Prof Ricardo Alonso MAR.6.30

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.

This course has a limited number of places (it is capped). Students who have this course as a compulsory course are guaranteed a place. Places for all other students are allocated on a first come first served basis.

Students should have completed (i) Economics A (EC100) or Economics B (EC102) or Microeconomics I (EC1A1/EC1A3) in combination with Macroeconomics I (EC1B1/EC1B3), (ii) Quantitative Methods (Mathematics) (MA107) or equivalent and Quantitative Methods (Statistics) (ST107) or equivalent, and (iii) Economics for Management (MG207) or Microeconomic Principles I (EC201) or Microeconomic Principles II (EC202) or Microeconomics II (EC2A1 and EC2A3).

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?

Teaching hours will be commensurate with a usual full unit undergraduate course.

This course includes a reading week in Week 6 of each term, in line with departmental policy.

In its Ethics Code, LSE upholds a commitment to intellectual freedom. This means we will protect the freedom of expression of our students and staff and the right to engage in healthy debate in the classroom.

Formative work such as mock exam questions and self-assessment 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.
• Build, Borrow, or Buy: Solving the Growth Dilemma (Harvard Business Press 2012) Laurence Capron and Will Mitchell

Exam (70%, duration: 2 hours, reading time: 15 minutes) in the spring exam period.
Continuous assessment (30%) in the AT and WT.

Two in-lecture multiple choice quizzes (week 10 of the AT and week 8 of the WT). For the continuous assessment, students are required to attempt both in-lesson assessments.

Students who attempt less than two in-lecture assessments will receive a mark of 0 for the missed assessment and will receive an overall average mark based on their score in the attempted assessment and a zero for the missed assessment. Students who fail to attempt any in-lecture assessments (0 out of 2), will be awarded a Zero Incomplete for the whole course and cannot be awarded the degree until they submit the work at resit.