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Competitive Intelligence

Competitive Intelligence. Dr. Richard Michon TRSM 1-040 rmichon@ryerson.ca www.ryerson.ca/~rmichon/mkt731. Scope of this Course. Michael Porter Business economics Economic reasoning underneath business strategy. Is this course matching your personal motivations?. Intellectual curiosity

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Competitive Intelligence

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  1. Competitive Intelligence Dr. Richard Michon TRSM 1-040 rmichon@ryerson.ca www.ryerson.ca/~rmichon/mkt731

  2. Scope of this Course • Michael Porter • Business economics • Economic reasoning underneath business strategy

  3. Is this course matching your personal motivations? • Intellectual curiosity • Abstract concepts • Quantitative reasoning Paris Hilton would not do well in this class

  4. Is this course matching your student motivations? • Minor or Major? • Motivation to workand learn • “A” students? Students only doing time at Ryerson do not do well in this class

  5. Grading D- D D+ C- C C+ B- B B+ A- A A+

  6. Is this course matching your professional motivations? • Will not bring you practical hands-on job skills • Will give you business insight • Will make you look more intelligent and help you make your way around as a smart kid!

  7. Course Framework • Cost, Pricing, and Value • Sustainable advantage • Understanding the industry structure and competitors’ behaviour

  8. Course Content (1) • Part 1: Firm Boundaries • Microeconomics (2) • Economies of scale and scope (3) • Vertical integration & diversification (4) • Part 2: Market and Competitive Analysis • Competition and Competitors (5) • Competition, strategic commitment, and dynamic pricing strategy (7) • Industry analysis (8)

  9. Course Content (2) • Part 3:Strategic Positioning and Dynamics • Positioning for competitive advantage (9) • Sustaining Competitive Advantage (10) • Part 4: Internal Organization • Structure, culture and strategy (11) • Markstrat wrap-up (12)

  10. Course material • David Besanko, David Dranove, Mark Shanley, Scott Schaefer, Economics of Strategy, 6th Edition, Wiley, 2013 $141 (Binder) or $69 (e-book) • Markstrat online license and manual (60 USD)Purchase: www.stratxstore.com • Additional readings are posted on the website

  11. Course evaluation • Three quizzes out of four (individual) 15% • Midterm exam 20% • Markstrat Simulation 35% • Markstrat industry simulation (group) 15% • One Markstrat industry analysis report (group) 10% • Markstrat peer evaluation (individual) 10% • Final Exam (cumulative, must pass) 30% 100%

  12. Enduring Principles “He who loves practice without theory is like the sailor who boards ship without a rudder and compass and never knows where he may cast.” Leonardo da Vinci

  13. Enduring Principles • "Theory without practice is empty;Practice without theory is blind."--Immanuel Kant • "Practice without Theory is blind,Theory without practice is sterile"-- Karl Marx • "Practice without theory is dangerous, but theory without practice is madness".--Mao-Tse-Tung

  14. Evolution of the Modern Firm • Strategy = f (Business Conditions, Industry structure, Monopoly Power) • Business Condition = f (Country’s Infrastructure, Technology, Governments) • Infrastructures = f (Transportation, Communications, Finance, Institution)

  15. 1840… • Infrastructure (Lack of …) • Transport: Sea, Rail, Waterways (Canada and US) • Communications: Mail, Telegraph, No market info. • Finance: Small private banks, No asset financing, No spot markets • Technology: Artisan, piecemeal production • Governments: Investments, lack of laws and regulations • Firms: Small, local, family owned & operatedProducer-Merchants-Brokers-Agents-Buyers

  16. The Chicago Hub

  17. 1910… • Infrastructure (Transaction efficiencies) • Transport: Efficient rail/waterways  Logistics • Communications: Telephone • Finance: Investment bankers, accounting practices (i.e. financial reporting and inventory turnovers), stock exchanges • Technology: Large throughputs, Economies of scale and scope (ROI), Office efficiency • Gov: Safety, antitrust, insurance, regulations • Firms: Some small, some large, professional managers, hierarchical organizational structures, vertical integration.

  18. Yesterday… 1980s • Infrastructure • Transport: Air and ground (multi-modal) • Communications: EDI, IT and Web based • Finance: Financial instruments, LBO, mergers • Technology: CAD and CAM, JIT tech and logistics • Government: Relaxed rules, support R&D & industrial clusters • Firms: Large conglomerates and portfolio holdings, diversifications

  19. Today… 2010s • Infrastructure • Transport: Air and ground (multi-modal) (global warming/costs) • Communication: EDI, IT and Web based, Web 2.0 (Social Mkt) • Finance: Collapse of institutions, credit crunch, ethics and governance • Technology: CAD and CAM, JIT tech and logistics,turnaround cycles, short runs, small volumes • Government: Tightening rules, re-invest in infrastructures, social programs • Firms: Downsizing (lean and mean), back to their knitting, focusing on core activities, outsourcing the rest, networking, flat structure, virtual organizations, governance

  20. Learning • Strategies  Adaptive responses to the environment and competition • Following recipes  Failures • Principles are universal • Infrastructures drive businesses • Large upfront investments  Cost advantages only if large throughputs • Microeconomics theory • Applications are localized  • Distribution chains (short or long) • Vertical integration or quasi integration • Functions remain the same but can be performed by different players.

  21. Next Week, for Survivors • Microeconomic Primer • Demand and cost functions • More on Markstrat

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