{"product_id":"economics-of-strategy-isbn-9781119042310","title":"Economics of Strategy","description":"\u003cp\u003e\u003cb\u003e\u003ci\u003eThis text is an unbound, three hole punched version. Access to WileyPLUS sold separately.\u003c\/i\u003e\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003e\u003ci\u003eEconomics of Strategy, Binder Ready Version\u003c\/i\u003e\u003c\/b\u003e focuses on the key economic concepts students must master in order to develop a sound business strategy. Ideal for undergraduate managerial economics and business strategy courses, Economics of Strategy offers a careful yet accessible translation of advanced economic concepts to practical problems facing business managers. Armed with general principles, today's students--tomorrows future managers--will be prepared to adjust their firms business strategies to the demands of the ever-changing environment.\u003c\/p\u003e \u003cp\u003e\u003cb\u003eIntroduction: Strategy and Economics 1\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eWhy Study Strategy? 1\u003c\/p\u003e \u003cp\u003eWhy Economics? 2\u003c\/p\u003e \u003cp\u003eThe Need for Principles 2\u003c\/p\u003e \u003cp\u003eSo What’s the Problem? 3\u003c\/p\u003e \u003cp\u003eA Framework for Strategy 5\u003c\/p\u003e \u003cp\u003eBoundaries of the Firm 6\u003c\/p\u003e \u003cp\u003eMarket and Competitive Analysis 6\u003c\/p\u003e \u003cp\u003ePositioning and Dynamics 6\u003c\/p\u003e \u003cp\u003eInternal Organization 6\u003c\/p\u003e \u003cp\u003eThe Book 7\u003c\/p\u003e \u003cp\u003eEndnotes 7\u003c\/p\u003e \u003cp\u003e\u003cb\u003eEconomics Primer: Basic Principles 8\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eCosts 9\u003c\/p\u003e \u003cp\u003eCost Functions 9\u003c\/p\u003e \u003cp\u003eTotal Cost Functions 9\u003c\/p\u003e \u003cp\u003eFixed and Variable Costs 11\u003c\/p\u003e \u003cp\u003eAverage and Marginal Cost Functions 11\u003c\/p\u003e \u003cp\u003eThe Importance of the Time Period: Long-Run versus Short-Run Cost Functions 14\u003c\/p\u003e \u003cp\u003eSunk versus Avoidable Costs 16\u003c\/p\u003e \u003cp\u003eEconomic Costs and Profitability 17\u003c\/p\u003e \u003cp\u003eEconomic versus Accounting Costs 17\u003c\/p\u003e \u003cp\u003eEconomic Profit versus Accounting Profit 18\u003c\/p\u003e \u003cp\u003eDemand and Revenues 18\u003c\/p\u003e \u003cp\u003eDemand Curve 18\u003c\/p\u003e \u003cp\u003eThe Price Elasticity of Demand 19\u003c\/p\u003e \u003cp\u003eBrand-Level versus Industry-Level Elasticities 22\u003c\/p\u003e \u003cp\u003eTotal Revenue and Marginal Revenue Functions 22\u003c\/p\u003e \u003cp\u003eTheory of the Firm: Pricing and Output Decisions 23\u003c\/p\u003e \u003cp\u003ePerfect Competition 25\u003c\/p\u003e \u003cp\u003eGame Theory 29\u003c\/p\u003e \u003cp\u003eGames in Matrix Form and the Concept of Nash Equilibrium 30\u003c\/p\u003e \u003cp\u003eGame Trees and Subgame Perfection 31\u003c\/p\u003e \u003cp\u003eChapter Summary 33\u003c\/p\u003e \u003cp\u003eQuestions 33\u003c\/p\u003e \u003cp\u003eEndnotes 34\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart One Firm Boundaries 35\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003e1 The Power of Principles: An Historical Perspective 37\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eDoing Business in 1840 37\u003c\/p\u003e \u003cp\u003eBusiness Conditions in 1840: Life without a Modern Infrastructure 39\u003c\/p\u003e \u003cp\u003eTransportation 39\u003c\/p\u003e \u003cp\u003eCommunications 40\u003c\/p\u003e \u003cp\u003eFinance 41\u003c\/p\u003e \u003cp\u003eProduction Technology 42\u003c\/p\u003e \u003cp\u003eGovernment 42\u003c\/p\u003e \u003cp\u003eDoing Business in 1910 44\u003c\/p\u003e \u003cp\u003eBusiness Conditions in 1910: A “Modern” Infrastructure 45\u003c\/p\u003e \u003cp\u003eProduction Technology 45\u003c\/p\u003e \u003cp\u003eTransportation 45\u003c\/p\u003e \u003cp\u003eCommunications 46\u003c\/p\u003e \u003cp\u003eFinance 46\u003c\/p\u003e \u003cp\u003eGovernment 46\u003c\/p\u003e \u003cp\u003eDoing Business Today 48\u003c\/p\u003e \u003cp\u003eModern Infrastructure 49\u003c\/p\u003e \u003cp\u003eTransportation 49\u003c\/p\u003e \u003cp\u003eCommunications 49\u003c\/p\u003e \u003cp\u003eFinance 50\u003c\/p\u003e \u003cp\u003eProduction Technology 50\u003c\/p\u003e \u003cp\u003eGovernment 50\u003c\/p\u003e \u003cp\u003eInfrastructure in Emerging Markets 51\u003c\/p\u003e \u003cp\u003eThree Different Worlds: Consistent Principles, Changing Conditions, and Adaptive Strategies 52\u003c\/p\u003e \u003cp\u003eChapter Summary 52\u003c\/p\u003e \u003cp\u003eQuestions 53\u003c\/p\u003e \u003cp\u003eEndnotes 54\u003c\/p\u003e \u003cp\u003e\u003cb\u003e2 The Horizontal Boundaries of The Firm 55\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eDefinitions 55\u003c\/p\u003e \u003cp\u003eDefinition of Economies of Scale 55\u003c\/p\u003e \u003cp\u003eDefinition of Economies of Scope 57\u003c\/p\u003e \u003cp\u003eScale Economies, Indivisibilities, and the Spreading of Fixed Costs 57\u003c\/p\u003e \u003cp\u003eEconomies of Scale Due to Spreading of Product-Specific Fixed Costs 58\u003c\/p\u003e \u003cp\u003eEconomies of Scale Due to Trade-offs among Alternative Technologies 58\u003c\/p\u003e \u003cp\u003eIndivisibilities Are More Likely When Production is Capital Intensive 60\u003c\/p\u003e \u003cp\u003e “The Division of Labor is Limited by the Extent of the Market” 62\u003c\/p\u003e \u003cp\u003eSpecial Sources of Economies of Scale and Scope 64\u003c\/p\u003e \u003cp\u003eDensity 64\u003c\/p\u003e \u003cp\u003ePurchasing 65\u003c\/p\u003e \u003cp\u003eAdvertising 65\u003c\/p\u003e \u003cp\u003eCosts of Sending Messages per Potential Consumer 65\u003c\/p\u003e \u003cp\u003eAdvertising Reach and Umbrella Branding 66\u003c\/p\u003e \u003cp\u003eResearch and Development 66\u003c\/p\u003e \u003cp\u003ePhysical Properties of Production 67\u003c\/p\u003e \u003cp\u003eInventories 67\u003c\/p\u003e \u003cp\u003eComplementarities and Strategic Fit 68\u003c\/p\u003e \u003cp\u003eSources of Diseconomies of Scale 68\u003c\/p\u003e \u003cp\u003eLabor Costs and Firm Size 69\u003c\/p\u003e \u003cp\u003eSpreading Specialized Resources Too Thin 69\u003c\/p\u003e \u003cp\u003eBureaucracy 69\u003c\/p\u003e \u003cp\u003eEconomies of Scale: A Summary 70\u003c\/p\u003e \u003cp\u003eThe Learning Curve 70\u003c\/p\u003e \u003cp\u003eThe Concept of the Learning Curve 70\u003c\/p\u003e \u003cp\u003eExpanding Output to Obtain a Cost Advantage 71\u003c\/p\u003e \u003cp\u003eLearning and Organization 73\u003c\/p\u003e \u003cp\u003eThe Learning Curve versus Economies of Scale 74\u003c\/p\u003e \u003cp\u003eDiversification 75\u003c\/p\u003e \u003cp\u003eWhy Do Firms Diversify? 76\u003c\/p\u003e \u003cp\u003eEfficiency-Based Reasons for Diversification 76\u003c\/p\u003e \u003cp\u003eScope Economies 76\u003c\/p\u003e \u003cp\u003eInternal Capital Markets 77\u003c\/p\u003e \u003cp\u003eProblematic Justifications for Diversification 78\u003c\/p\u003e \u003cp\u003eDiversifying Shareholders’ Portfolios 78\u003c\/p\u003e \u003cp\u003eIdentifying Undervalued Firms 78\u003c\/p\u003e \u003cp\u003eReasons Not to Diversify 79\u003c\/p\u003e \u003cp\u003eManagerial Reasons for Diversification 79\u003c\/p\u003e \u003cp\u003eBenefits to Managers from Acquisitions 79\u003c\/p\u003e \u003cp\u003eProblems of Corporate Governance 80\u003c\/p\u003e \u003cp\u003eThe Market for Corporate Control and Recent Changes in Corporate Governance 81\u003c\/p\u003e \u003cp\u003ePerformance of Diversified Firms 83\u003c\/p\u003e \u003cp\u003eChapter Summary 85\u003c\/p\u003e \u003cp\u003eQuestions 86\u003c\/p\u003e \u003cp\u003eEndnotes 88\u003c\/p\u003e \u003cp\u003e\u003cb\u003e3 The Vertical Boundaries of The Firm 90\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eMake versus Buy 90\u003c\/p\u003e \u003cp\u003eUpstream, Downstream 92\u003c\/p\u003e \u003cp\u003eDefining Boundaries 94\u003c\/p\u003e \u003cp\u003eSome Make-or-Buy Fallacies 94\u003c\/p\u003e \u003cp\u003eAvoiding Peak Prices 95\u003c\/p\u003e \u003cp\u003eTying Up Channels: Vertical Foreclosure 96\u003c\/p\u003e \u003cp\u003eReasons to “Buy” 98\u003c\/p\u003e \u003cp\u003eExploiting Scale and Learning Economies 98\u003c\/p\u003e \u003cp\u003eBureaucracy Effects: Avoiding Agency and Influence Costs 101\u003c\/p\u003e \u003cp\u003eAgency Costs 101\u003c\/p\u003e \u003cp\u003eInfluence Costs 102\u003c\/p\u003e \u003cp\u003eOrganizational Design 104\u003c\/p\u003e \u003cp\u003eReasons to “Make” 104\u003c\/p\u003e \u003cp\u003eThe Economic Foundations of Contracts 104\u003c\/p\u003e \u003cp\u003eComplete versus Incomplete Contracting 105\u003c\/p\u003e \u003cp\u003eBounded Rationality 105\u003c\/p\u003e \u003cp\u003eDifficulties Specifying or Measuring Performance 106\u003c\/p\u003e \u003cp\u003eAsymmetric Information 106\u003c\/p\u003e \u003cp\u003eThe Role of Contract Law 106\u003c\/p\u003e \u003cp\u003eCoordination of Production Flows through the Vertical Chain 107\u003c\/p\u003e \u003cp\u003eLeakage of Private Information 109\u003c\/p\u003e \u003cp\u003eTransaction Costs 110\u003c\/p\u003e \u003cp\u003eRelationship-Specific Assets 111\u003c\/p\u003e \u003cp\u003eForms of Asset Specificity 111\u003c\/p\u003e \u003cp\u003eThe Fundamental Transformation 112\u003c\/p\u003e \u003cp\u003eRents and Quasi-Rents 112\u003c\/p\u003e \u003cp\u003eThe Holdup Problem 113\u003c\/p\u003e \u003cp\u003eHoldup and Ex Post Cooperation 115\u003c\/p\u003e \u003cp\u003eThe Holdup Problem and Transaction Costs 115\u003c\/p\u003e \u003cp\u003eContract Negotiation and Renegotiation 115\u003c\/p\u003e \u003cp\u003eInvestments to Improve \u003ci\u003eEx Post \u003c\/i\u003eBargaining Positions 116\u003c\/p\u003e \u003cp\u003eDistrust 116\u003c\/p\u003e \u003cp\u003eReduced Investment 117\u003c\/p\u003e \u003cp\u003eRecap: From Relationship-Specific Assets to Transaction Costs 117\u003c\/p\u003e \u003cp\u003eSummarizing Make-or-Buy Decisions: The Make-or-Buy Decision Tree 118\u003c\/p\u003e \u003cp\u003eChapter Summary 119\u003c\/p\u003e \u003cp\u003eQuestions 119\u003c\/p\u003e \u003cp\u003eEndnotes 122\u003c\/p\u003e \u003cp\u003e\u003cb\u003e4 Integration and Its Alternatives 124\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eWhat Does It Mean to Be “Integrated”? 124\u003c\/p\u003e \u003cp\u003eThe Property Rights Theory of the Firm 124\u003c\/p\u003e \u003cp\u003eAlternative Forms of Organizing Transactions 125\u003c\/p\u003e \u003cp\u003eGovernance 127\u003c\/p\u003e \u003cp\u003eDelegation 128\u003c\/p\u003e \u003cp\u003eRecapping PRT 128\u003c\/p\u003e \u003cp\u003ePath Dependence 129\u003c\/p\u003e \u003cp\u003eMaking the Integration Decision 129\u003c\/p\u003e \u003cp\u003eTechnical Efficiency versus Agency Efficiency 130\u003c\/p\u003e \u003cp\u003eThe Technical Efficiency\/Agency Efficiency Trade-off 130\u003c\/p\u003e \u003cp\u003eReal-World Evidence 134\u003c\/p\u003e \u003cp\u003eDouble Marginalization: A Final Integration Consideration 136\u003c\/p\u003e \u003cp\u003eAlternatives to Vertical Integration 138\u003c\/p\u003e \u003cp\u003eTapered Integration: Make and Buy 138\u003c\/p\u003e \u003cp\u003eFranchising 138\u003c\/p\u003e \u003cp\u003eStrategic Alliances and Joint Ventures 140\u003c\/p\u003e \u003cp\u003eImplicit Contracts and Long-Term Relationships 143\u003c\/p\u003e \u003cp\u003eBusiness Groups 145\u003c\/p\u003e \u003cp\u003eKeiretsu 145\u003c\/p\u003e \u003cp\u003eChaebol 147\u003c\/p\u003e \u003cp\u003eBusiness Groups in Emerging Markets 148\u003c\/p\u003e \u003cp\u003eChapter Summary 149\u003c\/p\u003e \u003cp\u003eQuestions 150\u003c\/p\u003e \u003cp\u003eEndnotes 151\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart Two Market and Competitive Analysis 153\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003e5 Competitors and Competition 155\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eCompetitor Identification and Market Definition 156\u003c\/p\u003e \u003cp\u003eThe Basics of Market Definition and Competitor Identification 156\u003c\/p\u003e \u003cp\u003ePutting Competitor Identification into Practice 157\u003c\/p\u003e \u003cp\u003eEmpirical Approaches to Competitor Identification 158\u003c\/p\u003e \u003cp\u003eGeographic Competitor Identification 160\u003c\/p\u003e \u003cp\u003eMeasuring Market Structure 162\u003c\/p\u003e \u003cp\u003eMarket Structure and Competition 163\u003c\/p\u003e \u003cp\u003ePerfect Competition 163\u003c\/p\u003e \u003cp\u003eMany Sellers 164\u003c\/p\u003e \u003cp\u003eHomogeneous Products 164\u003c\/p\u003e \u003cp\u003eExcess Capacity 165\u003c\/p\u003e \u003cp\u003eMonopoly 166\u003c\/p\u003e \u003cp\u003eMonopolistic Competition 168\u003c\/p\u003e \u003cp\u003eDemand for Differentiated Goods 168\u003c\/p\u003e \u003cp\u003eEntry into Monopolistically Competitive Markets 169\u003c\/p\u003e \u003cp\u003eOligopoly 170\u003c\/p\u003e \u003cp\u003eCournot Quantity Competition 171\u003c\/p\u003e \u003cp\u003eThe Revenue Destruction Effect 174\u003c\/p\u003e \u003cp\u003eCournot’s Model in Practice 175\u003c\/p\u003e \u003cp\u003eBertrand Price Competition 175\u003c\/p\u003e \u003cp\u003eWhy Are Cournot and Bertrand Different? 177\u003c\/p\u003e \u003cp\u003eBertrand Price Competition When Products Are Horizontally Differentiated 179\u003c\/p\u003e \u003cp\u003eEvidence on Market Structure and Performance 181\u003c\/p\u003e \u003cp\u003ePrice and Concentration 181\u003c\/p\u003e \u003cp\u003eChapter Summary 182\u003c\/p\u003e \u003cp\u003eQuestions 182\u003c\/p\u003e \u003cp\u003eEndnotes 184\u003c\/p\u003e \u003cp\u003e\u003cb\u003e6 Entry and Exit 186\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eSome Facts about Entry and Exit 187\u003c\/p\u003e \u003cp\u003eEntry and Exit Decisions: Basic Concepts 188\u003c\/p\u003e \u003cp\u003eBarriers to Entry 188\u003c\/p\u003e \u003cp\u003eBain’s Typology of Entry Conditions 189\u003c\/p\u003e \u003cp\u003eAnalyzing Entry Conditions: The Asymmetry Requirement 189\u003c\/p\u003e \u003cp\u003eStructural Entry Barriers 191\u003c\/p\u003e \u003cp\u003eControl of Essential Resources 191\u003c\/p\u003e \u003cp\u003eEconomies of Scale and Scope 192\u003c\/p\u003e \u003cp\u003eMarketing Advantages of Incumbency 194\u003c\/p\u003e \u003cp\u003eBarriers to Exit 195\u003c\/p\u003e \u003cp\u003eEntry-Deterring Strategies 196\u003c\/p\u003e \u003cp\u003eLimit Pricing 196\u003c\/p\u003e \u003cp\u003eIs Strategic Limit Pricing Rational? 198\u003c\/p\u003e \u003cp\u003ePredatory Pricing 200\u003c\/p\u003e \u003cp\u003eThe Chain-Store Paradox 200\u003c\/p\u003e \u003cp\u003eRescuing Limit Pricing and Predation: The Importance of Uncertainty and Reputation 202\u003c\/p\u003e \u003cp\u003eWars of Attrition 203\u003c\/p\u003e \u003cp\u003ePredation and Capacity Expansion 204\u003c\/p\u003e \u003cp\u003eStrategic Bundling 205\u003c\/p\u003e \u003cp\u003e“Judo Economics” 206\u003c\/p\u003e \u003cp\u003eEvidence on Entry-Deterring Behavior 207\u003c\/p\u003e \u003cp\u003eContestable Markets 208\u003c\/p\u003e \u003cp\u003eAn Entry Deterrence Checklist 208\u003c\/p\u003e \u003cp\u003eEntering a New Market 208\u003c\/p\u003e \u003cp\u003ePreemptive Entry and Rent-Seeking Behavior 210\u003c\/p\u003e \u003cp\u003eChapter Summary 211\u003c\/p\u003e \u003cp\u003eQuestions 212\u003c\/p\u003e \u003cp\u003eEndnotes 213\u003c\/p\u003e \u003cp\u003e\u003cb\u003e7 Dynamics: Competing Across Time 214\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eMicrodynamics 215\u003c\/p\u003e \u003cp\u003eThe Strategic Benefits of Commitment 215\u003c\/p\u003e \u003cp\u003eStrategic Substitutes and Strategic Complements 216\u003c\/p\u003e \u003cp\u003eThe Strategic Effect of Commitments 217\u003c\/p\u003e \u003cp\u003eTough and Soft Commitments 219\u003c\/p\u003e \u003cp\u003eA Taxonomy of Commitment Strategies 219\u003c\/p\u003e \u003cp\u003eThe Informational Benefits of Flexibility 220\u003c\/p\u003e \u003cp\u003eReal Options 222\u003c\/p\u003e \u003cp\u003eA Framework for Analyzing Commitments 223\u003c\/p\u003e \u003cp\u003eCompetitive Discipline 224\u003c\/p\u003e \u003cp\u003eDynamic Pricing Rivalry and Tit-for-Tat Pricing 225\u003c\/p\u003e \u003cp\u003eWhy is Tit-for-Tat So Compelling? 227\u003c\/p\u003e \u003cp\u003eCoordinating on the Right Price 227\u003c\/p\u003e \u003cp\u003eImpediments to Coordination 229\u003c\/p\u003e \u003cp\u003eThe Misread Problem 229\u003c\/p\u003e \u003cp\u003eLumpiness of Orders 230\u003c\/p\u003e \u003cp\u003eInformation about the Sales Transaction 231\u003c\/p\u003e \u003cp\u003eVolatility of Demand Conditions 231\u003c\/p\u003e \u003cp\u003eAsymmetries among Firms and the Sustainability of Cooperative Prices 232\u003c\/p\u003e \u003cp\u003ePrice Sensitivity of Buyers and the Sustainability of Cooperative Pricing 233\u003c\/p\u003e \u003cp\u003eMarket Structure and the Sustainability of Cooperative Pricing: Summary 233\u003c\/p\u003e \u003cp\u003eFacilitating Practices 234\u003c\/p\u003e \u003cp\u003ePrice Leadership 234\u003c\/p\u003e \u003cp\u003eAdvance Announcement of Price Changes 234\u003c\/p\u003e \u003cp\u003eMost Favored Customer Clauses 234\u003c\/p\u003e \u003cp\u003eUniform Delivered Prices 236\u003c\/p\u003e \u003cp\u003eWhere Does Market Structure Come From? 237\u003c\/p\u003e \u003cp\u003eSutton’s Endogenous Sunk Costs 238\u003c\/p\u003e \u003cp\u003eInnovation and Market Evolution 240\u003c\/p\u003e \u003cp\u003eLearning and Industry Dynamics 241\u003c\/p\u003e \u003cp\u003eChapter Summary 241\u003c\/p\u003e \u003cp\u003eQuestions 242\u003c\/p\u003e \u003cp\u003eEndnotes 244\u003c\/p\u003e \u003cp\u003e\u003cb\u003e8 Industry Analysis 247\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003ePerforming a Five-Forces Analysis 248\u003c\/p\u003e \u003cp\u003eInternal Rivalry 249\u003c\/p\u003e \u003cp\u003eEntry 250\u003c\/p\u003e \u003cp\u003eSubstitutes and Complements 251\u003c\/p\u003e \u003cp\u003eSupplier Power and Buyer Power 251\u003c\/p\u003e \u003cp\u003eStrategies for Coping with the Five Forces 252\u003c\/p\u003e \u003cp\u003eCoopetition and the Value Net 253\u003c\/p\u003e \u003cp\u003eApplying the Five Forces: Some Industry Analyses 255\u003c\/p\u003e \u003cp\u003eChicago Hospital Markets Then and Now 255\u003c\/p\u003e \u003cp\u003eMarket Definition 255\u003c\/p\u003e \u003cp\u003eInternal Rivalry 255\u003c\/p\u003e \u003cp\u003eEntry 256\u003c\/p\u003e \u003cp\u003eSubstitutes and Complements 257\u003c\/p\u003e \u003cp\u003eSupplier Power 257\u003c\/p\u003e \u003cp\u003eBuyer Power 258\u003c\/p\u003e \u003cp\u003eCommercial Airframe Manufacturing 259\u003c\/p\u003e \u003cp\u003eMarket Definition 259\u003c\/p\u003e \u003cp\u003eInternal Rivalry 259\u003c\/p\u003e \u003cp\u003eBarriers to Entry 260\u003c\/p\u003e \u003cp\u003eSubstitutes and Complements 261\u003c\/p\u003e \u003cp\u003eSupplier Power 261\u003c\/p\u003e \u003cp\u003eBuyer Power 262\u003c\/p\u003e \u003cp\u003eProfessional Sports 262\u003c\/p\u003e \u003cp\u003eMarket Definition 262\u003c\/p\u003e \u003cp\u003eInternal Rivalry 262\u003c\/p\u003e \u003cp\u003eEntry 264\u003c\/p\u003e \u003cp\u003eSubstitutes and Complements 266\u003c\/p\u003e \u003cp\u003eSupplier Power 267\u003c\/p\u003e \u003cp\u003eBuyer Power 267\u003c\/p\u003e \u003cp\u003eConclusion 267\u003c\/p\u003e \u003cp\u003eProfessional Search Firms 268\u003c\/p\u003e \u003cp\u003eMarket Definition 268\u003c\/p\u003e \u003cp\u003eInternal Rivalry 268\u003c\/p\u003e \u003cp\u003eEntry 269\u003c\/p\u003e \u003cp\u003eSubstitutes and Complements 269\u003c\/p\u003e \u003cp\u003eSupplier Power 270\u003c\/p\u003e \u003cp\u003eBuyer Power 270\u003c\/p\u003e \u003cp\u003eConclusion 270\u003c\/p\u003e \u003cp\u003eChapter Summary 271\u003c\/p\u003e \u003cp\u003eQuestions 271\u003c\/p\u003e \u003cp\u003eEndnotes 275\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart Three Strategic Position and Dynamics 277\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003e9 Strategic Positioning For Competitive Advantage 279\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eCompetitive Advantage and Value Creation: Conceptual Foundations 280\u003c\/p\u003e \u003cp\u003eCompetitive Advantage Defined 280\u003c\/p\u003e \u003cp\u003eMaximum Willingness-to-Pay and Consumer Surplus 281\u003c\/p\u003e \u003cp\u003eFrom Maximum Willingness-to-Pay to Consumer Surplus 282\u003c\/p\u003e \u003cp\u003eValue-Created 284\u003c\/p\u003e \u003cp\u003eValue Creation and “Win–Win” Business Opportunities 287\u003c\/p\u003e \u003cp\u003eValue Creation and Competitive Advantage 288\u003c\/p\u003e \u003cp\u003eAnalyzing Value Creation 288\u003c\/p\u003e \u003cp\u003eValue Creation and the Value Chain 292\u003c\/p\u003e \u003cp\u003eValue Creation, Resources, and Capabilities 292\u003c\/p\u003e \u003cp\u003eStrategic Positioning: Cost Advantage and Benefit Advantage 296\u003c\/p\u003e \u003cp\u003eGeneric Strategies 296\u003c\/p\u003e \u003cp\u003eThe Strategic Logic of Cost Leadership 296\u003c\/p\u003e \u003cp\u003eThe Strategic Logic of Benefit Leadership 298\u003c\/p\u003e \u003cp\u003eExtracting Profits from Cost and Benefit Advantage 301\u003c\/p\u003e \u003cp\u003eComparing Cost and Benefit Advantages 302\u003c\/p\u003e \u003cp\u003e“Stuck in the Middle” 304\u003c\/p\u003e \u003cp\u003eDiagnosing Cost and Benefit Drivers 306\u003c\/p\u003e \u003cp\u003eCost Drivers 306\u003c\/p\u003e \u003cp\u003eCost Drivers Related to Firm Size, Scope, and Cumulative Experience 307\u003c\/p\u003e \u003cp\u003eCost Drivers Independent of Firm Size, Scope, or Cumulative Experience 307\u003c\/p\u003e \u003cp\u003eCost Drivers Related to Organization of the Transactions 308\u003c\/p\u003e \u003cp\u003eBenefit Drivers 308\u003c\/p\u003e \u003cp\u003eMethods for Estimating and Characterizing Costs and Perceived Benefits 309\u003c\/p\u003e \u003cp\u003eEstimating Costs 309\u003c\/p\u003e \u003cp\u003eEstimating Benefits 310\u003c\/p\u003e \u003cp\u003eStrategic Positioning: Broad Coverage versus Focus Strategies 310\u003c\/p\u003e \u003cp\u003eSegmenting an Industry 310\u003c\/p\u003e \u003cp\u003eBroad Coverage Strategies 311\u003c\/p\u003e \u003cp\u003eFocus Strategies 312\u003c\/p\u003e \u003cp\u003eChapter Summary 314\u003c\/p\u003e \u003cp\u003eQuestions 315\u003c\/p\u003e \u003cp\u003eEndnotes 318\u003c\/p\u003e \u003cp\u003e\u003cb\u003e10 Information and Value Creation 320\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eThe “Shopping Problem” 321\u003c\/p\u003e \u003cp\u003eUnraveling 322\u003c\/p\u003e \u003cp\u003eAlternatives to Disclosure 323\u003c\/p\u003e \u003cp\u003eNonprofit Firms 327\u003c\/p\u003e \u003cp\u003eReport Cards 327\u003c\/p\u003e \u003cp\u003eMultitasking: Teaching to the Test 328\u003c\/p\u003e \u003cp\u003eWhat to Measure 331\u003c\/p\u003e \u003cp\u003eRisk Adjustment 335\u003c\/p\u003e \u003cp\u003ePresenting Report Card Results 336\u003c\/p\u003e \u003cp\u003eGaming Report Cards 337\u003c\/p\u003e \u003cp\u003eThe Certifier Market 339\u003c\/p\u003e \u003cp\u003eCertification Bias 340\u003c\/p\u003e \u003cp\u003eMatchmaking 342\u003c\/p\u003e \u003cp\u003eWhen Sellers Search for Buyers 343\u003c\/p\u003e \u003cp\u003eChapter Summary 345\u003c\/p\u003e \u003cp\u003eQuestions 346\u003c\/p\u003e \u003cp\u003eEndnotes 347\u003c\/p\u003e \u003cp\u003e\u003cb\u003e11 Sustaining Competitive Advantage 349\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eMarket Structure and Threats to Sustainability 349\u003c\/p\u003e \u003cp\u003eThreats to Sustainability in Competitive and Monopolistically Competitive Markets 350\u003c\/p\u003e \u003cp\u003eThreats to Sustainability under All Market Structures 351\u003c\/p\u003e \u003cp\u003eEvidence: The Persistence of Profitability 351\u003c\/p\u003e \u003cp\u003eThe Resource-Based Theory of the Firm 353\u003c\/p\u003e \u003cp\u003eImperfect Mobility and Cospecialization 353\u003c\/p\u003e \u003cp\u003eIsolating Mechanisms 355\u003c\/p\u003e \u003cp\u003eImpediments to Imitation 358\u003c\/p\u003e \u003cp\u003eLegal Restrictions 358\u003c\/p\u003e \u003cp\u003eSuperior Access to Inputs or Customers 359\u003c\/p\u003e \u003cp\u003eThe Winner’s Curse 361\u003c\/p\u003e \u003cp\u003eMarket Size and Scale Economies 361\u003c\/p\u003e \u003cp\u003eIntangible Barriers to Imitation 362\u003c\/p\u003e \u003cp\u003eCausal Ambiguity 363\u003c\/p\u003e \u003cp\u003eDependence on Historical Circumstances 363\u003c\/p\u003e \u003cp\u003eSocial Complexity 363\u003c\/p\u003e \u003cp\u003eEarly-Mover Advantages 364\u003c\/p\u003e \u003cp\u003eLearning Curve 364\u003c\/p\u003e \u003cp\u003eReputation and Buyer Uncertainty 364\u003c\/p\u003e \u003cp\u003eBuyer Switching Costs 364\u003c\/p\u003e \u003cp\u003eNetwork Effects 365\u003c\/p\u003e \u003cp\u003eNetworks and Standards 365\u003c\/p\u003e \u003cp\u003eCompeting “For the Market” versus “In the Market” 366\u003c\/p\u003e \u003cp\u003eKnocking Off a Dominant Standard 367\u003c\/p\u003e \u003cp\u003eEarly-Mover Disadvantages 367\u003c\/p\u003e \u003cp\u003eImperfect Imitability and Industry Equilibrium 368\u003c\/p\u003e \u003cp\u003eCreating Advantage and Creative Destruction 370\u003c\/p\u003e \u003cp\u003eDisruptive Technologies 370\u003c\/p\u003e \u003cp\u003eThe Productivity Effect 371\u003c\/p\u003e \u003cp\u003eThe Sunk Cost Effect 371\u003c\/p\u003e \u003cp\u003eThe Replacement Effect 372\u003c\/p\u003e \u003cp\u003eThe Efficiency Effect 372\u003c\/p\u003e \u003cp\u003eDisruption versus the Resource-Based Theory of the Firm 373\u003c\/p\u003e \u003cp\u003eInnovation and the Market for Ideas 373\u003c\/p\u003e \u003cp\u003eEvolutionary Economics and Dynamic Capabilities 375\u003c\/p\u003e \u003cp\u003eThe Environment 376\u003c\/p\u003e \u003cp\u003eFactor Conditions 376\u003c\/p\u003e \u003cp\u003eDemand Conditions 376\u003c\/p\u003e \u003cp\u003eRelated Supplier or Support Industries 376\u003c\/p\u003e \u003cp\u003eStrategy, Structure, and Rivalry 378\u003c\/p\u003e \u003cp\u003eChapter Summary 378\u003c\/p\u003e \u003cp\u003eQuestions 379\u003c\/p\u003e \u003cp\u003eEndnotes 381\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart Four Internal Organization 383\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003e12 Performance Measurement and Incentives 385\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eThe Principal–Agent Relationship 386\u003c\/p\u003e \u003cp\u003eCombating Agency Problems 386\u003c\/p\u003e \u003cp\u003ePerformance-Based Incentives 388\u003c\/p\u003e \u003cp\u003eProblems with Performance-Based Incentives 393\u003c\/p\u003e \u003cp\u003ePreferences over Risky Outcomes 393\u003c\/p\u003e \u003cp\u003eRisk Sharing 394\u003c\/p\u003e \u003cp\u003eRisk and Incentives 396\u003c\/p\u003e \u003cp\u003ePerformance Measures That Fail to Reflect All Desired Actions 399\u003c\/p\u003e \u003cp\u003eSelecting Performance Measures: Managing Trade-offs between Costs 401\u003c\/p\u003e \u003cp\u003eDo Pay-for-Performance Incentives Work? 404\u003c\/p\u003e \u003cp\u003eImplicit Incentive Contracts 405\u003c\/p\u003e \u003cp\u003eSubjective Performance Evaluation 405\u003c\/p\u003e \u003cp\u003ePromotion Tournaments 406\u003c\/p\u003e \u003cp\u003eEfficiency Wages and the Threat of Termination 409\u003c\/p\u003e \u003cp\u003eIncentives in Teams 410\u003c\/p\u003e \u003cp\u003eChapter Summary 413\u003c\/p\u003e \u003cp\u003eQuestions 414\u003c\/p\u003e \u003cp\u003eEndnotes 416\u003c\/p\u003e \u003cp\u003e\u003cb\u003e13 Strategy and Structure 419\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eAn Introduction to Structure 421\u003c\/p\u003e \u003cp\u003eIndividuals, Teams, and Hierarchies 421\u003c\/p\u003e \u003cp\u003eComplex Hierarchy 424\u003c\/p\u003e \u003cp\u003eDepartmentalization 424\u003c\/p\u003e \u003cp\u003eCoordination and Control 426\u003c\/p\u003e \u003cp\u003eApproaches to Coordination 428\u003c\/p\u003e \u003cp\u003eTypes of Organizational Structures 431\u003c\/p\u003e \u003cp\u003eFunctional Structure (U-form) 431\u003c\/p\u003e \u003cp\u003eMultidivisional Structure (M-form) 433\u003c\/p\u003e \u003cp\u003eMatrix Structure 434\u003c\/p\u003e \u003cp\u003eMatrix or Division? A Model of Optimal Structure 435\u003c\/p\u003e \u003cp\u003eNetwork Structure 436\u003c\/p\u003e \u003cp\u003eWhy Are There So Few Structural Types? 438\u003c\/p\u003e \u003cp\u003eStrategy-Environment Coherence 439\u003c\/p\u003e \u003cp\u003eTechnology and Task Interdependence 440\u003c\/p\u003e \u003cp\u003eInformation Processing 442\u003c\/p\u003e \u003cp\u003eStructure Follows Strategy 443\u003c\/p\u003e \u003cp\u003eStrategy, Structure, and the Multinational Firm 445\u003c\/p\u003e \u003cp\u003eHybrid Organizations 449\u003c\/p\u003e \u003cp\u003eChapter Summary 451\u003c\/p\u003e \u003cp\u003eQuestions 452\u003c\/p\u003e \u003cp\u003eEndnotes 453\u003c\/p\u003e \u003cp\u003e\u003cb\u003e14 Environment, Power, and Culture 456\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eThe Social Context of Firm Behavior 456\u003c\/p\u003e \u003cp\u003eInternal Context 458\u003c\/p\u003e \u003cp\u003ePower 459\u003c\/p\u003e \u003cp\u003eThe Sources of Power 460\u003c\/p\u003e \u003cp\u003eStructural Views of Power 463\u003c\/p\u003e \u003cp\u003eDo Successful Organizations Need Powerful Managers? 464\u003c\/p\u003e \u003cp\u003eThe Decision to Allocate Formal Power to Individuals 466\u003c\/p\u003e \u003cp\u003eCulture 468\u003c\/p\u003e \u003cp\u003eCulture Complements Formal Controls 470\u003c\/p\u003e \u003cp\u003eCulture Facilitates Cooperation and Reduces Bargaining Costs 471\u003c\/p\u003e \u003cp\u003eCulture, Inertia, and Performance 472\u003c\/p\u003e \u003cp\u003eA Word of Caution about Culture 473\u003c\/p\u003e \u003cp\u003eExternal Context, Institutions, and Strategies 474\u003c\/p\u003e \u003cp\u003eInstitutions and Regulation 477\u003c\/p\u003e \u003cp\u003eInterfirm Resource Dependence Relationships 478\u003c\/p\u003e \u003cp\u003eIndustry Logics: Beliefs, Values, and Behavioral Norms 481\u003c\/p\u003e \u003cp\u003eChapter Summary 483\u003c\/p\u003e \u003cp\u003eQuestions 484\u003c\/p\u003e \u003cp\u003eEndnotes 485\u003c\/p\u003e \u003cp\u003eGlossary 488\u003c\/p\u003e \u003cp\u003eName Index •••\u003c\/p\u003e \u003cp\u003eSubject Index •••\u003c\/p\u003e \u003cp\u003e\u003cb\u003eDavid Dranove\u003c\/b\u003e is the Walter McNerney Distinguished Professor of Health Industry Management at Northwestern University's Kellogg School of Management, where he is also Professor of Strategy. He was previously Director of the Health Enterprise Management program. He has a PhD in Economics from Stanford University.\u003cbr\u003eProfessor Dranove's research focuses on problems in industrial organization and business strategy with an emphasis on the health care industry. He has published nearly 100 research articles and book chapters and written five books, including \u003ci\u003eThe Economic Evolution of American Healthcare and Code Red\u003c\/i\u003e. His textbook, \u003ci\u003eThe Economics of Strategy\u003c\/i\u003e, is used by leading business schools around the world. Professor Dranove regularly consults with leading healthcare organizations in the public and private sector and has served on the Executive Committee and Board of Directors of the Health Care Cost Institute. He has also served as an economics expert in several high profile healthcare antitrust cases.\u003c\/p\u003e","brand":"Wiley","offers":[{"title":"Default Title","offer_id":47989102510309,"sku":"NP9781119042310","price":111.0,"currency_code":"USD","in_stock":false}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/1842\/7735\/files\/9781119042310.jpg?v=1761782805","url":"https:\/\/k12savings.com\/es\/products\/economics-of-strategy-isbn-9781119042310","provider":"K12savings","version":"1.0","type":"link"}