Competitive Intelligence Dr. Richard Michon TRSM 1-040 [email protected] rmichon/mkt731.
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Transcript of Competitive Intelligence Dr. Richard Michon TRSM 1-040 [email protected] rmichon/mkt731.
Scope of this Course Michael Porter Business economics Economic reasoning underneath
business strategy
Is this course matching your personal motivations?
Intellectual curiosity Abstract concepts Quantitative reasoning
Paris Hilton would not do well in this class
Is this course matching your student motivations? Minor or Major?
Motivation to workand learn
“A” students?
Students only doing time at Ryerson do not do well in this class
Grading
D- D D+ C- C C+ B- B B+ A- A A+
Is this course matching your professional motivations?
Will not bring you practical hands-on job skills
Will give you business insight
Will make you look more intelligent and help you make your way around as a smart kid!
Course Framework Cost, Pricing, and Value
Sustainable advantage
Understanding the industry structure and competitors’ behaviour
Course Content (1) Part 1: Firm Boundaries
Microeconomics (2) Economies of scale and scope (3) Vertical integration & diversification (4)
Part 2: Market and Competitive Analysis Competition and Competitors (5) Competition, strategic commitment, and dynamic
pricing strategy (7) Industry analysis (8)
Course Content (2) Part 3:Strategic Positioning and Dynamics Positioning for competitive advantage (9) Sustaining Competitive Advantage (10)
Part 4: Internal Organization Structure, culture and strategy (11) Markstrat wrap-up (12)
Course material David Besanko, David Dranove, Mark Shanley, Scott
Schaefer, Economics of Strategy, 6th Edition, Wiley, 2013 $141 (Binder) or $69 (e-book)
Markstrat online license and manual (60 USD)Purchase: www.stratxstore.com
Additional readings are posted on the website
Course evaluation Three quizzes out of four (individual) 15% Midterm exam 20% Markstrat Simulation 35%
Markstrat industry simulation (group) 15% One Markstrat industry analysis report (group) 10% Markstrat peer evaluation (individual) 10%
Final Exam (cumulative, must pass) 30%
100%
Enduring Principles
“He who loves practice without theory is like the sailor who boards ship without a rudder and compass and never knows where he may cast.”
Leonardo da Vinci
Enduring Principles "Theory without practice is empty;
Practice without theory is blind."--Immanuel Kant
"Practice without Theory is blind,Theory without practice is sterile"-- Karl Marx
"Practice without theory is dangerous, but theory without practice is madness".--Mao-Tse-Tung
Evolution of the Modern Firm Strategy = f (Business Conditions, Industry
structure, Monopoly Power)
Business Condition = f (Country’s Infrastructure, Technology, Governments)
Infrastructures = f (Transportation, Communications, Finance, Institution)
1840… Infrastructure (Lack of …)
Transport: Sea, Rail, Waterways (Canada and US) Communications: Mail, Telegraph, No market info. Finance: Small private banks, No asset financing, No spot
markets
Technology: Artisan, piecemeal production
Governments: Investments, lack of laws and regulations
Firms: Small, local, family owned & operatedProducer-Merchants-Brokers-Agents-Buyers
The Chicago Hub
1910… Infrastructure (Transaction efficiencies)
Transport: Efficient rail/waterways Logistics Communications: Telephone Finance: Investment bankers, accounting practices (i.e.
financial reporting and inventory turnovers), stock exchanges
Technology: Large throughputs, Economies of scale and scope (ROI), Office efficiency
Gov: Safety, antitrust, insurance, regulations
Firms: Some small, some large, professional managers, hierarchical organizational structures, vertical integration.
Yesterday… 1980s Infrastructure
Transport: Air and ground (multi-modal) Communications: EDI, IT and Web based Finance: Financial instruments, LBO, mergers
Technology: CAD and CAM, JIT tech and logistics
Government: Relaxed rules, support R&D & industrial clusters
Firms: Large conglomerates and portfolio holdings, diversifications
Today… 2010s Infrastructure
Transport: Air and ground (multi-modal) (global warming/costs) Communication: EDI, IT and Web based, Web 2.0 (Social Mkt) Finance: Collapse of institutions, credit crunch, ethics and governance
Technology: CAD and CAM, JIT tech and logistics,turnaround cycles, short runs, small volumes
Government: Tightening rules, re-invest in infrastructures, social programs
Firms: Downsizing (lean and mean), back to their knitting, focusing on core activities, outsourcing the rest, networking, flat structure, virtual organizations, governance
Learning Strategies Adaptive responses to the
environment and competition Following recipes Failures Principles are universal
Infrastructures drive businesses Large upfront investments Cost advantages only if
large throughputs Microeconomics theory
Applications are localized Distribution chains (short or long) Vertical integration or quasi integration Functions remain the same but can be performed by
different players.
Next Week, for Survivors
Microeconomic Primer Demand and cost functions
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