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Semester 2

The Economics of Corporate Strategy (BUST10021)

Course Website

http://www.bus.ed.ac.uk/programmes/ugpc.html

Subject

Business Studies

College

CAHSS

Credits

20

Normal Year Taken

3

Delivery Session Year

2023/2024

Pre-requisites

Visiting students must have completed at least 4 Business/Management courses at grade B or above. This MUST INCLUDE at least one Economics course at intermediate level. This course cannot be taken alongside BUST08005 Business Economics; ECNM08002 Economic Principles and Applications; ECNM08013 Economics 1; ECNM08003 Economic Applications; or ECNM08004 Economic Principles. We will only consider University/College level courses.

Course Summary

This course aims to help students obtain a comprehensive understanding of the major strategic behaviours and decisions of the modern corporation. The discussion is generally non-mathematical, and real cases will be examined in all sessions.

Course Description

We will consider market policy in relation to decisions as to whether to pursue a strategy of product differentiation or cost reduction, and whether these are indeed mutually exclusive approaches. We discuss issues of sustainability of profits, and policies towards innovation. We then discuss such decisions as whether to make or buy inputs or channels of distribution. These issues are shown to depend critically on Transactions Costs, and following that line we examine the reward structure in the company. Having looked at the decisions relating to the component units of the corporation, we then round off the course by analysing strategic interactions between firms. Throughout the course, the issues of managerial interests and the conflict with shareholders' interests and the implied information asymmetry and reputation concern provide an underlying theme. Syllabus 1. Basic Economic Principle and Competitive Advantage 2. Creating and Sustaining Competitive Advantage 3. Strategic Interactions between Firms 4. Innovation 5. Agency Problems and Incentive Design 6. Vertical Boundaries: Transaction costs and Vertical Integration Student Learning Experience Much of the student's learning will be achieved through reading and classroom activities. The reading list specifies the most important and less important items. For each topic on the reading list, a question is specified which helps students to focus their thoughts whilst carrying out the reading. Also, each topic contains at least one classroom activity, in which students have the chance to practice the theories that they learn from lectures and reading. Classroom activities are designed to promote more student engagement and are closely related to Lectures. Lectures provide a detailed synthesis of the literature with illustrative examples. Because the class is typically small and the scheduled time for each lecture is quite long, students are given ample opportunities to both discuss the results of classroom activities and the ideas put forward by the lecturer.

Assessment Information

Written Exam 0%, Coursework 100%, Practical Exam 0%

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