...Wednesday11:00AM-12:00Noon 1 Course Description The fundamental objective of this course is to introduce to managers the important economic concepts and tools to improve their decision-making and to achieve managerial goals. The course will emphasize the economic way of thinking, and will enable managers to better understand the economic environment in which business decisions are made. Developing innovative solutions to business problems will be encouraged throughout the course. Learning Objectives Ø Apply the tools and theories from microeconomics to perform demand and supply analyses. Ø Identify different market structures. Formulate different pricing strategies under different market structures or consumer characteristics. Ø Apply basic game theoretic models to formulate business strategies such as pricing. Ø Understand the main issues faced by companies and what are the possible solutions suggested by economic theory. For example, the principal-agent problem and how incentive contracts can be used to address the issue. Ø Understand the key behavioral biases that can affect decision-making in business setting. Brief Course Outline The following table lists the approximate schedule and topics of the classes....
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...MULTIPLE CHOICE Choose the one alternative that best completes the statement or answers the question. 1) Perfect competition and monopolistic competition are similar in that both market structures include A) price-taking behavior by firms. B) a homogeneous product. C) no barriers to entry. D) very few firms. Answer: C Diff: 1 Topic: Market Structures 2) Perfect competition and monopolistic competition are similar in that firms in both types of market structure will A) act as price takers. B) produce a level of output where price equals marginal cost. C) earn zero profit in the long run. D) act as price setters. Answer: C Diff: 1 Topic: Market Structures 3) Oligopoly differs from monopolistic competition in that an oligopoly includes A) product differentiation. B) barriers to entry. C) no barriers to entry. D) downward-sloping demand curves facing the firm. Answer: B Diff: 1 Topic: Market Structures 4) Regardless of market structure, all firms A) consider the actions of rivals. B) maximize profit by setting marginal revenue equal to marginal cost. C) produce a differentiated product. D) have the ability to set price. Answer: B Diff: 1 Topic: Market Structures Figure 13.1 [pic] 5) Figure 13.1 shows a payoff matrix for two firms, A and B, that must choose between a high-price strategy and a low-price strategy. For firm B, A) setting...
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...Economics for the Global Manager BUS610 AIU Abstract An economic company has contracted out to establish the financial structure and potential actions of the Organization of Petroleum Exporting Countries, or OPEC. The purpose of this paper is to discuss the difference between a monopoly, an oligopoly, and a cartel along with examples of each. It will discuss the welfare effects of monopolies and oligopolies. It will discuss how game theory explains the relations of firms within oligopolies and cartels and the financial purpose of OPEC and the past five years of the oil prices. Economics for the Global Manager The Organization of Petroleum Exporting Countries, or OPEC, economic structure and future actions are predicated on a contract from an economic firm. The difference between a monopoly, an oligopoly, and a cartel are simple and examples of each will be given. The welfare effects of monopolies and oligopolies will be discussed. Game theory explains the relations of firms within oligopolies and cartels. The economic purpose of OPEC and what has happened to oil prices over the past five year will be discussed. Differences /Examples One seller of a good or service which has no close substitute and has substantial control over the price and protection from rivalry through a barrier to entry is a monopoly. An industry that has moderately diminutive number of firms, barriers to access, price searching behavior and mutual interdependence is an oligopoly. A cartel...
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...When the refinement of products and services, or the monetary flow has two directions, it is referred as Two-Sided Business Models. The concept of a value chain and terms such as upstream and downstream is not as clear as in One-Sided Business Models. Development can be made by what is in One-Sided Business Models referred to as downstream actors and monetary flow can come from actors referred to as upstream. Two – Sided Business Models are also mentioned as “Multi-sided Platforms”. One of the best examples for “Multi-sided Platform” is gaming platforms. The platform’s value for a particular user group depends substantially on the number of users on the platform’s “other sides”. A video game console will only attract buyers if enough games are available for the platform. On the other hand, game developers will...
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...independent music company and is 3rd among the top 5 music companies globally, with 12.6% of the global market share. The firm engages in the recording, producing, and distribution of music, mainly through CDs. EMI is a British based company, but North America is the largest market for the music industry. CD buyers have low brand awareness and loyalty. They typically don’t even know the music company that is producing the product. Brand awareness for the artist is very high and will drive the purchase decision almost exclusively. Buyers will seek out a store to purchase the music they desire. However, brand loyalty is low, with many “one hit wonders” that are #1 sellers one year, then gone the next. CDs are durable goods. They last a long time, but people’s tastes for music may change and, thus, categorizes them as a non-durable good. In this case, it is more about music than the actual CD. The location of the purchase decision has changed dramatically with a significant number of people using the Internet to illegally share music files. EMI and its recording artists do not receive any compensation from music file sharing. Those music consumers who remain have shifted from music stores to mass marketers. The market for CDs in the United States is splintered into different genres, with Rock, Rap/R&B, and Country as the top 3 in that order, comprising 60% of the US market. Demographics show that the greatest loss has been in ages 15-29, who have adopted online sites as...
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...2.Literature Review 2.0 Game theory and Microeconomics A game can be defined as a formal description of a strategic situation. It is a complete mathematical summary of a strategic interaction setting. Likewise, Game theory is the formal study of decision-making in which several players must make choices that potentially affect the interest of other players. Game theory addresses the dilemma in conflict and cooperation. The concepts of Game theory apply whenever the actions of several agents or players are interdependent within a competitive situation. These agents include individuals, groups, firms or a combination among these. Formal applications of Game theory requires knowledge of the identity of independent actors or players, their preferences...
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...a company to gain a competitive advantage over its rivals in a market or industry. The way that strategic managers define their company’s business is the first step in crafting business level strategy. Customer Needs and Product Differentiation Customer needs are desired, wants or cravings that can be satisfied by means of the attributes or characteristics of a product a good or service. Two factors determine which product a customer chooses to satisfy these needs: The price of the product and the way a product is diffetentiated from other products of its type. Product differentiation is the process of designing products to satisfy customers needs. A company obtains a competitive advantage when it creates, designs, and supplies a product in a way that better satisfies customer needs than its rivals do and chooses the correct pricing option the one that results in the level of demand that optimizes profitability. Customer Groups and Market Segmentation Market Segmentation is the way a company decides to group customers, based on important differences in their needs or preferences, in order to gain a competitive advantage. One principal way of grouping customers and segmenting the market is by what customers are able and willing to pay for a particular product, the other principal method of segmenting customers is according to the specific kinds of need that is being satisfied by a particular product. Market segmentation is an evolving, ongoing process that presents considerable...
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...author This is an E-book. It is available in camera copy format with free download from www.patrickmcnutt.com. December 2008 ACKNOWLEDGEMENTS Thank you for reading the E-book and making a contribution to the charity as identified on my web portal. The E-book can be read independently or in conjunction with the Kaelo v2.0 software tool. Some of the arguments are filtered from McNutt (2005): Law, Economics and Antitrust and from books referenced in the E-book. There are indeed numerous references and secondary readings recommended in the E-book. These should be read as well. They will be fully referenced as we continue together to write this E-book on the web. Interesting books on related themes to read are Roberts (2004): The Modern Firm: Games, Strategies and Managers and Nalebuff and Dixit (2008): The Art of Strategy. For my MBA students you will be reading either Baye (2008): Managerial Economics and Business Stratagy or Besanko (2007): Economics of Strategy. For clients using my services, a note of thanks and for management in general who may happen upon this E-book a set of business slides are available as one set called Framework T3 and GEMS which is available from the author. They will appear also on my web page. Please email your comments to me via my web portal at www.patrickmcnutt.com and participate in the Discussion Forums available on that web page. Some of my arguments are distilled from consultancy work and supervision of MBA and PHD students. To all my former MBA...
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...Bain-Chekal Introduction: The worldwide aspartame market has enjoyed patent protected financial prosperity since the early 1980’s. In 1986 the world demand for aspartame was 5,730 tons annually with future projected world demand reaching 10,000 tons annually, a 75% increase over 1986 demand. The Monsanto Corporation, the current owner of the rights to manufacture aspartame, under the brand name NutraSweet (NS), reported 1986 sales of $711 million. The estimated ROA was approximately 8%.1 With this being such an attractive industry, companies like Holland Sweetener Company (HSC) needed to determine whether or not to compete in the aspartame business. This paper will first analyze NS’s case for accommodating or deterring entry before turning to a discussion as to which strategy NS will actually choose. Given the above analysis the paper will briefly address what Holland Sweetener Company’s entry strategy should be. There are several industry factors that will affect how this game is played. First, the two versions of aspartame, as produced by HSC and NS, are relatively identical goods. This leaves the consumer indifferent to product attributes and only concerned with price. It is also assumed that geography is not a real strategic factor since shipping costs are so low. The shipping costs for a pound of aspartame average 15-20 cents.2 Compared to the 1986 market price of $70 per pound shipping costs only account for 0.002% of the market price, hardly a significant factor of concern...
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...VIDEO GAME INDUSTRY Son Tung Nikkila ID: 61191023 Introduction The first video game, Spacewar, which was created by Steve Russell in 1960s, marked a beginning of the video game industry. However, video games were not commercized until 1970, when Nolan Bushnell made a clone of Spacewar, called it Computer Space, and marketed it to the market in the form of a coin-operating arcade machine. And thus the video game industry started (Kline, Dyer-Witheford & Peuter, 2003). As video game expanded people spent less time on TV and spent more time on video game (Allen & Kim, 2005). In their article “Paradigm shifts in the video game industry”, Zackariasson and Wilson (2010) wrote about four important shifts in the video game industry: the starting period of video game industry, the development of the home cartridge, the entry of independent game developer-publishers, and the development of massively multiplayer online role playing games, known as MMORPG. According to the authors, those changes in the industry had an impact on its competition and culture (Zackariasson & Wilson, 2010). Kline, Dyer-Witheford and Peuter (2003) also mentioned about the starting period of the video game industry and agreed that it marked a great beginning of the industry. Along with the fast growth, the authors also brought up how the fast growing industry came to an end in 1984. However, not long after the meltdown of the industry, Nintendo stepped in and rescued the industry with its...
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...Game Theory and the Prisoner’s Dilemma Business Strategy Antoinette Monteiro Grand Canyon University DBA 815 January 13, 2016 The Definition of Game Theory The game is the object of game theory, which is an interactive situation. There are several players involved in the situation; a game with only one person is a decision problem. According to game theory, the players, their preferences, their information, the strategic actions available to them, affects the outcome. Game theory is conflict and cooperation; the agents are interdependent on the actions of others. These agents are individuals, groups, firms or a combination of these combined. Game theory provides a language to formulate, structure, analyze and understand different circumstances (Turocy and Stengel, 2001 p.4). History and Effects of Game Theory An example of game analysis is the idea of two players dominating the marketplace which was introduced by Antoine Cournot in 1838. Emile Borel, a mathematician proposed a game theory in 1921 and this research was expanded by Neumann in 1928 called the “theory of parlor games.” This theory was solidified in the publication, “The Theory of Games and Economic Behavior by Neumann and Morgenstern. This book pioneers the basic terms and problems that are still in use to this day (Turocy and Stengel, 2001, p.4). The mathematician, John Nash showed that finite games have an equilibrium point in which players choose actions which give the best outcome for themselves...
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...Professor Owen R. Phillips University of Wyoming Ross Hall 124 COURSE SYLLABUS FOR INTERMEDIATE MICROECONOMICS 4020 Course Description and Prerequisites Economics is broadly defined as a way of thinking about problems of allocation. This course entails the use of intermediate microeconomic theory in the analysis of problems facing decision-makers, not only in business, but also in government and other nonprofit organizations. Intermediate microeconomic theory can be described as the theory of choice. It has application to all decision problems. Specific theoretic tools are developed and applied to real world settings in order to illustrate optimal decision guidelines. The prerequisites for this course are a beginning economics class in microeconomics and a basic understanding of algebra and geometry. Required Textbook Required: Pindyck, Robert S. and Rubinfeld, Daniel L., Microeconomics, Third Edition, Prentice-Hall, 1995, ISBN 0-02-395900-2. Determining Your Grade During the course there are two “midterm” examinations. At the end of the course there is a comprehensive final examination; in the final exam there is some emphasis on the material following the second examination. All of the exams consist of multiple choice questions. Questions will be of a problem-solving nature much like those assigned in the homework. The homework questions are excellent preparation for the examinations. Answers to many of these questions are worked in the...
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...Case Study Overview Trip Hawkins founded Digital Chocolate in Silicon Valley in 2003 to “develop outstanding games for mobile devices.” Hawkins’s previous experience as CEO of Electronic Arts helped him appreciate the challenges with coming up creative content and making that contain available on different platforms. By 2008, Digital Chocolate had expanded its operations into four countries: San Mateo, California; Helsinki, Finland; Bangalore, India; and Barcelona, Spain, and had become one of the top developers of solo-player games for standard mobile phones and iPhones. The structure of the company is based on these the global teams where each one has expertise and a defined role and function during the development of games. Digital Chocolate’s culture is an example of cooperative environment and fine inter-personal relations. These features are results of the well-established communication methods followed. Functional departmentalization and communication is an important factor in every company and Digital Chocolate has achieved an exceptional flow of information between all levels of employees. Hawkins’s general strategy followed incorporates acquiring small but talented gaming companies. This way Digital Chocolate went into operations in very short period and captured a great market share. Moreover, one of the strategic tactics involves industry research. The competition of the gaming industry is fierce and in order to maintain a strategic position the companies...
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...products and services that consumers need and desire. And it survives and thrives by charging a price that equals or exceeds the cost of delivering the products and services that consumers value. In this course, students learn how businesses optimally create and capture value and how their abilities in doing so are impacted by various market forces and the strategic interaction among players in the industry. A good understanding of the 1 economic principles that govern the distribution of value in markets is critical to formation of a successful and sustainable business strategy. Learning Objectives: Understand and apply tools, concepts, and theories from microeconomics to perform industry and demand analyses. Apply demand and supply analyses in predicting market price and related dynamics in competitive markets. Understand the key tradeoffs between high margin and high volume of sales in pricing decisions, and choose different pricing strategies according to industry/market conditions or consumer characteristics. Predict competitors' actions and reactions using basic game theoretic methods. In the context of oligopoly market, analyze the direct...
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...PROGRAMME STRUCTURE FOR ISBE (PG) |S No |Subject |Credit | |1. |Business Statistics |3 | |2. |Operations & Optimization Research |3 | |3. |Economics for Managerial Decision Making – II |2 | |4. |Management Information System & KM |2 | |5. |Human Resource Management |2 | |6. |Financial Management |2 | |7. |Executive Communication |6 | |8. |National Economic Planning – I (Presentation Only) |2 | |9. |National Economic Planning - II |2 | BUSINESS STATISTICS (As per University...
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