Economics of Strategy

Edinburgh Business School

What are the topics?

Edinburgh Business School


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About the course

Being able to successfully analyse a company’s economic roles and stakeholder interactions is an essential aid to the development of its strategy and a guide to shaping its tactics.

Join us for this highly interactive 5 day course, which considers the use of economics to help managers make decisions regarding factors such as cost and demand, pricing, products and strategy in relation to rival firms. It offers guidelines to analysing the make or buy decision and vertical integration; diversification and the implications of mergers, and the sustainability of profits.

A special emphasis will be placed on the problems created by a lack of information and how this affects contracts and hence control of suppliers or distributors (and their management). By looking at many of the problems of strategy, marketing, and public policy, participants will learn to analyse the motivational factors of each party involved, something that is highly relevant in today’s extremely competitive global economy.

Aims and Outcomes

On completion of this course, the students will be able to:

  • Understand and critically discuss Marginal Cost, Average Cost, Sunk Costs, Economies of Scale and their influence on decisions in the short and long run and their relationship to market structure
  • Understand and critically discuss the nature of demand functions, for both differentiated and undifferentiated products
  • Understand and critically discuss the role of cost and differentiation advantage in strategic decisions
  • Understand and critically discuss issues involved in the make or buy decision including monopoly power and the trade-off between technical efficiency and agency costs
  • Understand and critically discuss factors leading to the sustainability of profits

Course Content

The course uses a mix of lectures and case studies, together with classroom simulations and exercises. Lectures are designed to be interactive and to promote autonomous learning.

Day 1 Lecture: Basic Principle

  • Firm Objectives, Differences between Opportunity Costs and Accounting Costs, Decompose the Profit, Market Equilibrium, and Price Elasticity
  • Classroom Activity: Pit Market
  • Case Study: PlayStation vs Xbox 360

Day 2 Lecture: Firm Boundaries

  • Economies of Scales, Economies of Scopes, Control Loss, Vertical Integration, Role of Contract, Lack of Commitment, Quasi-rent, and Economic Profit
  • Classroom Activity: Vertical Relations
  • Case Study: Disney and Pixar

Day 3 Lecture: Competitive Advantage

  • Strategic Positioning, Component of Value Creation, Value Map, Economic Logic of Cost Advantage/Benefit Leading, Cost vs Differentiation, Sustaining Competitive Advantage, Profit Erosion, and Impediments to Imitation
  • Classroom Activity: Predatory Price
  • Case Study: Apple Inc in 2015

Day 4 Lecture: Compensation Scheme

  • Agency Problem, Public Limited Company, Separate Ownership and Control, the Cost of Agency, and Incentive Compensation Model
  • Classroom Activity: Compensation Design
  • Case Study: Executive Compensation at General Electric

Day 5 Lecture: Innovation

  • Innovation, Patent Issue, Hyper-competition, Fintech, and Blockchain
  • Classroom Activity: Patent Race
  • Case Study: Nest Wealth


Tong Wang

Education Qualifications Ph.D, Decision Sciences, INSEAD, 2008 M.Phil, Systems Engineering and Engineering Managemen, Chinese University of Hong Kong, 2003 B.Eng, Industrial Engineering, Shanghai Jiao Tong University, China, 2001 Research Interest Sports Analytics Bayesian Learning And Value O...

Economics of Strategy at Edinburgh Business School

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Coursalytics is an independent platform to find, compare, and book executive courses. Coursalytics is not endorsed by, sponsored by, or otherwise affiliated with any business school or university.

Full disclaimer.

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