(IPM Business School Course Syllabus < Managerial Economics Class of Fulltime March 2006 Yulita F. Susanti, Ph.D. IPMI Business Schoo! Graduate Programs The Indonesian institute for Management Development Jakarta — indonesia btwritten assignments, a mid-term exam and a final exam. The contribution of these items to the final score is defined as follows: = Class participation (individual work, quizzes, group written as (25%) ~ A Term-project (group work) (25%) = Midterm Examination (20%) 0%) Aecietance lo oRkict 1G avalos Term Project [A term project is a short (8 pages excluding appendices) written term-paper of the actual business case relevant to managerial economies issues experienced by any student within the group. This group-based term project is required by the course to assess the student's ability to apply one of the topies covered in the course. The project should be based on some of the actual work experiences in the student’s provious or current employment, The report is due ia class on Session 26, The group has to present the term project report before the class at session 27 of 28. Evaluation of the term-project involved peer-ranked assessments in terms of complexity, of relevance to proposed topic or economic concepts being applied, of breadth and depth of the analysis, and of clarity and effectiveness ofthe presentation, Topics, Reading and Cases ‘Module I: Microeconomics Issues Session 1 ‘Topic : ‘The Fundamentals of Managerial Economics. Issues covered: = Objectives and structure of the course = Nature and scope of Managerial Economics Activity Lecture and general class discussion Required reading: Salvatore, Dominick (2001). Chapter 1 Session? Topic ‘The Fundamentals of Managerial Economics. Issues covered - KeV of Microeconomics Concepts. ~ Introduction to the time value of Money. Marginal Analysis Activity Lecture and general class discussion Required reading: Salvatore, Dominick (2001). Chapter 2.Market Demand,” Harvard Business Review, July- August 1988. Case Case #2.£.2. Phone Home: Forecasting Business Demand (HBS case #: 9~ 583-121) (Presentation: Groups U1) ess and marketing problems will ETPH managers face if they are granted an FCC cellular radio license forthe proposed area? - , Regarding Digitcon’s business demand forccast - how would you assess the firm's approach * to he forecasting task? (eg. do you consider their aggregate forecasting model to be adequate to the forecasting task? Why or why not? = What scems to you to be the strongest (and weakest elements ofthe Digitron approach? = How would you revise (or otherwise deal with) the weak elements (i any) of the forecast? ton ee Se Topic: Production Analysis Issues covered: Short and long-run production function, - Total cost, average cost, marginal concepts Activity + Lecture, and Class Discussion Reading Salvatore, Dominick (2001). Chapter 6. Session 8 Topic: Production Analysis Issues covered: - Short and long-run production function. ~ Total cost, average cost, marginal concep's Activity + Lecture, Case and Group Presentation Reading Salvatore, Dominick (2001). Chapter 6, Cases 2 Case #3. PT. Zebra Taxi (C) (Presentation: Groups 111) Note: Submit ofthe outline of the group term project report. Guiding questions: ~" Regarding Supply and Demand Choracteristios (See Exhibits 1-5 of the case) do. you consider these data adequate for the company to develop the “low cost focus” strategy the company seems to engage in? Why oF why not? = What seems to you to be the strongest (and weakest) eleren economic analysis in taxi market in Surabaya? , iFany, of Mr. Pudjianto’sSession 12 Topic Market Structure and Pricing Analysis 11 Issues covered : - Pricing in duopoly and oligopoly markets, - Price and non-price competition, limit pricing, and price leadership, Activity Lecture, case discussion, and group presentation Reeding + - Salvatore, Dominick (2001), Chapter 10. AR. Rao, M. E. Bergen and S. Davis (2000). “How to fight a price war.” Harvard Business Review, March ~ April, 2000. Case + =Case # 6. Lill Tissages, S.A. (HBS ease # 9-198-005). Assignment Questo’ ‘Analyze the case according to questions written at p.2 of the case. (Presentation: Groups 11) Ses Topic : Pricing of multiple-products, price discrimination and transfer pricing, Issues covered: _- Pricing of products with interrelated demands. = Optimal pricing of joint-product. ~ Meaning of and conditions for price discrimination, ~ Transfer pricing, Reading Salvatore, Dominick 2001). Chapter 11 Activity Lecture, general discussion, group presentation Topic : Pricing of multiple-products, price discrimination and transfer pricing, Issues covered: _- Pricing of products with interrelated demands. + Optimal pricing of joint-product. - Meaning of and conditions for price discrimination. «Transfer pricing. Reading Salvatore, Dominick (2001). Chapter 11 Activity: Lecture, general discussion, group presentation Case : Case #7: Great Giant Pineapple Company / GGPC (A) (Presentation: Groups 111) Guiding Questions: GGPC (A) = 1s GGPC competitive in Indonesia and international markets? Why? = What factors, if any, contributing to the GGPC suecess or failure in developing the pineapple business? = Has GGPC been able to exercise some sort of monopolistic power in these markets? Explain! 6inflation, Reading: ~~ Dombusch, Fischer and Startz(DFS): Chapters 1, 2. = National income Accounting. Harvatd Business Schoo}, HBS # 9-797-075. Activity = Lecture, and general discussion, quit. ‘Session 18 —— Topic « Introduction (continued) Issues covered = Money, interest, and income ~ Goods market and the IS curve + Assets markets and the LM curve + Bquilibrium in the goods and assets markets Reading :___ ~ Domibusch, Fischer and Startz (DFS): Chapters 5. Activity = General discussion and group presentation Group Assignment, Do problems #4 and 5 (conceptual problems) of DFS, p. 96 and Technical Problems # | and 2 of DFS, p. 97 ‘Submit these group assignments before the class. (Presentation: Groups 1) ‘Session 19 Topic + Agregate Supply and Aggregate Demand Issues covered: Understanding the macroeconomics indicators Reading: Dombuseh, Fischer and Startz (DFS): Chapters 546 and www casileasia.com: www adh org / economics - Herdiansjah, D. (April, 2002).)Why Managers Need To Have Some Sori of Understanding In Macroeconomics: An Indonesian Economy-Based Empirical Perspectives. Institut Pengembangan Manajemen Indonesia, Jakarta. Draft ME-2002. Activity: Class Lecturer and General ‘Session 20 ss Agregate Supply and Aggregate Demand = Understanding the maerozeonomics indicators - Dombuseh, Fischer and Starz (DFS): Chapters 546 and www castleasia.com: www adb.org / economics ~ Herdiansjah, D. (April, 2002).)7hy Managers Need To Have Some Sort of Understanding In Macroeconomics: An ‘Indonesian Economy-Based Empirical Perspectives. Institut Pengembangan Manajemen indonesia, Jakarta. Draft- ME-2002, Activity General discussion and group presentation Case Case #9, PT. Yanmar Diesel Indonesia. Institutwith some major issues facing by the company, taking into account ‘mactoeconomie conditions and financial consequences outlined in the ease? = How would you meke use of the data presented in Exhibit 4 ofthe ease, ifany, to build your recommendations? Session 23, Topic + International Economies and the Global Economy Issues covered: Balance of payments and exchange rates, -~ Exchange rates basic. + -. Exchange Rates Regime. Reading: ~~~ Dorbuch, R.,S. Fischer and R. Startz (2001): Chapters 12. ‘Activity Class Lecture General discussion. cession 24 Topic + International Economics and the Global Economy Issues covered: Corporate restructuring and privatization Reading: ~~~ Dormbuch, R., S. Fischer and R. Startz (2001). Chapters 12. Activity: Group preseatation Case Case # 11. NAPOCOR Privatization: Power in the Philippines (Presentation: Groups 1V) Guiding question: o Tn what ways that macroeconomic indicators are relevant, oF not so, tothe case ‘being analyzed? Why does your group think so? How far should the Philippines Government regulate the power utility companies, particularly NAPOCOR? How many pieces should the NAPOCOR Exevative split the company generating assets into? Why? = Ifyou were « NAPOCOR corporate advisor assigned to help Mr. Delgado, what would you ao? Session 25 Topic : Indonesia in The World Markets Issues covered : ~ Resource capabilities and factor endowments ~ Extemalities and environmental issues Reading + Seiji Naya and Chatless Morrison: “ A New Strategy Agenda: ASEAN, AFTA and APEC”. ~ Salvatore, Dominick (2001). Chapter 12 ‘Activity + Class lecture General discussion. Session 26Managerial Economics Regular MM ~ Fulltime 2006 Class A Guideline for Group Term Project Term Project Report Due date: (1) Submission ofthe proposed topic, abstract and outline ofthe paper: Due at the end of, Session 11 (2) 1% draft is due atthe end of Session 21 (3) Final draft is due atthe end of Session 25 (2) Presentation ofthe paper by each group at Sessions 272nd 28 1. Introduction Background (Explain why your group chooses @ particular topic and why the proposed project is important toll stakcholders) ~ Objectives of the proposed project (Business Plan) = Qualitative measures (Bigger issues, Strategic management) = Quantitative measures (from the point of view of Strategie Management, Marketing, Production and Operation, and Financing Decision) ince of the Proposed Project (Your Business Plan) ‘Competitive Analysis: Industry structure where you are, 4 = Strengths and potential weaknesses of your company with regard to you Business Plan (strategic cluster analysis) 3. Assessment of Functional Areas Relevant to your Business Plan 311. Description ofthe proposed Product(s) / Services) / Capacity Expansion / Cost Reduction ete. (Choose any relevant issue fit to your Business Plan / Cases to be determined), 32, Detail Analysis Assessment on Marketing Plan + Operational Plan (Including R&D?) + Proposed Management and Organization Deployment + Major Milestones + Structure and Capitalization - Financial Plan. 4. Proposed Pian of Action(s) ‘Major proposed achievement Specific proposed achievement 5. Attachments to the Business Plan/Report (Cost structure, Demand Estimate, Financial and capital budgeting, ete.) 6. Further Considerations, ‘Yulit F Susan PLD& 210 Part2 I Demand Theory, Analysis, and Estimation paying customers. You collect monthly data for the period from January 1986 to June 1988, which is given in Table 1. Use this data to estimate the trend line for domestic air travel. Then use your results to answr the following questions. QUESTIONS 1. Plot the data to see if there is any apparent trend. Does the trend appear to be upward or ownward sloping? 2. Does your regression analysis support your casual observation? Graph your estimated trend line on your plot. Why are there diserepancies between the actual observations and your trend Tine? 3. Using your estimated trend line, what are your forecasts for the pesiod from July 1988 to December 1988? How confident ae you with these Furecatts? ‘4. Does there appear to be any seasonal Yariation in airline travel? Whe. are some of the methods that can be used to adjust for tbese seasonal diferences? Choose one such method and present ‘an adjusted forecast. 5. Which forecast, rend or seasonally adjusted, are you going to present to your director? Ex: iin.