Objectives

This course examines the economic forces of digitization that shape and transform markets and business strategy in various industries, including entertainment goods, software, retail, banking, transportation, health and consulting services. The course will apply standard tools of microeconomic analysis to describe important features of these markets, capturing common and diverging elements of those various industries. We will use these microeconomic tools to make predictions about the impact of technology on future outcomes, to discuss strategic reactions and management, evaluate policy, and to understand the value derived by customers.

You will learn to characterize the consumption and production of information and network goods. You will examine strategies that firms use to compete in the digital economy.

In particular, you should be able to: (1) describe key concepts, features and predictions of economic models that characterize the digital economy; (2) apply economic reasoning to describe the impact of technological change and digitization on product, marketing and innovation strategy; (3) use economic reasoning to evaluate the consequences of competition, pricing, and consumer preferences for organization and strategy.

The course will have theoretical and practical parts. In the latter, you present an analysis of a particular industry (firm in an industry) on which we base a class discussion of key challenges, key learnings and implications for organization and strategy.

Contents

The course will be held online, mostly in synchronous format.

Keywords of the topics covered: Copyright, Innovation, Licensing, Differentiation, Pricing, Versioning, Platform Management, Vertical Integration, Entry, Word of Mouth, Trust and Reviews, Internationalization, Automation, The Market for Truth, Disruption, Blockchain, Privacy, Artificial Intelligence, Gig Economy, Standards, Evaluating New and Upcoming Technologies, Business Intelligence & Experiments

Classes 1-4: Introduction and theoretical background

Key concepts: Network effects, Information goods, Adoption and Diffusion, Competition and Concentration, Pricing, Multi-sided markets

Example project industry: Music

Classes 5-13: Class projects on industries such as TV and Movies, Retail,

Books, News, Software, Banking, Transportation, Healthcare, Management Consulting.

Class 14: Q&A and exam preparation

References

No text book is required for the course. Students will receive articles and case studies for the class project. There will also be recommended and required articles to read before each class.

Pre-requisites

I expect students to have a solid understanding of basic microeconomics and strategy, be willing to read and prepare before class, and participate in critical discussion.

Evaluation

First attempt

Exam:

Written 1 hours

Documentation:

Allowed

Calculator:

Allowed

Evaluation:

Active contribution are important for lively and interesting class discussions, so reading and thinking before class, and debating during class is important. The goal is for you to contribute to everybody’s learning by providing new insights to the discussion, or by asking good questions, or by reacting to comments from other students or guest speakers. To be prepared for class, students need to have read the assigned material and completed any other assignments for that day. You are also encouraged to contribute to the class by giving a short presentation of your professional experience as it relates to the class material (please contact me to discuss such presentations in advance). In addition, I will ask for someone to summarize the key “takeaways” of each class. Good answers are another great opportunity to contribute to everybody’s learning.

Class project (50%)
Small teams will present an analysis of a firm using the concepts discussed in class and beyond. Depending on the total number of students that take part in the course, each team will work on 1-2 projects, i.e. present 1-2 times in the semester. While students have broad latitude to choose a specific subtopic, all case analyses must follow a tight structure that includes an evaluation of the demand, costs and revenue for the firm and a summary of strategic challenges. Each group presentation should run for no more than 45 minutes, including questions and answers from the class. Groups are expected to lead the discussion, which means that they need to prepare at least three questions to start the discussion. Teams must hand in a two page summary report, a list of source materials, and a video recording of their presentation. The written summary should be concise, complete, and written in professional prose.

Exam (50%)
There will be a written final exam. The exam will be an individual effort and 60 minutes long.

Retake

Exam:

Written 1 hours

Documentation:

Allowed

Calculator:

Allowed

Evaluation:

Re-examination procedure: Students are required to redo failed assessments. The resits will be during the official resit examination period. Failed group assignments can be redone in the same format as the initial assessments, albeit in a new group or individually. The final exam can be redone in the same format as the initial assessment. The grade will be calculated on the assessments that are not redone along with the assessments that are redone as per weighting scheme of original syllabus.