January – March
The ESB Advantage builds on the Core to deepen students’ understanding of business economics and strategy.
This course develops the theory of finance and the theory of regulation, and it further explores how managers can utilise both financial markets and financial instruments to mitigate the risks that they face and the management of the regulatory regimes in which they may find themselves operating.
Macroeconomics for Business
The macroeconomic environment is a key factor affecting the performance of any business, and business planning requires a proper understanding of macroeconomic forces. These include not only domestic developments and government policies but also the impact of international forces in an increasingly interconnected world. The aim of this module is to develop the framework and tools of analysis needed to explain how the level of macroeconomic activity is determined and why macroeconomic conditions change over time.
While much of strategy deals with strategic analysis, any separation between strategy formulation and strategy implementation is unrealistic since no strategy is of value unless it is implemented. The question of strategy implementation is therefore a key challenge for practising managers. Strategy implementation involves balancing the strategic and operational goals of the organisation, appreciating the interconnectedness of strategy, structure and systems. It involves gaining the commitment of organisational members to a new strategy as well as managing processes of organisational change, both of which deal with the complex dynamics of power and politics.
Risk Management and Corporate Governance
This course explores how organisations are run and how their financing decisions affect their governance and profitability. When managers are not the owners of a business, they may have incentives to act in ways which are unhelpful for shareholders – and corporate governance describes the systems used to limit these kinds of behaviours. The course also examines the ways in which companies are financed, and it will show how this can not only affect profitability but also create incentives to engage in activities such as mergers and acquisitions.
Information, Incentives and Contracts
This module introduces basic models in economics of information, contract theory, market design and their applications. Firms, workers and consumers have to act in situations where they are dealing with a party that knows more than they do, such as the insurance applicant who may be a poor driver, the manager who knows more about the markets her firm is operating in than its shareholders, or brand-name owners (as in franchised businesses) do. We discuss the tools that economists have developed to analyse these problems and recommend solutions that can give people incentives to act in ways that don’t take too much advantage of their superior information. After overviewing the theoretical foundations the module discusses applications of the issues to franchise contracts.