Chapter18

Chapter18 - MANAGERIAL ECONOMICS An Analysis of Business...

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1 MANAGERIAL ECONOMICS An Analysis of Business Issues Howard Davies and Pun-Lee Lam Published by FT Prentice Hall
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2 Chapter 18: Economics and Business Strategy Objectives: To introduce some of the basic concepts used in the analysis of business strategy To examine the relationship between economic analysis and changing trends in the analysis of strategy
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3 What Is Strategy? Strategy as purposive action – the resource allocations that firms plan and implement in order to position themselves in markets and to compete with other Strategy as the ‘fit’ between a firm’s use of resources and its environment Strategy as an ongoing, unplanned and ‘unintended’ process of interaction between the firm’s internal structures and its environment
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4 The Four Components Strategy - in its various interpretations Structure – the internal resources and organisation of the firm Environment – the external circumstances in which the firm operates Performance – the outcomes achieved
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5 Performance as the Central Focus WHAT IS PERFORMANCE? Financial performance - ROI, ROS, ROE, Tobin’s Q - the most common interpretation in strategy, almost the only interpretation in Economics Financial and Operational performance - market share, new products, productivity increase Organisational Effectiveness - the ‘ultimate criterion’
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6 Two Approaches ‘System performance’ - organisational effectiveness ‘Goal performance’ - achievement of specific lower level objectives
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7 SWOT Analysis as an Overall Framework Normative and Prescriptive Firms should begin with two kinds of appraisal Internal Appraisal of S trengths and W eaknesses External Appraisal of O pportunities and T hreats Both Internal and External Factors are Important
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8 Strategy and the S-C-P Approach
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This note was uploaded on 08/07/2011 for the course PMBA 2963.2 taught by Professor Stephenchiu during the Spring '03 term at HKU.

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Chapter18 - MANAGERIAL ECONOMICS An Analysis of Business...

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