LXRY 665
Course Syllabus (incl. Industry Analysis Report Guidelines)
Professor Dr. Ingo Bobel
MLUX Program 2009-2010
COURSE SYLLABUS
Course Title
LUXURY INDUSTRY AND COMPETITIVE ANALYSIS
Instructor
Professor Ingo BÖBEL, Dr. rer. pol., Dr. rer. pol. habil.
Contact Information
Course Website: http://ibobel.pbwiki.com
Professor’s Email : ibobel@monaco.edu
Office: Room 215
Course Number
LXRY 665
Credits
3
Course Schedule
Sept. 15 – Dec. 15, 2009
Course Length
30 hours (two 90 min. sessions over 10 weeks)
Location
TBA
Course Description
In order to understand an industry one has to have a clear understanding of
competition. We focus on firm-level strategic entrepreneurial choices
regarding where to engage in which activities. We are faced with the
challenges of integrating the multiple perspectives, functions, and interests
that constitute to the (multinational) firm. How do firms gain and sustain
competitive advantage? If we do not understand how firms compete, how
they gain competitive advantage and to be internationally competitive it is
very hard to talk about the impact of location. Understanding how firms
compete locally and internationally (that is, across borders) is a necessary
condition to understand the relevance of the location and what creates
competitiveness in a location. Therefore, what we need is a good grounding
in firm-competition and strategy.
We provide students with the opportunity to critically review theories,
conceptual frameworks and to conduct in-depth analysis within the Luxury
Goods industry. All this culminates in the preparation of an Industry
Analysis Report in which the students should demonstrate the knowledge
acquired throughout this course.
The MLUX program seeks to produce imaginative, informed, specifically-educated managers capable of crafting novel
solutions to the often-unique problems that arise in the luxury sector.
Graduates are expected to fill senior positions in general management, distribution, strategic planning, identity and brand
management, product policy, new product development, and product portfolio management in the luxury goods sector.
1.
Objectives
Provide students with the concepts, tools and
frameworks necessary to recognize, analyze
and manage the business variables and issues
specific to the luxury industry
Assessment
% of Grade
Lectures,
Readings,
Participation/Discussion, Case
Research
Enable students to understand the vital role
economic,
cultural,
sociological,
psychological,
and
technological
environments play in the luxury industry.
Lectures,
Research
Studies,
10
3.
Enable students to identify and discuss the
current challenges faced by the companies
competing within the luxury sector
Establish a cognitive and behavioral base for
students to perceive and respond to the
Lectures, Class Participation, Teamwork,
Case Studies, Research.
20
Lectures,
Studies
10
Page 1
Readings,
Case
30
2.
4.
Readings,
Class
Study
Research,
Case
LXRY 665
Course Syllabus (incl. Industry Analysis Report Guidelines)
Professor Dr. Ingo Bobel
sensory and pragmatic resonances generated
by luxury goods and services.
5.
Enhance students’ thinking, analytical, and
problem-solving skills.
Lectures,
Readings,
Class
Participation/Discussion, Case Studies,
Research Paper
30
Course Learning Outcomes
On successful completion of this course, students will be able to:
Outcomes
Demonstrate an understanding of the
competetiveness of the luxury goods and
services sector.
Assessment Events
% of Grade
Case Studies, Class Participation, Team
Project
50
2.
Explain the significant position the luxury
sector holds in the modern global economy.
Case Studies, Class Participation, Team
Project
10
3.
Present an overview of functional business
theories, principles, and practice as they relate
to the luxury sector.
Case Studies, Class Participation, Team
Project
10
4.
Demonstrate an understanding of the complex
interrelationships between all business
functions within the luxury goods or services
enterprise
Case Studies, Class Participation, Team
Project
10
5.
Analyze a case and present the findings
according to accepted industry and academic
guidelines.
Case Studies, Class Participation, Team
Project
20
1.
Teaching Philosophy and Methodology
All IUM graduate courses focus on the multicultural perspectives inherent in the University’s mission. This means that
course topics will highlight the national and cultural differences students bring to class as well as the borderless nature of
modern business.
IUM graduate students will be expected to display satisfactory analytical and problem-solving skills, and to present subject
matter in novel ways depending on the application of these skills.
This course is taught through a combination of readings, lectures, case studies, discussions, and individual and team
exercise. Teaching methodology emphasizes a practical approach and real-world applications, as well as a focus on best
business and industry practices.
Sufficient time will be devoted to a frank and open exchange of views between students and with the instructor. Student
participation in class discussions is encouraged through an interactive teaching style, and the instructor will endeavor to
provide personalized attention – especially when students encounter problems.
Attendance
Attendance is compulsory and will be taken at each class. It is ultimately the student’s responsibility to make sure all of the
work for each course is completed.
Absences based on religious beliefs may be accepted and in such cases students will have the opportunity to make up the
work missed through such absence. Written approval for such absences from the Program Director is required.
All requests for absences based on religious beliefs will be treated on a case-by-case basis.
Examination Policy
Students are expected to attend all examinations.
In general, make-up examinations will be permitted only in exceptional cases, and the prior written approval of the
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LXRY 665
Course Syllabus (incl. Industry Analysis Report Guidelines)
Professor Dr. Ingo Bobel
Program Director is required.
All requests for make-up examinations will be treated on a case-by-case basis.
Academic Honesty
One of IUM’s primary goals is to foster the highest standards of academic integrity; faculty, administrators, and students
share responsibility for achieving this goal.
In this context, IUM views any form of academic dishonesty as unacceptable and subject to disciplinary action.
The IUM administration is responsible for establishing procedures to support and enforce the academic standards of the
University; students are responsible for maintaining standards of academic performance and classroom behavior.
IUM views any violation of these standards very seriously, and those students who are unwilling or unable to support these
standards will not be permitted to remain at the University.
Grades and Grading
In keeping with the IUM emphasis on rigorous and interactive project-based learning, the grading criteria below focus not
only on individual achievement of learning objectives but also on students’ performance as part of a team.
Each course should meet the following criteria for grading:
 For each assessment event in the grading guidelines, the professor should explain the assignment and show the exact
number of points allocated to this assessment event – and how students earn these points.
The breakdown of the final course grade is the following:
Individual Assignments: 60%
 Preparedness: 10%
 Class Participation: 15%
 3 Quizzes: 35%
Industry Analysis Report : 40%
Grading Scale
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, works shows superior command of the subject.
A
90-94%
3.7
Very good work showing understanding and mastery of all concepts.
A87-89%
3.3
Good work showing understanding and mastery of most concepts.
B+
83-86%
3.0
Fairly good work that shows an understanding of the main concepts.
B
80-82%
2.7
Fairly good work showing understanding of several important concepts.
B77-79%
2.3
Uneven understanding of the concepts with occasional lack of clarity
C+
73-77%
2.0
Work that barely meets modest expectations for the class
C
70-72%
1.7
Work that is below modest expectations for the class
C67-69%
1.3
Poor performance with lack of understanding of several important concepts
D+
63-66%
1.0
Work that is marginally above the minimum expectations for the class
D
60-62%
0.7
Work that barely meets the minimum expectations for the class
D< 60%
0.0
Work does not meet the minimum expectations for the class
F
Required Course Materials
There is no required textbook. We rather use a set of articles, cases and research papers. However, I recommend, to have a
good “Economics”textbook at hand that covers the general fundamentals. I suggest:
M. Parkin, Economics, 8th.ed, Boston: Addison Wesley 20081
Ingo Böbel, Global Strategy and Competitive Analysis, (work in progress-draft) Monaco 2009
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)
Michael Porter, Competing Accross Locations: Enhancing Competitive Advantage through a Global Strategy, in:
M. Porter, On Competition, HBS Press 1998
1
You can also use any other standard Economics textbook (such as P. A. Samuelson and W. D.
Nordhaus, Economics, 18th. ed, McGraw Hill 2007).
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LXRY 665
Course Syllabus (incl. Industry Analysis Report Guidelines)
Professor Dr. Ingo Bobel
“A Note on Microeconomics for Strategists”, reprinted in: Competitive Strategy, pp. 53-74 (see “Additional
Resources” below)
Th. Veblen, Theory of the Leisure Class (you can read the e-book on our course website)
Barney, Jay B. (2002), Strategic Management, Academy of Management Executive, Vol. 16 Issue 2, pp. 53-57
(available through Ebsco)
W. S. Comanor and T. A. Wilson (1979), The Effect of Advertising on Competition: A Survey, Journal of Economic
Literature 17 (
orum (2008), Global Competitiveness Report 2008-2009
http://www.weforum.org/en/initiatives/gcp/Global%20Competitiveness%20Report/index.htm
Additional Resources
A good textbook on “Managerial Economics”: Paul Farnham, Economics for Managers, Pearson International
Edition, 2009
“Competitive Strategy”, Business Fundamentals from Harvard Business School Publishing, HBS No. 1520, Boston
2002 (contains an excellent collection of fundamental articles on competitive strategy)
M. Porter (1979), How Competitive Forces Shape Strategy, reprinted in: Competitive Strategy, HBS Publ. 2002, pp.
75-86
H. Leibenstein, Bandwagon, Snob and Veblen effects in the Theory of Conspicuous Demand, Quarterly Journal of
Economics 64, 1950, pp. 183-207 (available through Ebsco Database)
Richard H. Holton, The Distinction between Convenience Goods, Shopping Goods, and Speciality Goods, Journal of
Marketing (23) 1958 (available through Ebsco)
M. Porter (1996), What is Strategy?, reprinted in: Competitive Strategy, HBS Publ. 2002
Bobel, I. and A. Martis, Value Creation in Health Care, mimeo, IUM-Monaco, 2009
Notes
All assignments should be completed in a professional manner, with a cover page.
Late assignments and projects will not be accepted.
Class Schedule
Session
Date, Time,
Location
Material Covered
Suggested Reading
Session 1
Week 2
15.9.
Getting Organized and Introduction to the General Hint:
Course
Always ask yourself:
”How does - what I
Review of Syllabus
have learned in class
- fit into my Industry
Remarks on Readings and Literature
Analysis
Report”?
Industry Analysis Report
How can it be
applied?
What
Course Website
sources
are
available?
Team Group Composition
Session 2
Week 2
16.9.
General Principles of “How to capture the “A
Note
relations between the firm and its market Microeconomics
Page 4
on
for
LXRY 665
Course Syllabus (incl. Industry Analysis Report Guidelines)
environment”
The structure-conduct-performance paradigm
Four classes of market structure: Perfect competitionmonopolistic competition-oligopoly-monopoly
Session 3
Week 3
22.9.
Causes of Market Structure: The “Basic
Conditions” of Demand and Supply Revisited
Professor Dr. Ingo Bobel
Strategists”
Porter (1996)
Barney, J. B. (2002)
“A
Note
Microeconomics
Strategists”
on
for
Law of Demand; Demand Curve; Demand and Income;
Income Changes; Normal vs. Inferior Goods; Other Factors
in Demand; Complements and Substitutes; Advertising;
Durable Goods. Market Demand: Construction; (Market)
Buyer Surplus.
Supply Curves; Market Equilibrium; Shift in Demand,
Shifts in Supply; Comparative Statics; Economic Profit vs.
Accounting Profit
Session 4
Week 3
23.9.
Identifying the Competitors and Market
Definition: The special case of “Luxury Good
Demand”
Convenience Goods, Shopping Goods and Speciality Goods
The impact of Veblen’s “Theory of the Leisure Class”
Session 5
Week 4
29.9.
“A
Note
on
Microeconomics
for
Strategists”
Th. Veblen, Theory of the
Leisure Class
H. Leibenstein (1950)
R. H. Holton (1958)
Note
The special case of “Luxury Good Demand” “A
Microeconomics
cont’d:
on
for
Strategists”
Bandwagon, Snob and Veblen effects in the Theory of
Conspicuous Demand
Other factors that affect “luxury demand”
Session 6
Week 4
30.9.
The Concept of the Elasticity
Own Price Elasticity of Demand; Construction and
Properties; Intuitive Factors; Elasticity vs. Slope of
demand curve
Farnham (2009)
“A
Note
Microeconomics
Strategists”
on
for
Other Elasticities: Income Elasticity; Advertising
Elasticity; Adjustment Time: Durables and Non-Durables
Identifying Competitors by Identifying
Substitutes
Cross-Price Elasticity of demand
Qualitative vs. Quantitative approaches
Session 7
Week 6
13.10.
11-12.30
Quiz 1
The Economics of Competition and Monopoly
Competition Defined:
Necessary Conditions (Homogeneous Product; Many
Buyers and Sellers; Free Entry and Exit; Equal Information)
The case for competition:
Page 5
“A
Note
Microeconomics
Strategists”
Farnham (2009)
on
for
LXRY 665
Course Syllabus (incl. Industry Analysis Report Guidelines)
Professor Dr. Ingo Bobel
Political Arguments and the efficiency of competitive
markets
Market Power
Preliminary remarks:
Costs Revisited (Fixed and Variable Costs in the Long Run;
Marginal and Average Costs; Opportunity Cost: Alternative
Courses of Action; Sunk Costs; Sunk vs. Fixed Costs)
Session 8
Session 9
Session 10
Week 6
13.10.
14-15.30
Monopoly and Monopoly Pricing
Week 6
14.10.
11-12.30
Industry Structure
Week 6
15.10.
14-15.30
Determinants of Market Structure
The Meaning of Monopoly: Sources of Market Power
Monopoly Pricing: Revenue; Costs; Profit-Maximization;
Demand and Cost Changes; Planning Horizon; the
inefficiency of monopoly pricing.
Market Structure-Effects of Restricted Competition; PriceCost Margin
Other Restraints from Competition: Cartels; Enforcement;
Horizontal and Vertical Integration
Finally: Some Remarks on Oligopoly and Oligopoly
Pricing
Concentration in particular markets
Alternative monopoly measures: Lerner Index; HerfindahlHirschman Index
Defining the relevant market ( the US-SIC system)
Economies of Scale (EOS)
EOS and Vertical Integration
Technological Change and Market Growth
Economies from Promotion: The role of Advertising
“A
Note
Microeconomics
Strategists”
Farnham (2009)
Farnham (2009)
“A
Note
Microeconomics
Strategists”
on
for
on
for
“A
Note
on
Microeconomics
for
Strategists”
Comanor/Wilson (1979)
The Impact of Government Policies
Session 11
Week 6
16.10.
16-17.30
Midterm-Review of Research Project
Prepare draft of your
“Industry
Analysis
Project”
Session 12
Week 7
21.10.
11-12.30
Industry Analysis
Bobel (2009)
How to perform a “Five-Forces” Analysis = how to assess
the current status and the likely evolution of an industry.
Many factors determine the nature of competition,
including not only rivals, but also the economics of
particular industries, new entrants, the bargaining power of
customers and suppliers, and the threat of substitute
services or products. A strategic plan of action based on this
might include: positioning the company so that its
capabilities provide the best defense against the competitive
forces; influencing the balance of forces through strategic
moves; and anticipating shifts in the factors underlying
competitive forces
Farnham (2009)
The “Five Forces” in detail:

Factors affecting Rivalry
Page 6
among existing
“A
Note
Microeconomics
Strategists”
Porter (2008)
Porter (1979)
on
for
LXRY 665
Course Syllabus (incl. Industry Analysis Report Guidelines)




Session 13
Week 7
22.10.
14-15.30
competitors
Factors affecting the threat of Entry
Factors affecting or reflecting pressure from
Substitutes and support from Complements
Factors affecting or reflecting power of input
Suppliers
Factors affecting or reflecting power of Buyers
Professor Dr. Ingo Bobel
HOMEWORK:
Five-Forces
SelfAssessment Practice
Homework due: Nov. 3
(in class)
Quiz 2
Farnham (2009)
Competitive Advantage
“A
Note
Microeconomics
Strategists”
The origins of competitive advantage
Value Creation and the value chain
Resources and Capabilities
How sustainable is competitive advantage
on
for
Bobel (2009)
Porter (2008)
Session 14
Week 8
3.11.
11-12.30
Firms and Industries: Industry Competition,
Strategy and Location
Computer Industry: Historical Overview
Session 15
Week 9
12.11.
9-10.30
Firms and Industries: Industry Competition, HBS Case 9-797-137
Strategy and Location
Porter, On Competition,
ch. 1, 2, 5
CASE ANALYSIS:
“INTEL Corporation 1968-1997
Session 16
Week 9
12.11.
11-12.30
Firms,
Industries
and
Cross-Border HBS Case 9-702-427
Competition: Competitiveness –
Porter, On Competition,
Overall Framework
ch. 2, 6, 7
CASE ANALYSIS:
“FINLAND-NOKIA”
Session 17
Week 10
17.11.
Competition as an Evolutionary Process: Porter (1998), Competing
Across Locations
Porter’s Diamond
Factor conditions
Demand conditions
Related supplier or supporting industries
Strategy, structure, and rivalry
Session 18
Week 10
18.11.
Bobel (2009)
Quiz 3
Global Competitiveness
Microeconomics of Competitiveness (MOC) - Report (GCR) (2007)
Approach:
An Overview
Session 19
Session 20
Week 11
24.11.
9-10.30
Value Creation in Health Care
Week 11
24.11.
Course Revision/Second Review of the Final
GCR (2007)
Bobel and Martis (2009)
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LXRY 665
Course Syllabus (incl. Industry Analysis Report Guidelines)
11-12.30
Industry Analysis Report
Week 12
30.11.-4.12.
Oral Presentations
Professor Dr. Ingo Bobel
This syllabus is a guideline only and is subject to change at the professor’s discretion.
Last update: September 2009
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