Economics of Strategy

ISBN-10: 0471679453
ISBN-13: 9780471679455
Edition: 4th 2007 (Revised)
List price: $190.95
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Description: 'The Economics of Strategy' delves into the concepts involved in sound business strategy. The text begins by focusing on the boundaries of the firm and examines the competitive strategy from the perspective of industrial organization economics. It  More...

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Book details

List price: $190.95
Edition: 4th
Copyright year: 2007
Publisher: John Wiley & Sons, Incorporated
Publication date: 8/7/2006
Binding: Hardcover
Pages: 632
Size: 8.25" wide x 10.25" long x 1.25" tall
Weight: 2.530
Language: English

'The Economics of Strategy' delves into the concepts involved in sound business strategy. The text begins by focusing on the boundaries of the firm and examines the competitive strategy from the perspective of industrial organization economics. It then explores strategic positioning and dynamics.

Introduction: Strategy and Economics
Why Study Strategy?
Why Economics?
The Need for Principles
So What's the Problem?
The Rise and Fall of the New Economy's Darling: The Enron Story
A Framework for Strategy
Boundaries of the Firm
Market and Competitive Analysis
Position and Dynamics
Internal Organization
Endnotes
Primer: Economic Concepts for Strategy
Costs
Cost Functions
The Importance of the Time Period: Long-Run versus Short-Run Cost Functions
Sunk versus Avoidable Costs
Economic Costs and Profitability
Economic versus Accounting Costs
Economic Profit versus Accounting Profit
Economic Profit and Net Present Value
Demand and Revenues
Demand Curve
The Price Elasticity of Demand
Total Revenue and Marginal Revenue Functions
Theory of the Firm: Pricing and Output Decisions
Perfect Competition
Game Theory
Games in Matrix Form and the Concept of Nash Equilibrium
Game Trees and Subgame Perfection
Endnotes
Firm Boundaries
The Evolution of the Modern Firm
The World in 1840
The Emergence of Chicago
The World in 1910
Evolution of the Steel Industry
The World Today
Economic Gyrations and Traffic Gridlock in Thailand
Three Different Worlds: Consistent Principles, Changing Conditions, and Adaptive Strategies
Infrastructure and Emerging Markets: The Russian Privatization Program
Building National Infrastructure: The Transcontinental Railroad
The Risks of Modernity: The Halifax Explosion of 1917
Parties, Scandals, and Directors Behaving Badly: After the Ball
Blaming Wal-Mart: The Prequel
Chapter Summary
Questions
Endnotes
The Horizontal Boundaries of the Firm: Economies of Scale and Scope
Where Do Economies of Scale Come From?
Where Do Scale Economies Come From?
Hub-and-Spoke Networks and Economies of Scope in the Airline Industry
The Division of Labor in Medical Markets
Special Sources of Economies of Scale and Scope
The Ace Hardware Corporation
The Pharmaceutical Merger Wave
Sources of Diseconomies of Scale
The AOL Time Warner Merger and Economies of Scope
The Learning Curve
The Boston Consulting Group Growth/Share Paradigm
Chapter Summary
Questions
Using Regression Analysis to Estimate the Shapes of Cost Curves
Endnotes
The Vertical Boundaries of the Firm
Make versus Buy
Vertical Disintegration in the Pharmaceutical Industry
Self-Insurance by British Petroleum
Reasons to "Buy"
Getting "Connected" at Sony
Reasons to "Make"
The Fundamental Transformation in the U.S. Automobile Industry
Power Barges
Underinvestment in Relationship-Specific Assets by British Subcontractors
Summarizing Make-or-Buy Decisions: The Make-or-Buy Decision Tree
Chapter Summary
Questions
Endnotes
Organizing Vertical Boundaries: Vertical Integration and Its Alternatives
Technical Efficiency versus Agency Efficiency
Vertical Integration in a Mountain Paradise
An Application of the Make-or-Buy Framework to Children's Memorial Hospital
Vertical Integration of the Sales Force in the Insurance Industry
Process Issues in Vertical Mergers
Alternatives to Vertical Integration
Tapered Integration in Gasoline Retailing
Amicore Comes to the Aid of Physicians
Interfirm Business Networks in the United States: The Women's Dress Industry in New York City
Chapter Summary
Questions
Endnotes
Diversification
A Brief History
Changes in Diversification, from American Can to Primerica
Why Do Firms Diversify?
Acquiring for Synergy: Procter & Gamble Buys Gillette
Managerial Reasons for Diversification
The Rise and Fall of an Industrial Conglomerate: The Strange Case of Tyco International
Performance of Diversified Firms
The Search for Synergy in New Markets: Ebay's Acquisition Binge
Chapter Summary
Questions
Endnotes
Market and Competitive Analysis
Competitors and Competition
Competitor Identification and Market Definition
Substitutes and Competition in the Postal Service
Measuring Market Structure
Defining Coca-Cola's Market
Market Structure and Competition
A Dog-Eat-Dog World: The Demise of the On-line Pet Supply Industry
The OPEC Cartel
Pricing in the Airline Industry
Cournot Equilibrium in the Corn Wet Milling Industry
Evidence on Market Structure and Performance
Chapter Summary
Questions
Endnotes
Strategic Commitment
Why Commitment Is Important
Loblaw Versus Wal-Mart Canada
Strategic Commitment and Preemption in the Global Airframe Market: Airbus versus Boeing
Commitment and Irreversibility in the Airline Industry
Strategic Commitment and Competition
Commitment at Nucor and USX: The Case of Thin-Slab Casting
Flexibility and Real Options
Commitment versus Flexibility in the CD Market
Corning's Nuclear Winter
A Framework for Analyzing Commitments
Chapter Summary
Questions
Endnotes
The Dynamics of Pricing Rivalry
Dynamic Pricing Rivalry
The General Motors Employee Discount Price War
What Happens When a Firm Retaliates Quickly to a Price Cut: Philip Morris versus B.A.T in Costa Rica
Forgiveness and Provocability: Dow Chemicals and the Market for Reverse Osmosis Membrane
How Market Structure Affects the Sustainability of Cooperative Pricing
Pricing Discipline in the U.S. Cigarette Industry
How Market Structure Conditions Conspire to Limit Profitability in the Heavey-Duty Truck Engine Industry
Facilitating Practices
Quality Competition
Quality Competition among U.S. Health Plans
Chapter Summary
Questions
Endnotes
Entry and Exit
Some Facts about Entry and Exit
Entry and Exit Decisions: Basic Concepts
Hyundai's Entry into the Steel Industry
Emirates Air
Entry-Deterring Strategies
Limit Pricing by Brazilian Cement Manufacturers
Entry Barriers and Profitability in the Japanese Brewing Industry
Predatory Pricing in the Laboratory
Exit-Promoting Strategies
Symbian: Keeping Microsoft out of the Mobile Phone Business
Evidence on Entry-Deterring Behavior
Chapter Summary
Questions
Endnotes
Industry Analysis
Performing a Five-Forces Analysis
Coopetition and the Value Net
Applying the Five Forces: Some Industry Analyses
Chapter Summary
Questions
Template for Doing a Five-Forces Analysis
Endnotes
Strategic Position and Dynamics
Strategic Positioning for Competitive Advantage
Competitive Advantage
Competitive Advantage and Value Creation: Analytical Tools and Conceptual Foundations
The Division of the Value-Created in the Sale of Beer at a Baseball Game
Kmart Versus Wal-Mart
Creating Value at Enterprise Rent-A-Car
Measuring Capabilities in the Pharmaceutical Industry
Strategic Positioning: Cost Advantage and Benefit Advantage
Cost Leadership by Cemex
Benefit Leadership by Superquinn
Strategic Positioning in the Airline Industry: Four Decades of Change
Strategic Positioning: Broad Coverage versus Focus Strategies
Chapter Summary
Questions
Appendix
Endnotes
Sustaining Competitive Advantage
How Hard Is It to Sustain Profits?
"Von-a-Bees"
Apex Digital
Exploiting Resources: The Mattel Story
American versus Northwest in Yield Management
Cola Wars: Slugging It Out in Venezuela
Switching Costs for the Newborn Set: Garanimals
The Microsoft Case
Imperfect Imitability and Industry Equilibrium
Chapter Summary
Questions
Endnotes
The Origins of Competitive Advantage: Innovation, Evolution, and the Environment
Creative Destruction
The Incentive to Innovate
The Sunk Cost Effect in Steel: The Adoption of the Basic Oxygen Furnace
Innovation and the Market for Ideas
R&D Spending and Firm Size in the Biotechnology Sector: The Role of Management
Innovation Competition
Patent Racing and the Invention of the Integrated Circuit
Organizational Adaptation in the Photolithographic Alignment Equipment Industry
Evolutionary Economics and Dynamic Capabilities
The Rise of the Swiss Watch Industry
The Environment
Competence, History, and Geography: The Nokia Story
Managing Innovation
Chapter Summary
Questions
Endnotes
Agency and Performance Measurement
The Principal/Agent Framework
Agency Contracts in Franchising
Pay, Performance, and Selection at Safelite Glass
Costs of Tying Pay to Performance
Market Effects in Executive Compensation
Cardiovascular Surgery Report Cards
Selecting Performance Measures: Managing Tradeoffs Between Costs
Do Pay-for-Performance Incentives Work?
Chapter Summary
Questions
Endnotes
Internal Organization
Incentives in Firms
Implicit Incentive Contracts
Promotion Tournaments at General Electric
Incentives in Teams
Stock Options for Middle-Level Employees
Career Concerns and Long-Term Employment
Career Concerns of Mutual Fund Managers
Incentives and Decision Making in Organizations
Teams and Communication in Steel Mills
Chapter Summary
Questions
Endnotes
Strategy and Structure
An Introduction to Structure
ABB's Matrix Organization
Structure-Environment Coherence
Organizational Structure at AT&T
Structure Follows Strategy
Strategy, Structure, and the Attempted Merger Between the University of Chicago Hospital and Michael Reese Hospital
Samsung: Reinventing a Corporation
Transnational Strategy and Organization Structure At SmithKline-Beecham
WingspanBank.Com: A Network Organization
Chapter Summary
Questions
Endnotes
Environment, Power, and Culture
The Social Context of Firm Behavior
Internal Context
Power
The Sources of Presidential Power
Power and Poor Performance: The Case of the 1957 Mercury
Gary Wendt at Conseco
Culture
Corporate Culture and Inertia at CPI
Politics, Culture, and Corporate Governance
External Context, Institutions, and Strategies
Institutions and Culture: The eBay IPO
Chapter Summary
Questions
Endnotes
Strategy and the General Manager
Introduction
A Historical Perspective on the General Manager
What Do General Managers Do?
Chapter Summary
Endnotes
Glossary
Name Index
Subject Index

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