ADM760 Economics of Strategy (Spring 2025)

This course covers the economic fundamentals of both business-level and corporate-level strategy. The course is designed to introduce the economic fundamentals of modern strategy frameworks, 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).

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

The main topics covered in the course are:

• Introduction: Review of microeconomic principles
• Economies of scale and scope
• The vertical boundaries of the firm
• Vertical integration and its alternatives
• Diversification
• Competitors and competition
• Strategic commitment
• The dynamics of pricing rivalry
• Entry and exit
• Industry analysis
• Strategic positioning for competitive advantage
• Sustaining competitive advantage
• Strategy and organizational architecture

The students are expected to acquire a set of relevant knowledge competences and skills on completion of the course.

Knowledge

• Explain and critically evaluate the relevant economic theory and apply it to actual business cases.
• Explain and critically evaluate an array of economic concepts, models and analytical techniques relevant to the day-to-day processes of production and consumption.
• Analyse and critically evaluate the business behaviour of firms and the broader environment in which that behaviour occurs.
• Analyse and critically evaluate key characteristics of the market structure and their implications for different business strategies.

Skills

• Apply economic theory to the decision-making process of firms in a domestic and international context.
• Apply the relevant microeconomic and macroeconomic reasoning to evaluate the structure, conduct and performance of business organisations.
• Identify the different strategies driving organizational performance and investigate the factors that impact on the corporate strategy success or failure.

• Form of assessment: School exam
• Proportion: 100%
• Duration: 3 hours
• Grouping: Individual
• Grading scale: Letter (A - F)
• Support material: General dictionary in mother tongue/Norwegian/English in paper version