Economics of Strategy and Organization

4.0 credits

This course introduces students to the principles of competitive strategy and organizational design. Competitive strategy deals with how firms compete in markets and what they can do to be profitable in the long run. Key topics include industry analysis, market entry and positioning decisions, and strategies for gaining a competitive advantage. Organizational design, in turn, is concerned with how firms organize themselves internally to best execute a strategy, whether at the level of individual jobs or of the entire organization. Central to organizational design are the assignment of decision rights (including centralization vs. decentralization of decisions), performance measurement, and incentives and rewards. The last pasture of the course is corporate strategy, which considers the scope of business activity and decisions to extend businesses either horizontally or vertically. Throughout, the course stresses the importance of fit between a firm’s internal organization and its strategy. The disciplinary focus is economics, with a particular emphasis on game theory and agency theory, both of which are introduced in the course. Occasionally, we will venture into psychology or behavioral economics as well. Classes consist of lectures and discussion of business cases and news articles, through which students practice applying theoretical concepts to real-life business problems.