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The Economist’s view
Structure Conduct Performance Equilibrium
The Strategist’s view
Conduct Structure Performance Competitive
advantage
Two views on Firm Behaviour
Rule makers or BaronsLargest and most profitable: GE, Toyota, Apple, Vodaphone
Rule takers or Serfs
Smaller and less profitable: Suzuki, Volvo
Rule breakers or revolutionaries
Initially small rebels who wreck the rules: Ryanair, Amazon
Source: Hamel and Prahalad
How firms influence industry structures
Strategic Administrative Operational
Whole firm Department wide
Long run < 1 year
Highest level Department Level
Fixed Assets Current Assets
Difficult to reverse Easily changed
Very risky Low risk
Visionary No vision
Infrequent Frequent
Unique Repetitive
Characteristics of firms’ decisions
Key Where managers spend time
Examples of Strategic Decisions
Characteristic Example
Scope Whole firm: Disney
Time span Long run: BP
Level Highest - iPhone
Assets used Large and fixed: Airbus
Reversability Difficult: Channel Tunnel
Riskiness High: Bet the firm:Boeing
Visionary Yes: iPhone
Frequency Rare: Takeover:PayPal
Uniqueness Yes: Spotify