IUM – MSc in Luxury Mgmt.
ECON 622 E/G
Program Course Syllabus
Professor Dr. Ingo Bōbel
MSc in Luxury Management Program 2014-2015
COURSE SYLLABUS
Course Title
INDUSTRY COMPETITIVE ANALYSIS – Fall 2014
Instructor
Professor Ingo BÖBEL, Dr. rer. pol., Dr. rer. pol. habil.
Contact Information
Website: http://ibobel.pbwiki.com
Professor’s Email : ibobel@monaco.edu
Follow me on Twitter: Follow@ibobel
Office: Room 204 – Tel. +377 97 986 986
Office Hours: TBA
Course Number
ECON 622 E/G
Credits
3
Course Schedule
See below
Course Length
33 hours (two 90 min. sessions over 11 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 firmcompetition 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 MSc in Luxury Management is designed to answer the specific needs of a fast-evolving, diverse and complex
industry: new trends, new concepts, new services, and new players are breaking into the sector that represents the ultimate
expression of personalized service and intimate elegance.
The IUM offers a strong practical and strategic content to prepare students for supervisory positions in the leisure industry:
a combination of hands-on skills acquired through experience, with university courses focus primarily on areas of
administration and management, providing students with the strategic understanding required to grow as an effective
manager in the hospitality and tourism industry.
PROGRAM LEARNING GOALS
Upon graduation our MSc in Luxury Management students will:
1. Demonstrate an understanding of the complexity of the luxury industry.
2. Have a global perspective and consider the international and cultural dimensions of the luxury business.
3. Master and be able to apply essential managerial fundamentals for luxury Hospitality professionals.
4. Be able to propose creative and viable solutions to luxury industry scenarios.
5. Be able to communicate effectively and professionally.
6. Understand the importance of ethical, responsible and professional behavior.
7. Demonstrate critical thinking and problem solving skills, using appropriate analytical methods and tools.
8. Demonstrate skill in working collaboratively in achieving shared objectives of a group.
Syllabus Prof. Bōbel
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Last updated: July 2014
IUM – MSc in Luxury Mgmt.
ECON 622 E/G
Program Course Syllabus
Professor Dr. Ingo Bōbel
COURSE OBJECTIVES & LEARNING GOALS
1.
Course Objectives
Demonstrate the mastering of concepts, tools
and frameworks necessary to recognize,
analyze and manage the business variables and
issues specific to the luxury goods and
services industry (LGS) (present the findings
according to accepted industry and academic
guidelines).
Assessment
% of Grade
Industry Analysis Project, Oral presentation
60
2.
Demonstrate an understanding of the complex
interrelationships between all business
functions within firms operating in the luxury
goods or services industry.
Quiz
20
3.
Demonstrate an understanding of the
competitiveness of the luxury goods and
services sector. Defend one’s point of view
with strong argumentations based on solid
marketing knowledge and research.
Demonstrate professionalism
Class Participation
15
4.
5
Attendance
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.
Attendance is taken within the first 5 minutes of class by the instructor. Attendance is part of the class grade: absences
affect final course grades.
Each class starts at the posted hour.
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, presentations and in-class exercises.
Missed quiz, examinations or any in-class exercise will result in a 0% mark and may not be made up.
In general, make-up examinations will be permitted only in exceptional cases, and the prior written approval of the
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.
Syllabus Prof. Bōbel
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Last updated: July 2014
IUM – MSc in Luxury Mgmt.
ECON 622 E/G
Program Course Syllabus
Professor Dr. Ingo Bōbel
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: 40%
 Professionalism (incl. preparedness in Group Project Revision Meetings , attendance): 5%
 Class Participation (incl. Group Project Revision Meetings): 15%
 Quiz: 20%
Group Assignment - Industry Analysis Report: 60%
 Written report: 70%
 Oral presentation: 30%
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
Grade
A
AB+
B
BC+
C
CD+
D
DF
GRADING SYSTEM DESCRIPTION
Percentage Grade
Quality of
Range
Points
Work
95-100%
4.0
Outstanding/
excellent
performance
90-94%
3.7
87-89%
3.3
83-86%
3.0
Good work
80-82%
2.7
77-79%
2.3
73-76%
2.0
Acceptable
work
70-72%
1.7
67-69%
1.3
63-66%
1.0
Poor work.
60-62%
0.7
< 60%
0.0
Fail
Required Course Materials
Required textbook:
Martha L. Olney, Microeconomics as a Second Language; Wiley Publ. 2009 (ISBN: 9780470433737)
In addition we shall use a set of articles, cases and research papers as required readings:
Michael Porter, The Five
Competitive Forces That Shape
(http://users.jyu.fi/~juanla/READINGS/HBR_on_Strategy_23_41.pdf)
Strategy,
HBR
January
2008
Michael Porter, Competing Accross Locations: Enhancing Competitive Advantage through a Global Strategy, in:
M. Porter, On Competition, HBS Press 1998
Syllabus Prof. Bōbel
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IUM – MSc in Luxury Mgmt.
ECON 622 E/G
Program Course Syllabus
Professor Dr. Ingo Bōbel
Th. Veblen, Theory of the Leisure Class (you can read the e-book on our course website at
http://xroads.virginia.edu/~HYPER/VEBLEN/veblenhp.html
World Economic Forum (2013), The Global Competitiveness Report 2013-2014
http://www.weforum.org/reports/global-competitiveness-report-2013-2014
1. Additional Recommended Resources
“Competitive Strategy”, Business Fundamentals from Harvard Business School Publishing, HBS No. 1520, Boston
2002 (contains an excellent collection of fundamental articles on competitive strategy) (available in IUM Library)
M. Porter (1979), How Competitive Forces Shape Strategy, reprinted in: Competitive Strategy, HBS Publ. 2002 (see
above), 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)
R. 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 (see above)
W. S. Comanor and T. A. Wilson (1979), The Effect of Advertising on Competition: A Survey, Journal of Economic
Literature 17 (available through EBSCO)
Notes
All assignments should be completed in a professional manner.
Late assignments and projects will not be accepted.
Session
Session 1
Material Covered
Getting Organized and Introduction to the Course
General Hint:
Always ask
yourself:”How
does - what I have
learned in class fit into my
Industry Analysis
Report”? How can
it be applied?
What sources are
available?
Download and
read Porter 2008:
http://users.jyu.fi/
~juanla/READIN
GS/HBR_on_Strat
egy_23_41.pdf
Review of Syllabus
Remarks on Readings and Literature
Course Website
Industry Analysis Report
Team Group Composition
Session 2
Suggested Reading
General Principles of “How to capture the relations
between the firm and its market environment”
Olney, ch. 1
From “The structure-conduct-performance paradigm” to
Syllabus Prof. Bōbel
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IUM – MSc in Luxury Mgmt.
ECON 622 E/G
Program Course Syllabus
Professor Dr. Ingo Bōbel
Porter’s Five Forces
Four classes of market structure: Perfect
monopolistic competition-oligopoly-monopoly
Session 3
competition-
Discussion of HOW TO SEARCH FOR SOURCES
to be used in the INDUSTRY ANALYSIS
Olney, ch. 3
Causes of Market Structure: The “Basic
Conditions” of Demand and Supply Revisited
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 4/5
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”
Olney, ch. 3
Th. Veblen, Theory of
the Leisure Class
The Economist:
http://www.economist.
com/node/5323772?sto
ry_id=E1_VPNPSSN
H. Leibenstein (1950)
Session 5
The special case of “Luxury Good Demand” cont’d:
Bandwagon, Snob and Veblen effects in the Theory of
Conspicuous Demand
Other factors that affect “luxury demand”
Pricing of Luxury Goods
Session 6
The Concept of the Elasticity
Olney, ch. 3
Th. Veblen, Theory of
the Leisure Class
The Economist:
http://www.economist.
com/node/5323772?sto
ry_id=E1_VPNPSSN
Olney, ch. 4
Own Price Elasticity of Demand; Construction and Properties;
Intuitive Factors; Elasticity vs. Slope of demand curve
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
Olney, ch. 6
Session 7
Production theoretical Foundations
And Costs of Production
Syllabus Prof. Bōbel
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IUM – MSc in Luxury Mgmt.
ECON 622 E/G
Program Course Syllabus
Professor Dr. Ingo Bōbel
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
The Economics of Competition and Monopoly
Competition Defined:
Olney, ch. 6
Necessary Conditions (Homogeneous Product; Many Buyers and
Sellers; Free Entry and Exit; Equal Information)
The case for competition:
Political Arguments and the efficiency of competitive markets
Session 9
Group Review of Research Project
See Industry
Analysis Project
Guidelines
Session 10
Group Review of Research Project
See Industry
Analysis Project
Guidelines
Session 11
Monopoly and Monopoly Pricing
Olney, ch. 7
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; Price-Cost
Margin
Other Restraints from Competition: Cartels; Enforcement;
Horizontal and Vertical Integration
Finally: Some Remarks on Oligopoly and Oligopoly
Pricing
Session 12
Industry Structure
Olney, ch. 7
Concentration in particular markets
Alternative monopoly measures: Lerner Index;
Hirschman Index
Defining the relevant market ( the US-SIC system)
Herfindahl-
Determinants of Market Structure
Comanor/Wilson
(1979)
The Global
Competitiveness
Report 2012-2013
Economies of Scale (EOS)
EOS and Vertical Integration
Technological Change and Market Growth
Economies from Promotion: The role of Advertising
Session 13
Industry Analysis
Olney, ch. 7
How to perform a “Five-Forces” Analysis = how to assess the
Syllabus Prof. Bōbel
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IUM – MSc in Luxury Mgmt.
ECON 622 E/G
Program Course Syllabus
Professor Dr. Ingo Bōbel
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
Porter (2008)
Porter (1979)
The Global
Competitiveness
Report 2012-2013
The “Five Forces” in detail:





Factors affecting Rivalry among existing 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
Session 14
Quiz
Session 15
Industry Analysis cont’d.
Porter (2008)
The “Five Forces” in detail:
Porter (1979)





Session 16
The Global
Competitiveness
Report 2012-2013
Industry Analysis cont’d.
Porter (2008)
The “Five Forces” in detail:
Porter (1979)





Session 17
Factors affecting Rivalry among existing 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
Factors affecting Rivalry among existing 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
Group Review of Research Project
Syllabus Prof. Bōbel
Page 7
The Global
Competitiveness
Report 2012-2013
See Industry
Analysis Project
Guidelines
Last updated: July 2014
IUM – MSc in Luxury Mgmt.
ECON 622 E/G
Program Course Syllabus
Professor Dr. Ingo Bōbel
Session 18
Group Review of Research Project
Session 19
Course Revision/Review of the Final Industry See Industry
Analysis Project
Analysis Report
Guidelines
Session 2022
Course Revision/Review of the Final Industry See Industry
Analysis Project
Analysis Report
Guidelines
ORAL
PRESENTA
TIONS
Final written group project (Industry Analysis
Report) is due!
See Industry
Analysis Project
Guidelines
Oral Presentations
Week: Dec. 15-19
See Industry
Analysis Project
Guidelines
Exact Dates will be announced by Program Director
Syllabus Prof. Bōbel
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Last updated: July 2014