IB827-10 Economics of the Business Environment
Introductory description
Organisations exist within macroeconomic and market contexts that significantly impact upon their behaviour and performance.
Module aims
This module is designed to introduce students to:
i. some understanding of how macroeconomic and market contexts themselves are determined and change over time.
ii. how the context interacts with the internal economics of the firm and how this impacts upon organisational decision-making.
This module will introduce a number of basic concepts used by economists, illustrate the use of these concepts in business, and illustrate how Economics as a discipline can be used to approach business-related questions. The module will require that students become familiar with major recent national and international economic and business trends. The tools of economic analysis presented in this module will generally provide a basis for other modules offered on the MBA, for example, strategy modules, and also specifically be built upon in second and third term electives which will explore:
i. how Economics can be used to approach a wider variety of business problems.
ii. how Economic analysis has led to a variety of national and international policies that are a further aspect of the environments within which organisations operate.
By the completion of the module, participants should exhibit:
(1) Increased knowledge of the global economy and of key current events.
(2) Understand some core elements of economic analysis and be able to use them.
(3) Appreciate the internal economics of a business and the contextual constraint on business decisions and be aware of what business cannot do or control in its strategy-making.
(4) Possess an increased awareness of the effects of public policy on business.
(5) Understand why business must cope with uncertainty and risk.
Outline syllabus
This is an indicative module outline only to give an indication of the sort of topics that may be covered. Actual sessions held may differ.
The module will contain three interrelated parts:
- The internal economics of the firm.
- The general business environment including both the market and the macroeconomy.
- The interaction of firm level decision-making with the macroeconomic and market context.
The below order may vary from time to time.
The macro context and exposure:
Business, strategy and the macroeconomy.
Markets and the macroeconomy.
GDP cycles and aggregate demand.
Overseas trade and the macroeconomy.
Government and the economy.
Macroeconomic policy.
Aggregate Supply Price Inflation and unemployment.
Current macroeconomic issues.
The Internal Economics of the Firm:
Inputs and outputs.
Production Possibility curves and the production function.
Costs and production in the short run.
Vulnerability to external shocks.
Costs and production in the long run.
Scale and Scope Economies.
Long run decisions to invest in physical and human capital.
Causes and effects.
The Economic Environment:
The market context and exposure in product and input markets.
Buyer behaviour and product demand.
Industries and markets.
The basics of supply and demand curves.
Perfect competition models. Implications for strategy.
Markets for inputs.
Coping with the market and the macroeconomy:
Raising profitability levels and reducing profitability variance; the role of market imperfections.
Product differentiation and monopolistic competition.
Monopoly and barriers to entry.
Public policy and monopoly.
Monopoly and monopsony in input markets.
Oligopoly. collusion and competition.
Strategic rivalry.
Sunk costs and contestability.
Strategic entry deterrence.
Economics and strategy.
Learning outcomes
By the end of the module, students should be able to:
- Show increased knowledge of the global economy and of key current events.
- Possess an increased awareness of the effects on business of public policy.
- Understand why business must cope with uncertainty and risk.
- Understand some core elements of economic analysis including the internal economics of the firm and be able to apply them to a variety of organisational and market contexts.
- Appreciate the contextual constraints on business decisions and be aware of what business cannot do or control in its decision making.
Indicative reading list
Begg, D. and Ward, D. (2016) . Economics for Business (5th edn) Maidenhead: McGraw-Hill.
Mankiw, N.G. and Taylor, M.P. (2014). Economics (3rd edn). Andover: Cengage.
Subject specific skills
Increase their awareness of economics as a discipline affecting their roles as managers.
Understand how external factors can impact a firm.
Transferable skills
Develop their awareness of how overall economic issues affect society.
Relate economic issues to the activities of a firm and their own activities as managers.
View such an issue from the perspectives of other nations, companies and so increase ability to forge partnerships to address such issues.
Study time
| Type | Required |
|---|---|
| Lectures | 12 sessions of 1 hour (12%) |
| Online learning (scheduled sessions) | 6 sessions of 1 hour (6%) |
| Online learning (independent) | 12 sessions of 1 hour (12%) |
| Private study | 28 hours (28%) |
| Assessment | 42 hours (42%) |
| Total | 100 hours |
Private study description
Private Study and preparation for lectures
Costs
No further costs have been identified for this module.
You do not need to pass all assessment components to pass the module.
Assessment group A5
| Weighting | Study time | Eligible for self-certification | |
|---|---|---|---|
Assessment component |
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| Individual Assignment (10 CATS) | 80% | 34 hours | Yes (extension) |
Reassessment component is the same |
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Assessment component |
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| Group Assignment (10 CATS) | 20% | 8 hours | No |
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Group assignment |
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Reassessment component is the same |
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Feedback on assessment
Assessments are graded using standard University Postgraduate Marking Criteria and written feedback is provided. Feedback for individual essays include comments on a marksheet.
Courses
This module is Core option list A for:
- Year 3 of TIBS-N1Q1 Postgraduate Business Administration (Executive) London
- Year 1 of TIBS-N1PW Postgraduate Taught Business Administration (Distance Learning)
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TIBS-N1Q2 Postgraduate Taught Business Administration (Distance Learning)
- Year 1 of N1Q2 Business Administration (Distance Learning)
- Year 2 of N1Q2 Business Administration (Distance Learning)