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Economics of Strategy 3rd Edition
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Top Customer Reviews
But some sections contain high fog counts and complicated discussions to describe relatively simple concepts.
Some of the examples offered as proof of theory seem forced. Instead of proving the theory, they show that other (undiscussed) strategic influences are at work. While expanded awareness is definitely a good thing, such examples tend to undermine the theories they purport to prove.
The text recapitulates the key tools of micreconomic theory in a masterful introductory chapter which covers cost theory and game theory. The rest of the book is structured around the four classes of issues which the authors see as the essence of strategic analysis: firm boundaries, market and competitive analysis, position and dynamics, and internal organization.
The text is full of excellent examples and mini case studies from a wide range of industries.
I have not found it easy to find many other texts which achieve this balance of analytical rigor and practical business-oriented empirical focus.
As discussed earlier, an important cost excluded from a firm's
accounting costs is the opportunity cost of its capital assets, such
as its plant and equipment. When a firm's accounting earnings do not
cover this opportunity cost, the firm will earn a positive accounting
profit but a negative economic profit. For example, in 2002
McDonald's had a positive accounting income of more than $2 billion,
but it had a negative economic profit of $124 million. (Table
P.3. shows McDonald's economic profit, and that for other selected
food and beverage chains, between 1997 and 2004.) What does this
negative $124 million mean? Just as with the owner of our software
firm, a negative accounting profit indicates that McDonald's assets,
when liquidated and deployed elsewhere, would have earned $124 million
more in income for its owners than McDonald's earned in 2002. In this
sense, in 2002 McDonald's "destroyed" $124 million of its owners'
wealth because its owners could have earned $124 million more that
year by deploying the funds they had invested in Starbucks in their
best alternative use. Not all firms, of course, make a negative
economic profit. In 2004, Starbucks earned an accounting profit of
slightly over $390 million and a positive economic profit of $151
million.Read more ›
The book is dense in content about strategy and economics, but I found it a little bit complicated and dry with no concerete numerical exercises. Usually, strategy and economics readings are much more engaging and mind-provoking.
I had to buy it for my Business Processes course at business school (full time MBA program).
However, this book provides a sound reasoning for every model on the basis of microeconomics. Even apparently abstract concepts like organization structure are explained on the basis of economics. I personally feel that the concepts covered in this book have been ingrained in my mind.
Most Recent Customer Reviews
I like this book! Helped me with my competitive tactics and policy classPublished 10 months ago by aog
Very good book, covers lots of interesting cases.
I read it almost as if it was a novel and not an economics book :)
This is the exact book that I was needing for my class. It was not marked up either! I Would recommend this book 2 whoever needs itPublished on October 6, 2013 by Tim
Great book. Simple and well articulated explanation of economic strategy for undergraduates. Highly recommended anyone who is interested in knowing about economic strategyPublished on October 2, 2013 by Michael Annoh
this is the basis of strategic analysis; all competitive strategy & managerial economics courses should use this book as the fundamental theory book. Read morePublished on August 26, 2013 by Abhijit
This is a great book for the management strategy class that I am taking. I am planning on keeping the book for future reference as well.Published on July 21, 2013 by Smajil
This was a required text for my MBA glass. Very intuitive and helpful. Received my book in only 4 days. Very happy with this book and shipper.Published on March 15, 2013 by Melissa Fontenot