Competitive Solutions: The Strategist's Toolkit

Competitive Solutions: The Strategist's Toolkit

Competitive Solutions: The Strategist's Toolkit

Competitive Solutions: The Strategist's Toolkit

Synopsis

Competitive Solutions is an entertaining and wideranging introduction to successful business methods applied to a variety of real-world situations. Rejecting the one-size-fits-all premise that underlies so many guides to business strategy, Preston McAfee develops the intellectual tools and insights needed to confront many marketplace problems. Drawing on his broad experience as a consultant for major U.S. companies, as well as extensive research, McAfee emphasizes cooperation, pricing, litigation, and antitrust as vital to a firm's competitive posture--and focuses more attention on these elements than do most business strategy accounts.

McAfee begins by considering strategy as successfully applied by America OnLine, an example that introduces many of the tools discussed in greater depth throughout the book. From here he moves to industry analysis: By examining the context for developing a strategy, he points out uses of positioning and differentiation that enable a firm to weaken price competition and deter rivals from stealing customers. McAfee's exploration of a product's life cycle proves an invaluable guide to positioning new technology in order to maximize the potential for future customers.

In the centerpiece of the book, McAfee lays out a how-to manual for cooperation, providing tactics crucial for setting standards, lobbying the government, and fostering industry growth. Writing in a conversational manner, McAfee also addresses such deep topics as organizational design and employee compensation and incentives. More detailed discussions examine antitrust enforcement, which is an increasingly important constraint on strategy, as well as strategies for pricing, bidding, signaling, and bargaining.

This book is a fascinating examination of modern business strategy and its application in many different settings. Students of business and economics--as well as executives and managers--will recognize Competitive Solutions as an indispensable resource as well as a definitive vision of the strategic firm: one in which each element of company strategy reinforces the other elements.

Excerpt

When your only tool is a hammer, every problem looks like a nail.

—Abraham Maslo.

Preamble

This book offers conceptual tools of business strategy with descriptions of practical implementations of the theory. It is intended for a general business audience, especially readers with technical training. It is also designed as a text for a course in business strategy that uses examination of cases as the primary teaching method.

Strategy texts tend to be comprehensive, which entails covering much material that is low on useful insights. in contrast, this book focuses on practical strategy— insights that have significant application in real situations. I use actual rather than hypothetical examples when possible.

A first feature of this practical approach is that I cover different material than other strategy books. the selection of material springs from my work in advising companies and evaluating mergers for antitrust purposes. Pricing provides an example. I pay much more attention to pricing than do most traditional texts. Pricing has been neglected in business strategy. Because many business schools devote a separate course to pricing, strategists often ignore it. Marketers tend to focus on increasing demand for one’s product, dismissing prices as either a markup on cost or “what the market will bear.” Economists tend to think of price as a single variable rather than as a pattern or dynamic array of prices. On the contrary, I believe that pricing ought to be at the core of business strategy rather than an afterthought. in particular, pricing strategies are important determinants of the profitability of R&D, service contracts, warranties, market segmentation, and other strategic choices.

By the same token, I pay greater attention to litigation and antitrust than is common in other books on strategy. the U.S. Department of Justice’s suit against Microsoft showed the folly of ignoring the antitrust laws in the design of business strategy. While few companies receive the level of antitrust scrutiny devoted to . . .

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