CONTENTS
PREFACE = xv
1 THE CONCEPT OF STRATEGY IN MARKETING = 1
The Laws of Physics and the Unfair Advantage = 3
The concept of Strategy = 6
BASIC STRATEGY CONCEPTS = 6
The Rules of Competitive Strategy = 13
Strategy in Economic Competition = 16
BASIC ECONOMIC COMPETITION = 16
IMPLICATIONS FOR STRATEGY = 20
A Sociobiological Model of Economic Competition = 21
NATURAL COMPETITON = 21
STRATEGIC COMPETITION = 22
Devising Strategy = 24
THE BASIC MODEL OF STRATEGY DEVELOPMENT = 24
Strategy as a Managerial Task = 30
Summary = 33
2 COMPETITIVE ADVANTAGE = 35
Value : The Basis of Economic Competition = 35
Winning in the Competition for Economic Exchange = 36
The Need for Competitive Advantage in Economic Exchange = 38
WINNING AND COMPETITIVE ADVANTAGE = 39
COMPETITIVE ADVANTAGE AND STRATEGIC ADVANTAGE = 43
The Key Competitive Product Strategies = 44
GENERIC STRATEGIES AND SUSTAINABILITY = 44
GENERIC STRATEGIES AND COMPETITIVE FORCES = 45
Overall cost leadership = 45
THE EFFECT ON COMPETITIVE FORCES = 46
THE LOW-COST PRODUCER WINS ON EFFICIENCY = 46
ACHIEVING LOW-COST PRODUCER STATUS = 47
RISKS OF A LOW-COST STRATEGY = 49
Differentiation = 50
THE EFFECT ON COMPETITIVE FORCES = 50
THE DIFFERENTIATED PRODUCER WINS IN EFFECTIVENESS = 50
ACHIEVING DIFFERENTIATION = 51
RISKS OF A DIFFERENTIATION STRATEGY = 54
Focus = 55
RISKS OF A FOCUS STRATEGY = 57
Operations and Economic Profiles of the Strategies = 57
PROFITABILITY AND THE GENERIC STRATEGIES = 58
The Importance of the Target Market = 59
ALL MARKETS ARE NOT EQUALLY ATTRACTIVE = 60
MARKET SIZE IMPORTANT = 61
Summary = 63
3 A FRAMEWORK FOR THE STRATEGIC ANALYSIS OF PRODUCTS = 65
Conceptualizing Products = 65
PRODUCTS AS PHYSICAL ACTIONS AND OBJECTS = 66
PRODUCTS AS SATISFACTION - GENERATING SYSTEMS = 67
PRODUCTS AS PSYCHOSOCIAL SYMBOLS = 68
PRODUCTS AS CAUSAL CONCEPTS = 69
PRODUCTS AS EXPERIENCES = 70
THE PRODUCT AS OFFERING = 72
PRODUCTS AS TECHNOLOGY = 75
PRODUCTS AS INVESTMENTS = 77
USING PRODUCT CONCEPTS = 77
Measuring and Mapping Value = 79
MEASURING VALUE = 80
MAPPING VALUE = 85
Product Performance and Quality Concepts = 100
QUALITY CONCEPTS = 101
SATISFACTION AND QUALITY = 105
QUALITY AND PROFITABILITY = 106
Summary = 108
4 MARKET-BASED PRODUCT CONCEPTS = 110
Raw Materials to Consumable Products = 110
Commodity/Specialty Continuum = 112
SOURCES OF MARKET POWER = 114
Product Positioning = 117
PHYSICAL PERFORMANCE POSITIONING = 118
PERCEPTUAL POSITIONING = 120
Summary = 129
5 ANALYZING PRODUCTION OPERATIONS AND COST BEHAVIOR FOR STRATEGIC DECISION MAKING = 131
Production Operations and Strategy = 132
Gaining a Strategic View of Technology = 132
SYSTEMIC INFLUENCE OF THE EPT = 133
MANAGERIAL KNOWLEDGE OF THE EPT = 134
STRATEGIC IMPLICATIONS OF THE TECHNOLOGY = 136
Value Chain Analysis = 137
THE VALUE SYSTEM = 138
THE VALUE CHAIN = 140
PRIMARY ACTIVITIES = 142
SUPPORT ACTIVITIES = 142
DEFINING AND ANALYZING THE VALUE CHAIN = 143
Operations Cost Behavior and the Experience Curve = 148
THE EXPERIENCE CURVE = 149
SOURCES OF THE EXPERIENCE EFFECT = 152
DETERMINANTS OF THE SLOPE OF THE EXPERIENCE CURVE = 162
THE STRATEGIC IMPACT OF EXPERIENCE ON PRICES = 165
USING THE EXPERIENCE CURVE ARGUMENT CORRECTLY = 167
STRATEGIC WEAKNESSES OF EXPERIENCE - BASED STRATEGIES = 169
THE CORE MESSAGE OF THE EXPERIENCE CURVE = 173
Summary = 173
6 A FRAMEWORK FOR INCORPORATING TECHNOLOGY INTO PRODUCT STRATEGY DECISIONS = 175
Technology Creation and Utilization = 175
RESEARCH AND DEVELOPMENT = 176
TECHNOLOGY = 183
Theories of Technological Innovation = 190
THE LAW OF PROGRESS = 191
THE LAW OF LIMITS = 191
THE INNOVATION PROCESS = 195
THE INNOVATION PROCESS AS MANAGED CHAOS = 198
THE INNOVATION ACCEPTANCE PROCESS = 199
THEORIES EXPLAINING THE PATTERN OF INNOVATION = 207
THE ELEMENTS OF A TECHNOLOGY STRATEGY = 211
TECHNOLOGY STRATEGY = 212
Summary = 220
7 THE DYNAMIC NATURE OF COMPETITION AND COMPETITIVE STRATEGY
An Overview of the Classic Life-Cycle Concept = 222
THE VALIDITY OF THE CLASSIC LIFE CYCLE = 224
An Evolutionary Model of the Life Cycle = 224
THE EVOLUTIONARY APPROACH = 225
A Population Ecology Model of Competitive Markets = 226
POPULATION GROWTH = 228
STRATEGY TYPOLOGIES = 228
NATURAL SELECTION = 231
An Ecological Approach to Market Evolution = 232
Models of Competitive Entry and Strategy = 233
THE COMPETITIVE LIFE CYCLE = 233
COMPETITIVE MARKET STRATEGIES = 236
The Dynamics Underlying a Product's Evolutionary Cycle = 238
THE LEVEL OF PRODUCT MARKET EVOLUTION = 238
THE PROCESS OF MARKET PENETRATION AND SATURATION = 240
SOCIAL AND FASHION INFLUENCES = 243
Profits, Cash Flow, and the Life Cycle = 246
START - UP AND ENTRY = 248
GROWTH RATES AND CASH FLOW = 249
CASH FLOW, THE ENVIRONMENT, AND STRATEGY = 250
Summary = 252
8 CREATING STRATEGIC CHANGE IN EVOLUTIONARY MARKETS = 254
A Theory of Strategic Change = 254
STRATEGIC WINDOWS = 256
Strategy in the Early Phases of Product Market Evolution = 258
THE PROS AND CONS OF EARLY ENTRY INTO RAPIDLY GROWING MARKETS = 258
Rewards to Successful Pioneers : The Theory = 263
Rewards to Pioneers : The Evidence = 265
PHARMACEUTICALS AND CIGARETTES = 265
CONSUMER PRODUCTS = 266
PIMS-BASED STUDIES = 270
Strategy in the Transition Period = 272
CHANGES IN THE TRANSITION PERIOD = 272
MANAGING THE TRANSITION = 274
Strategy at Maturity and Decline = 275
MATURITY = 275
SUCCESS STRATEGIES IN MATURITY = 276
CREATING STRATEGIC CHANGE AT MATURITY = 278
DECLINE = 278
CREATING THE STRATEGIC RESPONSE = 279
THE STRATEGIES = 281
Summary = 281
9 ANALYZING COMPETITION = 283
Perspectives on Marketplace Competition = 283
ECONOMISTS' PERSPECTIVE ON COMPETITION = 283
Models of Competition = 288
THE BASIC STRUCTURE OF MARKETS = 288
MONOPOLY, OLIGOPOLY, AND MONOPOLISTIC COMPETITION = 290
OLIGOPOLY THEORY = 292
UNDERSTANDING COMPETITIVE BEHAVIOR IN OLIGOPOLY = 293
GAME THEORETIC APPROACHES TO OLIGOPOLY = 296
The Industrial Organization Approach = 304
CONCENTRATION = 305
ENTRY BARRIERS = 307
NATURAL MARKET STRUCTURES = 309
Managerial Approaches to Market Structure = 312
Competition and Supranormal Profits = 314
THE IMPACT OF COMPETITIVE ENTRY = 319
THE IMPACT OF SUBSTITUTION = 320
STRATEGIES FOR GAINING LONG-TERM SUPRANORMAL PROFITS = 321
AVOIDING THE EFFECTS OF COMPETITION = 322
Choosing the Firm's Competitive Orientation = 324
ONE-ON-ONE COMBAT = 325
I DO THE BEST I CAN = 327
WE'RE ALL IN THE SAME BOAT = 328
COMPETITION WITHOUT COMPETITION = 329
Summary = 330
10 ANALYZING COMPETITORS = 331
The Goals of competitor Analysis = 331
Identifying Competitors = 332
BUSINESS DEFINITION = 333
IDENTIFYING COMPETITORS AT THE PRODUCT MARKET LEVEL = 340
IDENTIFYING POTENTIAL COMPETITORS = 342
Identifying Information Needs = 346
WHAT THE COMPETITOR IS DOING AND CAN DO = 346
WHAT THE COMPETITOR IS LIKELY TO DO = 355
THE COMPETITOR'S RESPONSE PROFILE = 358
Assessing and Interpreting Competitive Signals and Moves = 360
INTERPRETING COMPETITIVE SIGNALS = 361
Collecting Competitive Information = 365
THE NEED FOR A STRATEGIC INTELLIGENCE SYSTEM = 368
THE OUTPUTS OF AN INTELLIGENCE SYSTEM = 369
Summary = 371
11 DEVELOPING AND ANALYZING STRATEGIC OPTIONS = 373
Generic Strategy Options = 373
Portfolio Techniques for Strategy Generation, Analysis, and Evaluation = 375
THE BCG PRODUCT PORTFOLIO = 375
IMPLICATIONS FOR MANAGING THE PORTFOLIO = 384
CRITICAL ISSUES IN PORTFOLIO ANALYSIS = 385
SUMMARY OF THE PRODUCT PORTFOLIO = 389
INDUSTRY ATTRACTIVENESS/BUSINESS POSITION MATRICES = 390
OVERVIEW OF THE MARKET ATTRACTIVENESS/COMPETITIVE POSITION MATRIX = 390
APPLYING THE MARKET ATTRACTIVENESS/BUSINESS POSITION TECHNIQUE = 393
THE LIFE-CYCLE PORTFOLIO MATRIX = 396
STRATEGIC DIRECTIONS PROVIDED BY THE LIFE-CYCLE PORTFOLIO MATRIX = 399
SUMMARY OF THE LIFE-CYCLE PORTFOLIO MATRIX = 400
THE PIMS PROGRAM'S APPROACH TO STRATEGY ANALYSIS = 400
OVERVIEW OF THE PIMS PROGRAM = 402
HOW MANAGERS USE THE PIMS PROGRAM TO DEVELOP STRATEGY = 405
ISSUES IN USING PIMS-BASED ANALYSES = 407
Portfolios and PIMS : A Summary = 409
Summary = 410
12 STRATEGIZING : UNDERSTANDING THE PROCESSES OF STRATEGY FORMULATION AND STRATEGIC THINKING = 411
The Normative Model of strategy and Strategy Formulation = 411
THE CONTENT OF NORMATIVE STRATEGY = 412
THE PROCESS OF NORMATIVE STRATEGY = 413
SUMMING UP THE NORMATIVE MODEL = 417
Behavioral Models of Strategy and Strategy Formulation = 417
A CONSTITUENCY - BASED MODEL OF STRATEGY = 417
THE PROACTIVE MODEL OF STRATEGY = 420
LEARNING MODELS OF STRATEGY FORMULATION = 421
BEHAVIORAL MODELS : A SUMMARY = 428
Organization Strategy as Business Strategy = 429
SUMMARY OF THE ORGANIZATIONAL STRATEGIES MODEL = 432
Thinking Strategically = 432
THINKING ANALYTICALLY = 433
THINKING COMPETITIVELY = 437
THINKING STRATEGICALLY = 443
Summary = 448
13 EVALUATING, VALUING, AND IMPLEMENTING STRATEGY = 449
Evaluating Strategy = 449
STRATEGY OBJECTIVES = 449
Measuring the Strategy = 451
Valuing Strategy = 458
TRADITIONAL MEASURES OF PROFITABILITY = 458
SHAREHOLDER VALUE APPROACH = 463
Implementing Strategy = 468
A MODEL OF STRATEGY IMPLEMENTATION = 470
THE INDIVIDUAL'S PERSPECTIVE ON IMPLEMENTATION = 476
Summary = 480
INDEX = 481