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Managerial Economics Case Study (ECON 3551:
Managerial Economics Case Study
(ECON 3551: Managerial Economics and Business Strategy)
The case study asks you to apply the tools and analytical approaches we've been learning in class to a real world scenario. With the exception of the discussion about market structure, this is a non-technical exercise designed to require the conceptual application of the concepts involved in optimal managerial decision-making and strategic managerial choices. Completion of the case study and the display of a correct understanding and application of the concepts we have discussed are the primary means for evaluation.
Expectations
First, find a company that made a news headline in recent years for an action that they had taken. These decisions should be related to one or more of the topics we have discussed throughout the quarter (decision-making over time, profit maximization, cost minimization, long-run adjustments, strategic interaction, etc.). Excellent sources include The Wall Street Journal, The Economist, The New York Times, CNN, etc. Begin by describing the news headline - what was the action being taken, who was taking it, and why was it considered newsworthy?
A fun way to do this would be to find something related to an aspect of sports and entertainment that you are interested in.
Second, describe the firm you have identified, including a report concerning what they produce and what market they are in. Provide some analysis of the structure of that market - are they perfectly competitive, a monopolist, or somewhere in between? How do you know? If the firm produces many products in multiple different markets, focus on the market most relevant for the news headline you have chosen. Use the tools we've discussed in class and other evidence/analysis you can find to support your argument.
Third, analyze the action taken in light of what we have discussed in class. Although we do not know all of the relevant circumstances and information underlying the decisions made by the company's management team, use the information presented in the article and what else you can learn about the company - from statements and documents produced by the firm or other articles that you can find - to learn as much as you can. This analysis should include answers to the following questions:
• What was the motivation for the action, and did it appear to be successful?
• How does the action relate to a topic discussed in class? For example, was it an example of a firm exercising some price-setting power or strategy? Was it an example of a firm restructuring or reducing costs to increase competition? Was it a strategic move? Explain.
• Given what you've learned in class and what you've learned about the case, identify what you suspect to be the issues that the firm was likely to have been considering when making the decision to take the action being analyzed. Can you think of any strategic reason why the firm may have taken the action? Explain why these considerations would have been important.
I expect a formally written document, complete with citations and a works cited page for any sources you use (including, of course, the original article). The only data analysis I expect is in your analysis of the market structure. It will likely help to bring in other analyses, reports, and articles to inform and support your analysis. I expect the final write-up to be between 4 and 6 pages excluding the works cited page.
