Course Outline

ECON 5100F: THE ECONOMIC ENVIRONMENT OF

BUSINESS
Schulich School of Business
York University
Winter 2023
Thursday 14:30-17:30
SSB N106

Instructor
Fred Lazar
Phone: 416-736-5068
Office: SSB N205J
Email: flazar@yorku.ca
Office hours: Thursdays 12:00-14:00

Assistant:
Jennifer Fernandez
Phone: 416-736-2100 ext. 55067
Office: SSB N205A
Email: jfernandez@schulich.yorku.ca

Lectures

Brief Description

This course introduces a number of economic concepts, which will prove useful in understanding
decision-making and the risks inherent in all decisions. The objective is to enable students to
identify, understand and evaluate the domestic and global forces that should be factored into all
decisions. Key concepts and ideas from microeconomics, macroeconomics and international
economics are introduced. Upon completion, students are expected to be familiar with the
fundamental concepts of economics, and to be able to analyze how changes in the economic
environment affect business performance and future strategic options.

Course objectives

Bob Lutz on MBA Programs: “They have produced generations of number-crunching,

alternate-scenario-loving, spreadsheet-addicted idiot savants. They should be ashamed.”

Why is this course part of the MBA curricula? Because in addition to providing a useful tool set
for tackling problems, economics should provide a platform for bringing the various areas
together in tackling problems. While areas such as Accounting, Finance, Marketing,
Organizational Behaviour and Strategy can be taught in “silos”, and at times problems may be
specific to a particular area, most often, solving a problem requires combining two or more of
these areas. An economics course should play a key role in showing you how to combine areas
for decision-making and problem solving and provide you with more tools to tackle and solve
real problems.

By linking a key economic concept or principle to a particular issue or problem, students should
be able to better appreciate the value of economics and understand the key concepts and
principles.

Some examples: Corporate Social Responsibility (CSR) has become well entrenched in MBA
curricula and in the actions of many CEOs. But does it make sense for a company to be
concerned with CSR? How about business ethics – an oxymoron, or integral component of
decision-making?

Paul Krugman, a Nobel Laureate in Economics, believes that companies such as Apple (the first
public US$1 trillion company) and Microsoft will fade away as new competitors overtake them.
Remember Google did not exist 20 years ago. Nortel was Canada’s most valuable company in
the 1990s. It was liquidated many years ago. GE once ranked among the top two or three most
valuable companies in the world. Apple can buy GE and not even use up half of its entire cash
hoard. The Japanese banks used to be the largest in the world. Amazon has killed many in the
retail space, has become a leader in cloud services, and with its move into air freight, the
company may disrupt this industry as well. FedEx is concerned. And streaming services may kill
movie theaters, especially with Disney’s entry into this market.

Is size a competitive advantage or disadvantage, especially for R&D and marketing? What drives
the creation of new business models?

The list of real examples and problems where economics can play an illuminating role in
clarifying the issues and highlighting the most reasonable solutions can be almost endless.

Organization of the Course

Required readings for this course include the following:

Fred Lazar, Economics for Management 2021

Available online. The lectures also are available online.

Paul Krugman, Robin Wells, Iris Au and Jack Parkinson, Microeconomics, 4th Canadian Edition
(Worth) -- https://achieve.macmillanlearning.com/courses/jc9w9y

Paul Krugman, Robin Wells, Iris Au and Jack Parkinson, Macroeconomics, 4th Canadian Edition
(Worth) -- https://achieve.macmillanlearning.com/courses/3b5w9q

Available online through Macmillan Learning --

https://achieve.macmillanlearning.com/courses/5qnc6d

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Relevant websites:

www.bank-banque-canada.ca
www.bank-banque-canada.ca/en/rates/converter.html
www.xe.com/ucc/
www.forbes.com
www.globeandmail.com
www.statcan.ca
www.oecd.org

www.fin.gc.ca
www.imf.org
www.federalreserve.gov
www.nytimes.com
www.sedar.com
www.sec.org

Evaluation of Student Performance

The course grading scheme for Master’s level courses at Schulich uses a 9-value grade-point
system. The possible course letter grades for a course and the corresponding grade points
awarded for each grade are:

A+ 9 grade points
A 8
A- 7
B+ 6
B 5
B- 4
C+ 3
C 2
C- 1
F 0

The letter grades for each assignment and test will be converted into grade points as above, and a
weighted average will be calculated to determine the final grade for each student.

The final grade for the course will be based on the following items weighted as indicated:

Assignment #1: 35%

Mid-term test: 30%
Final Examination: 35%

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Assignment #1 is a short essay: Pick any one of the 50 largest (by market cap) public
companies in North America and explain how you would rate it on ESG. The essay should be
about 1,200 words in length. No need to list references. The essay will be due on March 30.
Send me your essay by email.

Mid-Term Test will consist of answering three questions, which you will select from a set of
six. The test will take place on March 9. The test will be posted on Canvas no later than 14:15,
and will be expected back no later than 16:30.

The Final Examination will consist of answering three questions, which you will select from a
set of six. The exam will take place on April 13. The test will be posted on Canvas no later than
14:15, and will be expected back no later than 16:30.

Academic Honesty

Academic honesty is fundamental to the integrity of university education and degree programs.
The Schulich School will investigate and will act to enforce academic honesty policies where
apparent violations occur. Students should familiarize themselves with York University’s policy
on academic honesty. It is printed in full in your student handbook and can also viewed on-line
on the Schulich website, clicking through as indicated:

MBA/IMBA.
Schulich website à ‘Programs’ à ‘Master’s Degree’ à ‘Learn More’ à ‘Academic Policy’

While academic dishonesty can take many forms, there are several forms of which students
should be highly aware because they are the ones that are most likely to occur in the context of a
specific course.

[1] Plagiarism. Plagiarism is the presentation of information, ideas, or analysis generated

by other people as being your own. It includes direct quotations as well a substantive
paraphrases where the course of that information or idea is not clearly identified to the
reader. Students should be careful to present their written work in a way that makes it
completely clear in each and every case where a quotation, a paraphrase, or an analysis is
based on the work of other people. (This includes information from all sources, including
websites.)

[2] Cheating. Cheating is an attempt to gain an unfair advantage in an evaluation.

Examples of such violations include (but are not limited to) consulting prohibited
materials during an examination or copying from another student.

[3] Failure to follow limitations on collaborative work with other students in preparing
academic assignments. Each class differs in the mix of assignments and group-versus-
individual preparation that is allowed. The instructor will make clear the extent of

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collaboration among students that is acceptable among students on various pieces of
assigned work. Students should abide by those limitations and, if they are unsure about
whether a certain level or form of collaboration would be acceptable, to clarify that
question with the instructor in advance.

[4] Aiding and abetting. A student is guilty of violating academic honesty expectations if
he/she acts in a way that enables another student to engage in academic dishonesty. If a
student knows (or should reasonably expect) that an action would enable another student
to cheat or plagiarize, that student’s action constitutes an academic honesty violation.
Illustrative examples include making your exam paper easily visible to others in the same
exam or providing your own working or finished documents for an ‘individual
assignment’ to another student (even if that other student said that he/she just wanted to
‘get an idea of how to approach the assignment’ or ‘to check whether they had done
theirs correctly’).

[5] Use of academic work in more than one course. Generally, academic work done for
every course is ‘new’ work, done for that course only. If a student wishes to use some or
all of the academic work done for an assigned task in one course in another course, the
student must get explicit, prior permission from both instructors so that they agree that
the scope and nature of the overlapping use of that work is such that it can fairly be
counted toward both courses.

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Schedule of Topics and Readings

Date: Topic Chapters Assigned

Lectures work due
January 12 Introduction: Microeconomics – Macro ch. 1, 2; Micro
decision making; Macroeconomics ch. 4, 20; L ch. 1, 2
January 19 Microeconomics: Demand; perfect Macro ch. 3, 4
competition; supply; monopoly; rent Micro ch. 6, 7, 10-13;
seeking L. ch. 7, 10
January 26 Behavioural economics; profits; game Micro ch. 8, 9, 14,
theory; oligopoly; monopolistic 15; L ch. 2, 4, 5, 10
competition; firms
February 2 Firms (cont’d); agency; corporate Micro ch. 4, 13, 15; L
governance; market segmentation ch. 5, 7
February 9 Costs; labor supply/demand; Micro ch. 4, 11, 15,
information; brands; advertising; 19; L. ch. 6-9
marketing; moral hazard
February 16 M&A; competition; strategy; strategic Micro ch. 11, 16; L
behavior ch. 10
February 23 READING WEEK
March 2 Macroeconomics: Aggregate demand Macro ch. 6-8, 11-13;
Micro ch. 7, 16-18; L
ch. 11
March 9 TEST
March 16 Balance of payments and globalization; Macro ch. 6, 8, 9, 12,
aggregate demand and supply; growth; 13, 16, 18; L ch. 12
labor market; trade-offs: unemployment
and inflation; business cycles
March 23 Financial Markets; central banks and Macro ch. 11, 14, 15;
monetary policy; financial crisis; L ch. 13
derivatives
March 30 Exchange rates; Euro currency markets; Macro ch. 18; L ch. Assignment
economic integration and EU 14 #1
April 6 Globalization and trade; trade policies; Macro ch. 3, 5, 18;
climate change; lessons from Covid Micro ch. 16; L ch.
15
April 13 TEST