Market Strategy

Lecture 1: Microeconomics and Biz Strategy

References: Pindyck&Rubinfeld. Chap.1

What are the firm’s important functions and strategies ?

1. Selling need to know consumers purchasing behavior

for example, what if the price increases: price elasticity of demand marketing/product positioning strategies
Topics 3-5 lectures

2. Production Supply function/producers output decision how to produce?
Firms output decision: Short run vs LR
For example, should the firm continue producing even though loss?
Topic 6.

3. Managerial Operation organisation aspect of the firm
Institutional setting within which diverse entities interact and come into equilibrium
- Topics 11-12.

4. Market equilibrium  changing biz environment
- Industry analysis: strategic groups/the five forces model
- Industry structure and firms behaviour
- Topic 2, 7 - .

5. Information implications to managerial operation/selling
- for example, what if there is asymmetric infor b/ owners and managers or
- b/ sellers and buyers
- Topics 11-12.

6. Market structure and rivalry - various oligopoly firms behaviours - Topics 9-10.

Linking Biz Strategy and Microeconomics: Some cases

1. How to respond ____consumers________ behavior

Cf. Leather Jacket industry vs. environmental protection, Accommodation cost in GC vs. terrorism

2. Market __positioning______ strategy

Cf. Volvo’s strategy focusing on safety in motor vehicle industry

3. _____Price__ competition

Cf. Quantas vs Virgin Blue’s competition

4. ___Cost____of production/ R&D investment

Cf. Dell company’s introduction of just-in-time delivery system to reduce inventory loading.

5. __Business type_______ strategy

Cf. Foreign direct investment vs joint venture; internal production vs outsourcing

6. Corporate _____governance______

Cf. Some argue that ‘crony capitalism’ caused the Asian crisis in 1997; Collapse of HIH insurance co. in 2001

7.