MBA ITB

School of Business and Management INSTITUTE of TECHNOLOGY BANDUNG

MM 5005

BUSINESS ECONOMICS

MASTER OF BUSINESS ADMINISTRATION JULY 2011

CONTENTS
Page Facilitator Profile ........................... 3 Course Description ................................................................................ 4

Expected Learning Outcomes ... 4 Learning Guidance ................................................................................. 5 Prequisites .............................................................................. Learning Method ... Large Group Discussions.... Class Participation . 5 5 5 5

Grading Policy ....................................................................................... 6 Reading Materials ................................................................................... 6 Course Schedule ...................................................... 7

FACILITATOR PROFILES
Deddy P. Koesrindartoto, MSc., Ph.D. E-mail: deddypri@sbm-itb.ac.id Website : http://deddy.agentbased.net Phone: 0813 806 88854 Lecturer Code: DPK
Deddy is a full time lecturer at the ITB School of Business and Management. He is an Economist by training, received a PhD in Economics with minor in Statistics and held MSc. in Industrial Engineering, both from Iowa State University. He also earned a first degree in Electrical Engineering from Institute Technology of Bandung. Prior to joining SBM-ITB, Deddy was a Research Fellow at the Center for Computational Finance and Economics Agents (CCFEA) University of Essex, UK. He involved in several international infrastructure research projects, among of them are; US' Electricity Markets Deregulation funded in part by National Science Foundation and Los Alamos National Laboratory; designing Smart Market Protocol for Road Transportation funded by UK's Foresight Intelligent Infrastructure Systems Project. He consulted for World Bank, Ministry of Finance, BAPPENAS, IDB and some private companies. Currently, Deddy is being appointed as the Director of Graduate Studies in Management Science School of Business and Management, since January 2011.

COURSE DESCRIPTION
Business Economics or Managerial Economics is concerned with the application of economic principles and methodologies to the decision making process of the business firm operating under conditions of risk and uncertainty. The course establishes important principles for business practice. Business practice is recognized and incorporated into the discipline of Managerial Economics. The course is concerned about the firms competitive strategy, rather than simply costs and revenues. The course will put into the context of real-world business decision problems, to demonstrate methods of identifying problems and finding solutions. This course provides and covers (1) a general introduction to Managerial Economics, (2) Microeconomics Theory and its Applications and (3) Macroeconomics Theory and its Applications. This course aims to (1) familiarize the managers with the economics problems and issues that confront them daily, and (2) provide them with the concepts, insights and tools to help them to make decisions and gain competitive advantage for their organizations.

The main goal of this course is to apply the tools of economic theory to address a series of questions that the managers faced. Using the time-tested economic theory, this course will explore the real world applications.

EXPECTED LEARNING OUTCOMES

The goal of this course is to develop students ability to explain why economic events happen the way they do, and how firms and individuals can successfully react to events. To accomplish this goal, we will work toward mastery of several economic principles that govern most economic behavior. We will be particularly interested in understanding markets and competition because those are the central realities of the modern economy.

LEARNING GUIDANCE
PREQUISITES No formal background in economics is required for this course.

LEARNING METHOD
The course relies heavily on the preparation and active participation of the participants. It is assumed that students are prepared for each class and, in the best business school tradition, will not hesitate to use cold calls (that is, unsolicited questions to unsuspecting students). The grading method, described below, puts a heavy weight on the quality and quantity of class participation. We are happy to provide one-on-one feedback concerning participation as the semester progresses. We are a fervent believer in steady, honest feedback upward, downward, and lateral. There are a number of occasions on which we will assess each other formally. We encourage you, however, to let us know how things are going on a continual basis and to make suggestions to improve your learning.

LARGE GROUP DISCUSSIONS

Students are asked to read the case-studies before coming to class. In this way, they are up and running to discuss the material with the other members of their team. The questions posed will be given in class at the start of the group discussion.

CLASS PARTICIPATION
Classroom learning is enhanced when all students attend regularly and are prepared to discuss the materials. To reward those students who are good citizen, participation points will be assigned on the basis of class participation: 1) Attendance. 2) Preparedness. The students will be called at random during the lecture. 3) General participation and general contributions to the intellectual environment of the classroom will be taken into account.

GRADING POLICY
Grading of this course is based on whether or not participants performance meets the module standards for completion and proficiency in the subject materials. Your final grade will be weighted as follows:
Aspect Assignment Participation Final Examination % 20% 40% 40% Description Individual grade by facilitator/team Individual grade by facilitator/team Individual grade by facilitator

SPECIAL NOTES FOR STUDENTS

1. Necessity for reading class materials. We strongly recommend each student to read all the material given prior to each class meeting. Failing to do so, will put the student in a weak position to understand the lecture and to participate in the class discussion. 2. Unwillingness or unreadiness to participate in class discussion. If the student does not make an effort to participate in class discussion, the lecturer will purposely target such student with question which the student must answer. 3. Grading results: in the past experiences weak students obtained C grade in order to avoid low grade, the students must make an effort to study seriously. 4. Late assignment: assignments to be submitted to the lecturer are similar to assignments to be submitted to your boss or executive committee. Late submission of assignments will results in penalty.

READING MATERIAL
Compulsary Materials: Salvatore, D., (2006), Managerial Economics in a Global Economy, 6th Edition, Thomson South Western. (SD) Case, K., E., Fair, R., C., (2004), Principles f Economics, 9th Edition, Prentice Hall. (CF)

Reference Material: Douglas, J. E. (2005), Managerial Economics; Analysis and Strategy, International Edition Prentice Hall (DE)

COURSE SCHEDULE
Course Code MM5005 Course Title Credit Hours 2 SKS Krakaau Steel inhouse MBA Program

Business Economics

Session 1

Issue Covered (60) : Course introduction, syllabus, and code of conduct The Nature and Scope of Managerial Economics Reading Assignment : SD Ch. 1; Ch. 13 (SD pp. 571-572) Issue Covered (50) : Demand Theory, Demand Estimation and Demand Forecasting Reading Assignment : SD Ch. 3,4,5 Issue Covered (50) : Demand Theory, Demand Estimation and Demand Forecasting Case 1 : Monsanto and Round Up Case 2 : Resolving Chinas Power Shortage Issue Covered (50) : Production Theory and Estimation, Cost Theory and Estimation Reading Assignment : SD Ch. 6,7 Case 3 : General Motors Decides Smaller is Better (SD. pp. 259) Issue Covered (50) : Production Theory and Estimation, Cost Theory and Estimation Reading Assignment : SD Ch. 6,7 Case 4 : Breakeven Analysis for Lockheeds Tri-Star and Europes Airbus Industries (SD pp.308) Issue Covered (50) : Market Structure: Perfect Competition, Monopoly, and Monopolistic Competition Reading : SD Ch. 8,9 Market Structure Reading Assignment : SD Ch. 10,11 Case 5: Wednesday at Cinemex Case 6: BHP Biliton: Iron Ore for China Game Theory and Strategic Behavior Reading Assignment : SD Ch. 10,11

Session 2

Session 3

Session 4

Session 5

Session 6

Session 7

Session 8

Session 9

Game Theory and Strategic Behavior Case 7 : NBC Case 8 : United Airlines Issue Covered (50) : Measuring National Output and National Income; Unemployment, Inflation, and Long-Run Growth; The Labor Market In the Macroeconomy Reading : CF Ch. 18, 19, 20 Case 9 : Exercise in calculating GDP (in class excerise) Case 10 : Exercise in measuring Inflation (in class exercise) Issue Covered (50) : Public Goods and Externalities Reading : CF Ch. 15 Case 11 : Discussion in Solving the Pollution (in class exercise) Issue Covered (50) : Government Policy Taxes and Subsidies Reading : CF Ch. 17, 28 Case 12 : Discussion the Effects of Taxes, Subsidies (in class exercise) Case 13: Discussio on the Effects of Price Controls (in class exercise) Issue Covered (50) : Money, Banking and Financial Institution Reading : Ch. 23,24,25 Case 14 : Exercise on Calculating Money Multiplier Issue Covered: (50) : Capital Market and The Economy Reading : CF Ch. 29 Issue Covered (50) : Aggregate Demand and Aggregate Supply Model Economic Growth in Developing and Transitional Economies Reading : CF Ch. 21,26 Case 15: Discussions on 5 cases of economic conditions Issue Covered (50) : IS/LM Model Reading : Ch.22, 23,24 Issue Covered (50) : IS/LM Model Case 16 : German Monetary Fiscal Tug of War (in class excercises) Case 17 : The Clinton-Greenspan Policy Mix (in class excercise) Issue Covered (50) : Economic Growth in Developing Economies Reading : CF Ch. 16, 35 Issue Covered (50) : International Trade, Comparative Advantage, and Protectionism

Session 10

Session 11

Session 12

Session 13

Session 14

Session 15

Session 16

Session 17

Session 18

Session 19

Reading : CF Ch. 33 Session 20 Issue Covered (50) : International Trade, Comparative Advantage, and Protectionism Reading : CF Ch. 33 Case 18 : Case of Tariff Case 19 : Case of Quota