INTRODUCTION: STRATEGY AND ECONOMICS

Why Study Strategy?

Why Economics?

So What's the Problem?

A Framework for Strategy

The Book

Endnotes

ECONOMICS PRIMER: BASIC PRINCIPLES

Costs

Economic Costs and Profitability

Demand and Revenues

Total Revenue and Marginal Revenue Functions

Theory of the Firm: Pricing and Output Decisions

Perfect Competition

Game Theory

Chapter Summary

Questions

Endnotes

PART ONE FIRM BOUNDARIES

1 THE POWER OF PRINCIPLES: AN HISTORICAL PERSPECTIVE

Doing Business in 1840

Doing Business in 1910

Doing Business Today

Three Different Worlds: Consistent Principles, Changing Conditions, and Adaptive Strategies

Chapter Summary

Questions

Endnotes

2 THE HORIZONTAL BOUNDARIES OF THE FIRM

Definitions

Scale Economies, Indivisibilities, and the Spreading of Fixed Costs

Special Sources of Economies of Scale and Scope

Complementarities and Strategic Fit

Sources of Diseconomies of Scale

The Learning Curve

Diversification

Why Do Firms Diversify?

Managerial Reasons for Diversification

The Market for Corporate Control and Recent Changes in Corporate Governance

Performance of Diversified Firms

Chapter Summary

Questions

Endnotes

3 THE VERTICAL BOUNDARIES OF THE FIRM

Make versus Buy

Reasons to "Buy"

Reasons to "Make"

Summarizing Make-or-Buy Decisions: The Make-or-Buy Decision Tree

Chapter Summary

Questions

Endnotes

4 INTEGRATION AND ITS ALTERNATIVES

What Does It Mean to Be "Integrated"?

Governance

Making the Integration Decision

Real-World Evidence

Alternatives to Vertical Integration

Chapter Summary

Questions

Endnotes

PART TWO MARKET AND COMPETITIVE ANALYSIS

5 COMPETITORS AND COMPETITION

Competitor Identification and Market Definition

Measuring Market Structure

Market Structure and Competition

Oligopoly

Evidence on Market Structure and Performance

Chapter Summary

Questions

Endnotes

6 ENTRY AND EXIT

Some Facts about Entry and Exit

Entry and Exit Decisions: Basic Concepts

Entry-Deterring Strategies

Evidence on Entry-Deterring Behavior

Contestable Markets

An Entry Deterrence Checklist

Entering a New Market

Chapter Summary

Questions

Endnotes

7 DYNAMICS: COMPETING ACROSS TIME

Microdynamics

Impediments to Coordination

Asymmetries among Firms and the Sustainability of Cooperative Prices

Facilitating Practices

Where Does Market Structure Come From?

Sutton's Endogenous Sunk Costs

Chapter Summary

Questions

Endnotes

8 INDUSTRY ANALYSIS

Performing a Five-Forces Analysis

Coopetition and the Value Net

Applying the Five Forces: Some Industry Analyses

Chapter Summary

Questions

Endnotes

PART THREE STRATEGIC POSITION AND DYNAMICS

9 STRATEGIC POSITIONING FOR COMPETITIVE ADVANTAGE

Competitive Advantage and Value Creation: Conceptual Foundations

Strategic Positioning: Cost Advantage and Benefit Advantage

Diagnosing Cost and Benefit Drivers

Strategic Positioning: Broad Coverage versus Focus Strategies

Chapter Summary

Questions

Endnotes

10 INFORMATION AND VALUE CREATION

The "Shopping Problem"

Report Cards

The Certifier Market

Matchmaking

Chapter Summary

Questions

Endnotes

11 SUSTAINING COMPETITIVE ADVANTAGE

Market Structure and Threats to Sustainability

The Resource-Based Theory of the Firm

Impediments to Imitation

Early-Mover Advantages

Imperfect Imitability and Industry Equilibrium

Creating Advantage and Creative Destruction

Innovation and the Market for Ideas

Evolutionary Economics and Dynamic Capabilities

The Environment

Chapter Summary

Questions

Endnotes

PART FOUR INTERNAL ORGANIZATION

12 PERFORMANCE MEASUREMENT AND INCENTIVES

The Principal-Agent Relationship

Performance-Based Incentives

Problems with Performance-Based Incentives

Performance Measures That Fail to Reflect All Desired Actions

Selecting Performance Measures: Managing Trade-offs between Costs

Do Pay-for-Performance Incentives Work?

Implicit Incentive Contracts

Efficiency Wages and the Threat of Termination

Incentives in Teams

Chapter Summary

Questions

Endnotes

13 STRATEGY AND STRUCTURE

An Introduction to Structure

Types of Organizational Structures

Strategy-Environment Coherence

Structure Follows Strategy

Chapter Summary

Questions

Endnotes

14 ENVIRONMENT, POWER, AND CULTURE 456

The Social Context of Firm Behavior

Internal Context

Power

Culture

External Context, Institutions, and Strategies

Chapter Summary

Questions

Endnotes

GLOSSARY

NAME INDEX

SUBJECT INDEX