Me_Nov09

THE UNIVERSITY OF MANCHESTER MANCHESTER BUSINESS SCHOOL WORLDWIDE DEGREE EXAMINATIONS November 2009 MASTER OF BUSINESS ADMINISTRATION COURSE – MANAGERIAL ECONOMICS TIME ALLOWED: 3 HOURS plus 10 Minutes Reading Time* NOTE TO INVIGILATORS THIS IS AN OPEN BOOK EXAMINATION *During the 10 minute reading time you may write on this paper but not on the answer book. Instructions to students 1. Answer any THREE questions. It is imperative that case study materials and/or examples be used where appropriate in order to support your answers. 2. Marks will be deducted for answers of an illegible nature. All questions carry equal marks. 3. Do not staple any foreign materials into the answer books. 4. Please ensure that you write your 4 digit exam I.D number and paper reference number on the front of your answer book. Failure to do so may result in non-marking of your script. 5. Ensure that your answer is well structured. State and defend any assumptions clearly. The examiner is looking for a robustly defended answer. 1. “Maximising market share rather than shareholder value may be a critical decision for management, but the right one in the long run”. Do you agree or disagree with this statement' Be specific in your reply. 2. Either (i). "The ability of managers to pursue goals other than profit maximisation is severely limited by internal and external constraints; the profit maximisation model provides the best explanation of firms' behaviour." Critically evaluate this statement. Or (a) “Management models cannot be simply reduced to a diagram but rather they describe a process taking place within the modern firm”. Do you agree or disagree with this statement' Support your answer with specific examples drawn from your knowledge of either the Baumol or Marris model. 3. Either (i): How important is it for management to achieve cost leadership in the product market' Examine the extent to which the production-cost relationship, for example, can help management achieve cost leadership. Or (ii) Outline the economic analysis underpinning the five steps behind cost-leadership model. Provide examples and case material where appropriate. 4. The thesis that structure follows strategy has been applied to different firms that compete in different scenarios. Examine the extent to which modern game theory can assist management in understanding the implications of such a thesis for the firm’s strategy. 5. Either (i) ‘The make-or-buy decision involves a calculated balancing of several benefits and costs of integration’. Critically assess this statement drawing upon your knowledge of transaction cost economics (TCE). Or (ii) ‘A central issue in business strategy is how to organise the vertical chain’. Do you agree or disagree with this statement. Why' 6. Outline the contribution of games and strategic thinking to management decision making. In your reply, evaluate the contribution in terms of pricing decisions and/or increasing market share.