “How to capture the relations
between the firm and its market environment”
The structure-conduct-performance paradigm
Four classes of market structure: Perfect competitionmonopolistic competition-oligopoly-monopoly
Causes of Market Structure: The “Basic Conditions”
of Demand and Supply Revisited
Read: [(F) ch. 2]
Market Definition, Use of Supply and Demand Curves:
Law of demand; Demand Curve; Shifts in the Demand
Curve; Market Demand.
The Firm and the Supply Decision
Law of supply; Supply in the Short-Run; Supply in the
Long-Run: Entry and Exit; Market Supply.
Market equilibrium
Comparative static analysis
The concept of elasticity
Read: [(F) ch. 3 up to p. 99]
Review of Own- and Cross-price Elasticities
Price Elasticity of demand and supply, measurement of
elasticities; revenue and elasticity. Defining the Market
Discussion of Market Definition and Market Strategy
Professor Dr. Ingo Böbel
IUM – EMBA Program
Jan. 2010
EMBA
ECON 611 Managerial Econonomics
Page 6
Class activity: (depending on the time constraint):
Discussion of Case Study: The U.K. Credit Card
Industry in the late 1980s (9-897-168)
On-campus session Day 2 (Jan 5) (Morning session):
Output, Production and Costs
Read: [(F) ch. 5]
Review of the Economics of Production and Cost
Production theory; Short-run technology constraint:
Total, marginal and average product.
Costs in the short-run vs. costs in the long-run: Total
cost, average cost, variable cost, fixed cost, sunk cost,
opportunity cost; marginal costs.
The Learning Curve and Cost Reduction over Time
The Economics of Competition and Monopoly
The Model of Perfect Competition
Read: ((F) Ch. 7, up to p. 203):
Necessary Conditions (Homogeneous Product; Many
Buyers and Sellers; Free Entry and Exit; Equal
Information)
Monopoly and Monopoly Pricing ((F) ch. 8)
Review of Market Power (Monopoly):
Competition and Entry
Monopoly
Pricing:
Revenue;
Costs;
ProfitMaximization; Demand and Cost Changes; Planning
Horizon; the Inefficiency of monopoly pricing.
Market Structure-Effects of Restricted Competition;
Price-Cost Margin
Class activity: Discussion of cases (contained in the
textbook chapters), end-chapter textbook questions
and problems handed out in class.
On-campus session Day 2 (Jan 5) (Afternoon session):
Professor Dr. Ingo Böbel
IUM – EMBA Program
Jan. 2010
EMBA
ECON 611 Managerial Econonomics
Page 7
Discussion of the “Intel case”
The case describes three stages in Intel's history: the
initial success and then collapse in DRAMs and
EPROMs, its transition to and dominance in
microprocessors, and its move to become the main
supplier of the building blocks for the Internet economy.
It allows a rich discussion of industry structure and
transformation in DRAMs and microprocessors, creation
of competitive advantage and value capture, as well as
sustainability.
Teaching Purpose: Intel's Internet strategy can be used
to introduce basic ideas on corporate strategy and
industry analysis and transformation, competitive
strategy, and competitive dynamics.
Prepare: “Intel”-case and work through the assignment
questions (handed out in class)
Class activity: Discussion of assignment questions
On-campus session Day 3 (Jan 6):
Discussion of the “Finland and Nokia” case
We extend our knowledge of economics by expanding
the scope of inquiry to cover the economics of the nation
in a global economy. The case study used (Finland and
Nokia) will illustrate the success of a nation, a cluster
within a nation, and an individual firm using the concepts
of industry analysis (Porter’s Five Forces), Strategy and
global strategy, the Diamond model and the Cluster
model.
Prepare: “Finland and Nokia”-case
Suggested reading: M. E. Porter, “Competing Across
Locations: Enhancing Competitive Advantage through a
Global Strategy”, in: (P)
In addition to the assignment questions that you find
on the course website, also ponder the following set of
questions:
Professor Dr. Ingo Böbel
IUM – EMBA Program
Jan. 2010
EMBA
ECON 611 Managerial Econonomics
Page 8
What were the primary characteristics of Finland that
allowed Nokia to build a global leadership position in
mobile phones?
Which of these were the result of explicit policy choices?
To what extent were these advantages unique to Finland,
compared to Germany or other countries in Western
Europe, the U.S. or Japan?
To what extent did Nokia “reach beyond” these “homebase” characteristics in establishing its leading position?
Do you think the same cycle of establishing advantage
(and the associated business model) in an advanced
country and diffusing it to other markets (including
emerging markets) is still relevant in this industry?
Why or why not?
Discussion of individual take-home final project (case
study)
Part III:
Post-Course::
Complete and Hand Up All Post-Course Assignments
(individual take-home final project (case study) to be
discussed in class) – Due Date: TBD
Additional Readings
I recommend to consult a number of reference books
and articles which might be of valuable help:
Michael Porter, The Five Competitive Forces That Shape
Strategy, HBR January 2008 (you can access the article
through our course website at http://ibobel.pbwiki.com)
M. Porter (1996), What is Strategy?, reprinted in:
Competitive Strategy, HBS Publ. 2002
Professor Dr. Ingo Böbel
IUM – EMBA Program
Jan. 2010
EMBA
ECON 611 Managerial Econonomics
Page 9
M. Porter (1979), How Competitive Forces Shape
Strategy, reprinted in: Competitive Strategy, HBS Publ.
2002, pp. 75-86
World Economic Forum (2009), Global Competitiveness
Report 2009-2010
L.M.B. Cabral, Industrial Organization, Cambridge,
Mass.: MIT Press, 2002
M. Neumann, Competition Policy: History, Theory and
Practice, Cheltenham: E. Elgar 2001
M. E. Porter, Competitive Strategy, 2nd. ed., New York:
The Free Press 2000
Macroeconomics:
J. Bradford DeLong, Macroeconomics, Burr Ridge, IL:
McGraw-Hill Higher Education, 2002
Olivier Blanchard,
Prentice Hall 2005
Revision Date
Macroeconomics,4th.ed.,
N.Y.:
Dec. 26, 2009
Disclaimer: This outline is a guideline and subject to change at the professor’s discretion.
Professor Dr. Ingo Böbel
IUM – EMBA Program
Jan. 2010