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Book chapter
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Reference no. MHE0155BC
Authors: Sean Rickard
Chapter from: "The Economics of Organizations and Strategy"
Published by: McGraw Hill Education
Published in: 2006

Abstract

Chapter 8. Most economic textbooks, even when titled business or management economies, are not sufficiently focused on the realities of business life to catch the imagination of students planning a career in business. The traditional approach is to slavishly set out highly theoretical models, which assume away many of the problems and issues that those working in business encounter in practice. Change is gathering pace and within business schools economics is increasingly being taught from the perspective of business needs. There are now a few textbooks that explicitly place the teaching of strategy and organizational efficiency within the framework of industrial economics. But, they primarily focus on either strategy or organizational efficiency: bringing the two pillars of competitive advantage together within an industrial economics framework is rare. In the view of this author, it is not sensible to separate an examination of strategic behaviour from an examination of the way firms develop and utilize their resources. In addition to explicitly combining the study of strategy and organizational efficiency within an industrial economics framework, there is also a need to present the learning in ways that are accessible. For students lacking a degree in economics, this requires an emphasis on narrative and diagrams to augment a modest resort to formulae. This book is differentiated by its range and treatment of topics. Its value to business students is that, within its covers a very wide range of key business topics of direct relevance to organizational efficiency and strategy are explained and demonstrated. Each chapter includes a summary of key learning points, student exercises and references. In this chapter, we focus on a firm''s proximate environment; what might be described as the terrain upon which firms develop and play out the strategic rivalry that will be the subject of the following chapters. By absorbing the information contained in this chapter, you will: (1) be able to define seller concentration and its relationship to market structure; (2) appreciate the extent to which barriers to entry can influence market structure; and (3) understand how relationships with suppliers, customers and rivals contribute to the strategic behaviour of firms and their economic performance.

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Abstract

Chapter 8. Most economic textbooks, even when titled business or management economies, are not sufficiently focused on the realities of business life to catch the imagination of students planning a career in business. The traditional approach is to slavishly set out highly theoretical models, which assume away many of the problems and issues that those working in business encounter in practice. Change is gathering pace and within business schools economics is increasingly being taught from the perspective of business needs. There are now a few textbooks that explicitly place the teaching of strategy and organizational efficiency within the framework of industrial economics. But, they primarily focus on either strategy or organizational efficiency: bringing the two pillars of competitive advantage together within an industrial economics framework is rare. In the view of this author, it is not sensible to separate an examination of strategic behaviour from an examination of the way firms develop and utilize their resources. In addition to explicitly combining the study of strategy and organizational efficiency within an industrial economics framework, there is also a need to present the learning in ways that are accessible. For students lacking a degree in economics, this requires an emphasis on narrative and diagrams to augment a modest resort to formulae. This book is differentiated by its range and treatment of topics. Its value to business students is that, within its covers a very wide range of key business topics of direct relevance to organizational efficiency and strategy are explained and demonstrated. Each chapter includes a summary of key learning points, student exercises and references. In this chapter, we focus on a firm''s proximate environment; what might be described as the terrain upon which firms develop and play out the strategic rivalry that will be the subject of the following chapters. By absorbing the information contained in this chapter, you will: (1) be able to define seller concentration and its relationship to market structure; (2) appreciate the extent to which barriers to entry can influence market structure; and (3) understand how relationships with suppliers, customers and rivals contribute to the strategic behaviour of firms and their economic performance.

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