Universidad Pública de Navarra - Nafarroako Univertsitate Publikoa

Module/Subject matter

Economics of Strategy. http://pagines.uab.cat/mmobe/content/economics-strategy

Professors: Emilio Huerta Arribas; Lucía Garcés.

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Contents

1. Introduction and Course Description

Economics of Strategy, within the MMOBE, belongs to the Markets, Strategy and Performance section. This course covers the fundamentals of both business-level and corporate-level strategy. The course is designed to introduce a wide variety of modern strategy frameworks and methodologies, including methods for assessing the strength of competition, for understanding relative bargaining power, for anticipating competitors'actions, for analyzing cost and value structures and their relevance to competition, and for assessing potential changes in the scope of the firm (diversification and vertical integration). Basic mastery of these tools has relevance to everyone seeking a career in management.

The perspective of Economics of Strategy is unique in that we adopt the perspective of the general manager who has overall responsibility for the performance of the firm or business unit within the firm. Such a manager needs to understand the basis for the current performance of the firm. The manager must also be able to identify changes (inside or outside the firm) that are most likely to affect future performance adversely or to provide opportunities for the firm to improve its performance. The manager must then develop a strategy that uses the company's position and capabilities to compete successfully in its new environment.

Of course, general managers need to understand the functional areas of the businesses they manage. Indeed, this why we shall frequently draw on functional expertise developed in other courses. However, the general manager's role is not simply to oversee those functional areas (finance, marketing, operations) but rather to set a strategic direction for the firm and to coordinate its activities to help achieve its strategic goals. And it is this general perspective that we adopt in this course.

2. Pedagogical Approach

Economics of Strategy develops theoretical and conceptual frameworks for strategic management and dedicates itself to applying these frameworks to real-world situations. These theories and frameworks are designed to help students better understand and analyze management problems and opportunities, and to develop solutions to deal with these situations. As such, each class session will usually have a "theory" reading, which explains and develops the framework, and an application reading, which may consist of a real case and/or a research paper.

This case&research-based approach will require students to become familiar not only with the details of the general theoretical framework, but will also give the student an opportunity to learn about a number of industries, and a number or recent research topics on strategy. The analysis and discussion of different industry and company situations is the primary class activity. Preparation of the cases and participation in the discussion is critical to the learning and the success of the class as a whole.

The disciplinary lens used to study strategy in this course is Economics, since it permits the formulation of subtle and powerful hypotheses that generate richer strategies in comparison with other disciplines such as political science or organizational behavior.

The class sessions are organized into six modules. In the first module we will explore the nature of strategy, its main vocabulary and the different levels in its study. The second module covers the analysis of the industry where the firm is operating. The third module explores the creation of value at the business level. The fourth focuses on corporate strategy, paying special attention to the horizontal and vertical boundaries of the firm. The fifth explores issues on advanced topics in internationalization strategy. Finally, the sixth module finishes with the particular case of the family business strategy.

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General proficiencies

GP1: Develop a critical and a constructive attitude to one's work and that of others.

GP2: Develop an ethical, social and environmental commitment.

GP3: Draw valid conclusions for business from case studies.

GP4: Present research results to various audiences using the different media available.

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Specific proficiencies

SP1: Analyze business cases from a theoretical perspective with the aim of better understanding organizational behaviors.

SP2: Display knowledge of the economic and institutional environment in which the economic agents interact within, or through, economic organizations.

SP3: Distinguish the characteristics and relations of the different variables that condition corporate strategy.

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Learning outcomes

1. Assess the company's adaptation and optimal behavior in these markets.
2. Design business policies aimed at improving competitive advantage
3. Distinguish the different business strategies in real business operation.
4. Explain and motivate the analyses, interpret the results and present all these clearly and concisely in English.
5. Identify the different strategies driving organizational performance.
6. Investigate the variables that characterize the corporate strategy of the firm
7. Study the competitive behavior of companies in various contexts
8. Work in multidisciplinary international teams

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Methodology

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Languages

English.

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Evaluation

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Agenda

Agenda

• Introducing Strategy: Session 1

• • Understand the characteristics of strategic decisions.
  • Understand how strategic priorities vary by level: corporate,business and operational.
  • Understand the basic vocabulary, models and frameworks of strategy.

• Industry analysis: Session 2

• • Threat of new entrants
  • Barganing power of suppliers
  • Barganing power of buyers
  • Threat of substitutes
  • Rivalry among existing competitors

• Business strategy: Session 3
  • What competitive strategy to adopt in order to gain competitive advantage in a market at the business level?
  • The logic of value creation
  • The link to competitive advantage
  • Two ways to get value creation
• Corporate strategy: Session 4
  • Definition of corporate strategy
  • From business strategy to corporate strategy
    • Vertical integration
    • Diversification

• International Strategy: Session 5
  • Implications of internationalization
  • Competitive advantage in an international context
  • Applying the framework:
    • International location of production
    • Foreign entry strategies
  • Global integration vs national adaptation

• Family business Strategy: Session 6
  • • Why are different? Singularities
    • Challenges
    • Empirical evidence
    • Implications

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Bibliography

Access the bibliography that your professor has requested from the Library.

Access the bibliography that your professor has requested from the Library.

• Besanko, D., Dranove, D., Shanley, M., Schaefer, S. (2013): Economics of Strategy. International Student Version. 6th edition. Ed.: John Wiley & Sons. ISBN: 978¿1-118-31918-5.
• Grant, R., (2016), Contemporary Strategy Analysis, 9th Edition. Willey. ISBN: 978-1-119-12084-1.
• Johnson, G. Scholes, K. and Whittington, R., (2008), ¿Exploring Corporate Strategy¿, Pearson Education. ISBN: 0273711911.

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Location

Universidad Pública de Navarra.

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