Strategic Decision Making in Agribusiness

Catalog description

This course is designed to analyze strategic decision making among agribusiness firms and other economic agents in a market environment characterized by imperfect information and market power. The course draws upon game theory and other strategic decision tools to analyze four broad types of strategic decisions, each of which corresponds with the four main parts of the course: 1) Strategic Decisions Between Rival Firms : Focusing on firm decisions made between rivals with full information, part one includes the following topics and strategies: limit pricing, entry deterrence, predatory pricing, excess capacity, wars of attrition, strategic commitment, tit-for-tat pricing, and retaliation. 2) Strategic Firm Decisions in an Uncertain World : Focusing on firm decisions made with incomplete information, part two, includes topics on probabilities, expected value and expected utility, learning curves, investment decisions, flexibility, and option value. 3) Strategic Decisions Between Unequal Partners: Focusing on firm decisions made between unequal partners with asymmetric information, part three includes topics on vertical coordination, incentive compensation, franchising, and auctions. 4) Cooperation and Strategic Alliances: Part four investigates how firms can overcome informational problems described above through the use of strategic partnerships. This writing, intensive course will rely on both class lectures and a substantial amount of class discussion. The course content will feature eight to ten industry applications and case studies of individual companies to reinforce economic theory. Learning Objectives- Students will: Classify practical agribusiness problems by the type of available information - full, incomplete, or imperfect and by the nature of market power in an industry. Construct and analyze game trees and other representative models of strategic decisions facing businesses and employees. Solve strategic business problems using economic models based on game theory and other economic principles. Write business-style memos and reports that summarize a business decision, plan, or solution that is supported by economic analysis.