Dr Ricardo Alonso NAB 5.31

This course is compulsory on the BSc in Management. This course is available as an outside option to students on other programmes where regulations permit. This course is available with permission to General Course students.

Students should have completed Economics A (EC100) or Economics B (EC102) or equivalent, Quantitative Methods (Mathematics) (MA107) or equivalent and Quantitative Methods (Statistics) (ST107) or equivalent, and Economics for Management (MG207) or Microeconomic Principles I (EC201) or equivalent.

The first half of the course studies how firms compete with each other. More specifically, we will study strategic situations (competition and rivalry, competitive advantage (sources and sustainability), entry and entry deterrence, product differentiation, the role of information in markets, etc.) and formulate decision models of these situations. While the modelling and predictions are based on game theory, we will contrast our findings to real life games according to the growing empirical evidence.

The second half of the course studies how firms organize and the challenges they face in doing so. More specifically, we study the way managers interact with the different constituencies inside the firm- workers, board members, and other managers- and how those interactions shape the actual design of organizations. It presents, again with a heavy emphasis on the evidence, how the need to motivate organizational members and to coordinate their actions shape the provision of incentives, the allocation of authority, the ownership structure, acquisition and diffusion of knowledge, and patterns of communication. 

Beyond the emphasis on the content of the course, the course also aims to be a course where students learn to think critically and analytically. Students will learn to identify trade-offs in how firms behave and the way they organize themselves, and critically evaluate the sources of those trade-offs by appealing to simple models of individual behaviors. Students will learn to read the primary literature, discuss papers in class, interpret the evidence etc. Students will learn to ask questions such as: What is the evidence? What evidence would convince me of the opposite hypothesis?

20 hours of lectures and 9 hours of classes in the MT. 20 hours of lectures and 10 hours of classes in the LT. 2 hours of lectures in the ST.

There will be a reading week in Week 6 in line with departmental policy.

Formative work such as problem sets and mock exam questions will be set.

The basic readings for the course will be the lecture notes written by Dr. Alonso. These lecture notes can be complemented with the following additional readings:

Thinking Strategically: Competitive Edge in Business, Politics and Everyday Life, WW Norton, 1993, by Avinash Dixit and Barry Nalebuff

The Art of Strategy, WW Norton, 2008, by Avinash Dixit and Barry Nalebuff.

Games of Strategy (WW Norton, 3rd edition, 2009) by Avinash Dixit, Susan Skeath and David Reiley.

Economics of Strategy (5th Edition) David Besanko, David Dranove, Mark Shanley, Scott Schaefer. (2009)

An Introduction to Game Theory(Oxford, 2003) by Martin J. Osborne

Strategic Management, Garth Saloner, Andrea Shepard and Joel Podoldny, Wiley, 2000

The Modern Firm: Organizational Design for Performance and Growth, John Roberts 2007.

Exam (100%, duration: 3 hours) in the main exam period.