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 « MBA Information» in the
« Sidebar » on my personal website)
ECON 611
3
For exact details see course outline below
September 29, 30/October 1, 2008 – all day (9.00-19.30)
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
Fall 2008
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.1
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 August
25), 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
 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 no later than November 9, 2008. There
will be no credit for work submitted after this
deadline).
See my 2008 paper in the “mandatory readings” list.
Professor Dr. Ingo Böbel
IUM – EMBA Program
1
Fall 2008
EMBA
Grades
Professor Dr. Ingo Böbel
ECON 611 Managerial Econonomics
Page 3
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,
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
IUM – EMBA Program
Fall 2008
EMBA
Course Material
ECON 611 Managerial Econonomics
Page 4
Textbook:
1. Ivan Png and Dale Lehman, Managerial
Economics, 3rded, Malden, MA: Blackwell
Publ., 2007 (= PL)
Mandatory Reading:
2. Ingo Böbel, Global Strategy and Competitive
Analysis, (draft – work in progress) Monaco
2008 (the paper is obtainable from the IUM
library – please contact Ms. Susan Eklow, IUM
Head of Library and Research Services, at
seklow@monaco.edu or +377-97986990)
3. You find an excellent collection of articles in:
“Competitive Strategy”, Harvard Business
Fundamentals Series, HBS Publ. 2002
(available from IUM library) Highly
recommended!
Course Outline
Part I:
Pre-Study: 18 course hours; August 25-September 28,
2008:
Complete
Reading
and
Pre-Course
Assignments (for detailed information see the course
page on the sidebar at http://ibobel.pbwiki.com)
Part II:
On-campus session Day 1 (Sept. 29):
Foundations of Microeconomic Analysis
In order to prepare for class read the following (see
“Sidebar”
on
the
Course
Website
at
http://ibobel.pbwiki.com)
1. Introduction: What’s different about economics?
2. Sweetwater vs. Saltwater
3. In PL: ch. 1
The Nature and Scope of Economics Relevance of the
Professor Dr. Ingo Böbel
IUM – EMBA Program
Fall 2008
EMBA
ECON 611 Managerial Econonomics
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subject for executives; the added value of economic
concepts; more specifically: the role of market power.
Fundamental economic principles. The nature and scope
of Managerial Economics: the economic approach to
business decisions and business strategy.
The Decision Process: how to make the right choices?;
Cost, value and price as the major determinants for
creating economic profit. Remarks on costs, opportunity
cost, hidden costs, sunk costs. The application of costvalue-price logic: The role of trade offs, efficiency,
inefficiency.
Demand and Supply Analysis
Read: [(PL) ch. 2 and 4]
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: [(PL) ch. 3]
Price Elasticity of demand and supply, measurement of
elasticities; revenue and elasticity.
Cost, Value, and Price: The concepts of Consumer
Surplus and Producer Surplus.
Class activity (depending on the time constraint):
Discussion of cases (contained in the textbook
chapters), end-chapter textbook questions and
problems handed out in class
On-campus session Day 2 (Sept. 30) (Morning
session):
Read:
1. “Slackers or pace-setters ?” (from The
Economist)
2. Competitive strategy to lure the investor
(Whittington
article
from
“Mastering
Strategy”, FT).
3. [(PL) ch 5. and ch. 8]
Professor Dr. Ingo Böbel
IUM – EMBA Program
Fall 2008
EMBA
ECON 611 Managerial Econonomics
Page 6
Output and Costs
Read: [(PL) ch. 4]
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
Short-run technology constraint: Total, marginal and
average product; Product curves
Monopoly
Monopoly, dominant firms, market (monopoly) power
revisited, market structure and the degree of competition,
characteristics of monopoly
Perfect Competition
The Basic Competitive Model: the firm’s decisions in
perfect competition; output, price and profit: entry and
exit in a competitive market
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 (Sept. 30) (Afternoon
session):
Read in PL ch. 10
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.
Professor Dr. Ingo Böbel
IUM – EMBA Program
Fall 2008
EMBA
ECON 611 Managerial Econonomics
Page 7
Prepare: “Intel”-case and work through the following
assignment questions: Assignment questions Intel.doc
Class activity: Discussion of assignment questions
On-campus session Day 3 (Oct. 1):
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.2
Prepare: “Finland and Nokia”-case
Suggested reading: M. E. Porter, “Competing Across
Locations: Enhancing Competitive Advantage through a
Global Strategy”, in: Porter, On Competition, Boston:
Harvard University Publ. 1998
In addition to the assignment questions that you find
on the course website, also ponder the following set of
questions:
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
See my 2008 paper in the “mandatory readings” -list.
Professor Dr. Ingo Böbel
IUM – EMBA Program
2
Fall 2008
EMBA
ECON 611 Managerial Econonomics
Page 8
(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?
SELECTED MACROECONOMIC TOPIC
Economic Growth
The Goods Market GDP and Economic Growth (1):
The interaction between production, income and demand
Measuring Economic Activity
The Cost of Living
GDP and Economic Growth (2): History and Facts
The nature of economic growth through time; Economic
Growth in a long-term context:
Why is it that modern Western people are incomparably
richer than his/her ancestors 1000 years ago? Why have
economic advances been so slow over such a long time?
The break-down of the "iron law" of history. What had
happened? Why did it happen at that particular time and
place? The “critical mass” theory to explain the take-off
process. Examples of technological advancements.
Class activity: Discussion of case related assignment
questions
Discussion of individual take-home final
project (case study)
Part III:
Post-Course: October 5 - November 9, 2008:
Complete and Hand Up All Post-Course Assignments
(individual take-home final project (case study) to be
discussed in class) – Due Date: November 9, 2008!
Professor Dr. Ingo Böbel
IUM – EMBA Program
Fall 2008
EMBA
Additional Readings
ECON 611 Managerial Econonomics
Page 9
I recommend to consult a number of reference books
which might be of valuable help:
Microeconomics:
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
M. E. Porter, On Competition, Boston: Harvard
University Publ. 1998
“Competitive Strategy”, Harvard Business Fundamentals
Series, HBS Publ. 2002 (available from IUM library)
Highly recommended!
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.:
August 2008
Disclaimer: This outline is a guideline and subject to change at the professor’s discretion.
Professor Dr. Ingo Böbel
IUM – EMBA Program
Fall 2008