Program for which this course is designed: Bachelor of ...


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Program for which this course is designed: Bachelor of ...

  1. 1. 2002IBS Microeconomics of Business Strategy Semester 1, 2004 GRIFFITH UNIVERSITY – GOLD COAST CAMPUS MICROECONOMICS OF BUSINESS STRATEGY Semester 1, 2004 COURSE GUIDE Code: 2002IBS-GC Title: Microeconomics of Business Strategy Department: International Business and Asian Studies Faculty: Griffith Business School Program for which this course is designed: Bachelor of International Business Status of course within program: core Credit point value: 10 Prerequisites: 1005ECS Economics for Managers or 1001IBS Principles of Economics Year and Semester: 2004, Semester 1 Lecture Times & Venue: Wednesdays 9:00-11:00 G02_1.24 Course Convenor: Dr Byung S. MIN Room: N06 0.17 (Nathan Campus) Telephone and voicemail: 3875 5248 Fax: 3875 5111 Email: Teaching Team: Lisa Alder Telephone and voicemail: 3875 5143 Mobile:0438 720 650
  2. 2. 2002IBS Microeconomics of Business Strategy Semester 1, 2004 1. Objectives Students who will successfully complete this course will: • develop an awareness of the link between theory and practice and appreciate the relevance of basic microeconomic concepts in a business setting • develop analytical and problem-solving skills • develop an awareness of key issues in microeconomic theory that are currently part of ‘leading-edge’ research in the field • develop an awareness of current issues facing Australian business and the Australian economy in an age of globalization 2. Interrelationship of the course with other course/s and program/s This course provides various microeconomic concepts/theories and their implications to real business world with a view to learning business strategies. This is a foundation course for bachelor of business. For example, consumer theories provide theoretical foundation for marketing strategies, concepts of the firms behaviour are essential to managerial strategies and accounting and finance(i.e. corporate governance), and economic logics for the market are crucial to understand business activities in real world and competition policies. 3. Course description This course seeks to demonstrate how selected aspects of microeconomic theory can facilitate business strategy formulation and corporate decision making. The coverage of topics include: understanding consumer’s behavior and its implication to business strategy such as product positioning and pricing strategies, basic idea of industry economics, rivalry behaviours, firms output decision and monopolistic firm’s pricing strategies, as well as introduction of basic concepts of the nature of the firm with a view to finding business implications to managers. A number of relevant cases from the Australian economy or overseas will be provided during the lecture time.
  3. 3. 2002IBS Microeconomics of Business Strategy Semester 1, 2004 4. Content Topic: Goal of lecture References/readings Lecture 1: Week1 An overview of the subject and its Pindyck&Rubinfeld: Chap.1 (3 March) delivery mode, resources available, Besanko et al. Chap.1 and the assessment criteria will be mentioned. This lecture will also provide some introductory concepts: - Understanding concept of business strategy - How microeconomic knowledge facilitates business strategy formulation and corporate decision making. 2:Week2 Overview of business environment Pindyck&Rubinfeld:Chap.1 and 3 (10 March) and Consumer Demand:Consumer Besanko et al. pp.23-29 preferences and theory of demand as tools for product positioning & strategic marketing The first aim is to understand a general framework of the lecture, focusing on: - consumers demand - industry, strategic groups within industries, and supply - market equilibrium - changing business environment The second aim is to understand: - background to the demand curve 3: Week 3 Pricing strategy and consumers Pindyck&Rubinfeld: Chap.2(pp.30- (17 March) respond 36), Chap.4( pp.116-119); Besanko et This lecture is an extension of al. pp.23-29. lecture 2, focusing on the implication of market demand and elasticity on business pricing strategy - market demand - price elasticity; income elasticity(normal and inferior good) - effects of price changes on revenue 4: Week 4 Product positioning and strategic Pindyck&Rubinfeld:pp.127-131, p. (24 March) marketing:Consumer preferences 109, p.33, pp.116-119. and theory of demand as tools for Besanko et al. Chap.11.
  4. 4. 2002IBS Microeconomics of Business Strategy Semester 1, 2004 production positioning & strategic marketing The goal of this lecture is to understand the implications of consumers preferences for business production positioning and marketing. To do this we will discuss: - network externalities: bandwagon effect and snob effect - theory of brand choice: the attribute approach - cross-price elasticity 5: Week 5 The firm, profit maximisation, and Pindyck&Rubinfeld:Chap.6-8, (31 March) production decision: Production, Besanko et al. pp.9-23. * Lecture 5 Technology and Costs Additional readings: can be Main objective is to understand basic • Bailey, E.E. and Friedlander, discussed A.F., 1982, Market structure concepts related to producer after lecture behaviour. We will learn: and multiproduct industries, in Week 7. Journal of Economic - what are costs; production and costs; measurement of Literature, Vol.XX:1024-1048 costs; costs in the SR and LR • Cohn, E. et. Al., 1989, - output decisions: short-run, Institutions of higher long run education as multiproduct - economies of firms: Economies of scale and scale/economies of scope scope, Review of Economics and Statistics, 284-289. 6: Week6 (7 April) Mid-semester test Mid-semester test 12-16 April Mid-semester vacation 7: Week7 (21 April) Industry analysis:Building blocks in Besanko et al. Chap.9-10. * This industry economics Pindyck&Rubinfeld:Chap.8 Lecture can In order to understand the basic be discussed framework for industry analysis, you before lecture will learn: 5 - defining the basic units of analysis: the nature of the firm; strategic groups; industry - Understanding basic framework with Five Forces model 8: Week 8 Industry structure and business Pindyck&Rubinfeld:Chap.8 and (28 April) strategy- Perfect competition pp.288-89; Besanko et al. Chap.6. In order to understand output Additional readings:
  5. 5. 2002IBS Microeconomics of Business Strategy Semester 1, 2004 decision in competitive market, you • Baumol, W., 1991, will learn: Determinants of industry - Concepts of perfect structure and contestable competition and market theory, in Greenway, contestability E., Companion to - SR shut down condition Contemporary Economic - LR decision to exit or enter Thought, Routledge, London. an industry • Shepherd, W.G., 1984, - Evaluating the market Contestability vs competition, equilibrium:Consumer and American Economic Review, producer surplus vol.74(4):572-586. 9: Week 9 Monopoly’s output and pricing Pindyck&Rubinfeld:Chap.10-11; (5 May) decision: Structure, strategy and Besanko et al. Chap.7. performance in Monopoly • Additional reading: Mark - What are monopoly’s Rogers, 1999, Monopoly characteristics power, innovation, and - Pricing strategy: a rule of economic growth, Australian thumb for pricing; price Economic Review, discrimination strategy(first vol32(1):96-104 degree, second degree, third degree price discrimination) 10: Week 10 Oligopoly’s Profit Maximising Pindyck&Rubinfeld:Chap.12- (12 May) Behavior: Oligopoly 13;Besanko et al. Chap.7-9. Additional reading: The goal is to understand • Montet, C., 1991, Game Oligopolistic industry structure and theory and strategic behavior, business strategy: in Greenway, D., et al.(eds.), - What are oligopoly firms Companion to Contemporary characteristics Economic Thought, - prisoner’s dilemma and its Routledge, London. application for business • Dixit, A.K.,1982, Recent strategy Development in Oligopoly Theory, American Economic Review, vol.72:12-17. 11: Week 11 Industry structure and business Pindyck&Rubinfeld:Chap.12- (19 May) strategy: Oligopoly part II. 13;Besanko et al. Chap.7-9. Additional reading: This lecture is an extension of • Montet, C., 1991, Game lecture 9, focusing on the application theory and strategic behavior, of game theory to business strategy in Greenway, D., et al.(eds.), Companion to Contemporary Economic Thought, Routledge, London. • Dixit, A.K.,1982, Recent Development in Oligopoly
  6. 6. 2002IBS Microeconomics of Business Strategy Semester 1, 2004 Theory, American Economic Review, vol.72:12-17. 12:Week12 Alternative theories of the firm, Pindyck&Rubinfeld:Chap.17;Besanko (26 May) Asymmetric information and et al. Chap 2-4. managerial decision making: Issues Additional readings: in organisational design/corporate • Gibbons, R., 1998, Incentives governance in organisations, Journal of - Understanding the firm Economic Perspectives, - What is moral hazard vol.12(4):115-132. - What is the principal-agent • Holmstrom, B. and Roberts, J., problem 1998, The boundaries of the - Incentive design firm revisited, Journal of - What are issues for corporate Economic Perspective, governance vol.12(4):73-94. • Coase, R., 1937, The nature of the firm, Economica, 4:386- 405. • Alchian, A. and Demsetz, H., 1972, Production, information costs, and economic organisation, American Economic Review, 62:777-95. 13: Week 13 Revision (2 June) 5. Generic skills development This course will help students to develop: (1) self-management skills, adaptability and learning skills, problem solving and conceptual skills; (2) written(and oral) communication and information skills; (3) personal effectiveness and professional effectiveness. 6. Flexible learning This course is Mode A: Web Supplemented. The web material is particularly for non-native English speaking students and part-time students. It is important to notice that attending all lectures and tutorials are crucial to achieve good result. 7. Organisation and Teaching Methods Teaching will entail the following modes: (i) Lectures (Week 1 to 13) will be held in G02_1.24 on Wednesdays between 9:00- 11:00 am (2 hours). Lecture will provide an introduction of necessary theoretical concepts, relevant cases from real world, their relevance in formulating business strategy.
  7. 7. 2002IBS Microeconomics of Business Strategy Semester 1, 2004 (ii) Workshop sessions: There are ten(10) weeks of workshop, starting in Week 3. (No workshop in Week 6). Each workshop lasts for fifty minutes. There are several identical sessions each week, which allow you to sign up for a group that fits the rest of your timetable. Sign-up sheets will be available in Week 1 in lecture room. Note that there is a limit of around 25 students per workshop group. Workshop sessions are aimed at developing the student’s ability to understand the theoretical constructs that are necessary in applied analysis. The sessions will be conducted in an interactive manner and will be based on problem-solving questions that entail computations, use of diagrams, and the application of relevant theories and concepts. Regular attendance in workshops is crucial in successful completion of assessment items. 8. Assessment: Items Time Weights Multiple choice questions Week 6: during lecture 15% exercise hours(7 April) Semester Essay/Report Week 9 [ 5 May, Lecture 35% time] Final examination TBA 50% MCE: • The multiple choice exercise will consist of thirty (30) multiple choice questions. The questions will be from lecture week 1 to week 5. • Duration of exam will be one hour. • Results of the exam will be posted on the University website at the end of week 8. The mid-semester essay/report will be designed to encourage students to test their understanding of key concepts and issues in the course and to test their ability to undertake research in a designated topic. (topic will be advised in Week 2) The final examination will be designed to ensure that students have acquired a comprehensive understanding of the various analytical skills necessary for interpretation and analysis of economic phenomena. The examination will be based on material covered in the lectures and workshop sessions for the entire semester. The examination will have three sections, multiple choice questions, short-answered questions, and problem oriented questions requiring essay length discussion.
  8. 8. 2002IBS Microeconomics of Business Strategy Semester 1, 2004 9. Text and references: Pindyck, R.S. and Rubinfield, D.L., Microeconomics, Fifth eds., Pearson Education.(website links available at : Besanko, D. and Dranove, D., and Sharnley, M., Economics of Strategy, Third eds., John Wiley. (website links available at: 10. UNIVERSITY POLICIES 10.1 Late Submission of Assignments Requests for an extension of time for submission of an assessment item must be lodged before the due date for the assessment item. Requests received on or after the due date will only be considered in exceptional circumstances. Extension requests must be made in writing to the Course Convenor, and be accompanied by appropriate supporting documentation. Where an extension has not been granted, an assessment item submitted after the due date will be penalised as follows: the market awarded to the item will be reduced by 10% of the maximum possible mark for each day that the assessment item is late. Each week (from Friday to Sunday) will count as one day. 10.2 Plagiarism/Academic misconduct Students must conduct their studies at the University honestly, ethically and in accordance with accepted standards of academic conduct. Any form of academic conduct which is contrary to these standards is academic misconduct for which the University may penalise a student. Specifically it is academic misconduct for a student to: • present copied, falsified or improperly obtained data as if it were the result of laboratory work, field trips or other investigatory work; • include in the student’s individual work material which is the result of significant assistance from another person if that assistance was unacceptable according to the instructions or guidelines for that work • assist another student in presentation of that student’s individual work in a way that is unacceptable according to the instructions or guidelines for that work • cheat • plagiarise On determination that academic misconduct has taken place, the PENALTY which may be imposed on the student is one or more of the following: a. a reduced or nil result for the assessment item affected by the academic misconduct; b. a fail grade for the course c. exclusion from enrolment d. exclusion from the program Further information on this policy can be found: 10.3 Assessment policy: refer to 10.4 Student appeals and grievances policy
  9. 9. 2002IBS Microeconomics of Business Strategy Semester 1, 2004 Griffith University is committed to an equitable and enriching environment for students which fosters academic achievement and where the interactions amongst students and staff are based on mutual respect, fairness and fulfilment of obligations. The University’s Student Charter expresses the expectations which students may have of the University and which the University has of its students. The Student Charter, together with the rules and policies of the University, provide the framework for the interaction between the University, its staff and students.( 11. Course communications Students can communicate with course convenor: (1) consultation time: Wednesdays[2 hours] at Gold Coast Campus (Time will be advised shortly) (2) Telephone, email and internal mail (refer to first page) (3) Special final examination consultation at GC (Time will be advised) ********************************************************************