STR421 Competitive Strategy

• Topics

  Competitive strategy studies the relationship between a firm and its competitors, suppliers, distributors and partners. The relationship is studied through the framework of "coopetition". This approach emphasises the occurrence of both competition and cooperation between a firm and the players in the firm’s surroundings. The main principles of coopetition come from game theory and help us generate business strategies that are otherwise not easy to see or may even seem counterintuitive. Competitive strategy takes a step back and studies how firms can change the game they are currently playing into a game with new rules, with other players, or with a different scope. Through a set of case studies, the course will demonstrate that coopetition is something firms of all sizes, and in any industry, should be highly aware of and master, as it may yield large profits or prevent large losses.

  Some of the topics covered are:

  • Why and when do we observe fierce price competition, and how can firms avoid such an outcome?
  • In which markets do we expect collusive behavior? Can collusion on prices lead to tough competition along other dimensions?
  • How should an entrant behave in a market where it challenges a dominant firm?
  • Will lack of coordination typically lead to too much or too little entry, and why?
  • How may the competition authorities change the rules of the game?
  • When do firms and consumers benefit from vertical integration?

  There will be case studies from various industries, and there will also be guest lectures.

• Learning outcome

  The main topic in this course is strategic interaction between firms, with the objective to acquire an understanding of firms' business strategies through a mixture of theory and case studies. We apply some rather simple game theoretic models and case studies from Harvard Business School to study actual behavior by firms .

  Upon completion of the course, the student can:

  Knowledge

  • Describe different tools that are used to study the interaction between firms in the market place, and how this can be used to shape a firm's strategy.
  • Discuss how game theory can be used to predict outcomes of a competitive situation.
  • Explain the framework termed "co-opetition" and the different ways this framework can be used to shape firms' strategies.

  Skills

  • Apply game theoretical tools to business decisions.
  • Predict optimal strategies depending on the business environment.

  General competence

  • Recognise and analyse firms' strategies for creating value and capturing the largest possible share of this value in various contexts.

• Teaching

  The course consists of a combination of plenary lectures, case discussions, and student presentations.

• Recommended prerequisites

  The course is based on a student background of intermediate microeconomics (e.g. "Microeconomics" by Goolsbee, Levitt and Syverson, "Microeconomics" by Pindyck and Rubinfeld, or a textbook in micro economics at a similar level) and Business Strategy.

• Required prerequisites

  The course is based on a student background of intermediate microeconomics (e.g. "Microeconomics" by Goolsbee, Levitt and Syverson, "Microeconomics" by Pindyck and Rubinfeld, or a textbook in micro economics at a similar level) and Business Strategy.

• Compulsory Activity

  All students must give a presentation in class on the topic of their course paper. In addition, we expect the students to attend all classes (15 lectures) and all presentations in class by group of students (minimum 10 presentations).

• Assessment

  Three hours individual home exam (50% of final grade); course paper (50% of final grade).

  The course paper must be written in groups of 2-3 students, and within the period mid-March to mid-April (approximately).

  The exam and the course paper must be written in English.

• Grading Scale

  A-F.

• Computer tools

  None.

• Literature

  The main required text book in the course:

  BN: A. M Brandenburger and B. J. Nalebuff: Co-opetition, Currency Doubleday, paperback edition, 1998.

  The course is based on a student background of intermediate microeconomics (e.g Pindyck and Rubinfeld) and students also need to have, or acquire, some basic knowledge on game theory. The following text book can for instance be used:

  DSR: A. K. Dixit, S. Skeath and D.H. Reiley: Games of Strategy, W.W. Norton & Company, third edition, 2009.

  In addition, there will be several case studies, shorter notes and articles to be announced at course start.