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Competition and Business Strategy in Historical PerspectiveA review and critique of importantstrategy tools, concepts and research Learning Objectives Develop familiarity with previous tools & techniques Discuss strategy implications of Experience Curve Discuss strategy implications of Growth-Share Matrix Understand historical importance of 5-Forces model Determine if new tools are fashion or fact
Historical Background • First Industrial Revolution (mid-1700s to mid-1800s) • Second Industrial Revolution (from mid 1800s) • 1920s – Learning curve • 1930s – “Structure v. Strategy Debate” • 1950s – (HBS) matching strategy to competitive environment • 1960s – SWOT analysis, age of consumerism / branding • 1970s – Rise of strategy consulting firms, “oil shocks” 73 & 79 • 1980 – Porter’s book “Competitive Strategy” released (“extended competition”) • 1980s – TQM, quality circles, teamwork, re-engineering • 1990s – Value Net • 2000s – Dynamic models
Tools of the Strategy Consulting Firms:“Powerful Oversimplifications” • BCG – Experience curve • BCG – Growth Share Matrix • McKinsey & Company – Strategic Business Units (SBUs) • McKinsey & Company – Industry Attractiveness / Business strength matrix • Michael Porter – Five Forces Model • Brandenburg and Nalebuff – Value Net How does your firm accomplish strategic management ?
Unit Cost Cumulative Production Boston Consulting GroupExperience Curve Strategy Implications ?Why might this relationship fail to hold ?
Boston Consulting GroupGrowth Share Matrix Strategy Implications ?
McKinsey & Company – Industry Attractiveness / Business Strength Matrix Improvement(s) over BCG Growth Share Matrix ?
Suppliers New Entrants Rivalry Substitutes Buyers Michael Porter – Five Forces Model How well has this important theory been tested ? Used in your business ?
Brandenburg and NalebuffValue Net Customers Competitors Company Complementors Suppliers How does this differ from the Five-Forces model ?
Current Directions in Strategy Research:Dynamics of Competition • Game Theory • Payoffs are interdependent • Valid criticisms ? • Resource Based View • Unique historical conditions • Causal ambiguity • Social complexity • Dynamic Capabilities • Capabilities are “developed” • Commitment • Firms make resource commitments that are not easily bought or sold