Contabilidade

Source: freedigitalphotos.net

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“If everyone can do it, it’s difficult to create and capture value from it.” or, alternatively

“In a perfectly competitive market, no In firm realizes economic profits (rents).”

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(Industrial Organization View)

Monopoly Rents

(Resource Based View)

Ricardian Rents

Schumpeterian Rents
( y (Dynamic Capabilities View) p )

S P S’ MC 1MC 2 P AC 1 q1 q2 AC 2

D Q

-Barriers to entry -Industry structure matters

-Barriers to imitation -Firm structure matters

-Markets are dynamic -Innovation matters

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The Industrial Organization Perspective: Premise that industry structure matters most Economic rents due to barriers to competition (i.e. (i monopoly rents) l ) Some industries are more profitable than others
P S S’

D Q

Source: Fortune 500 2009, money.cnn.com m

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Threat of Entry Bargaining Power of Suppliers Bargaining Power of Buyers

Intensity of y Rivalry

Threat of Substitutes

Threat of Entry Bargaining Power of Suppliers Bargaining Power of Buyers

Intensity of y Rivalry

Threat of Substitutes

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Entry is less likely when ...
1. Entrant faces high sunk costs sunk costs are investments that cannot be recovered

2. Incumbents have a competitive advantage potential entrants are at a competitive disadvantage compared to existing players, simply not profitable to enter

3. Entrant faces retaliation potential entrants are likely to be forced out of business by strategic (pricing) behavior of incumbents

Point: For sunk costs, emphasize non-recoverability (vs. large recoverable capital investment) Ex: R&D, hotel vs. big box Counter Example:Leasing airplanes Slide: Potential Barriers Ex: Patents, etc: Taxis, Doctors, Lawyers Ex: Pioneering Brands: Quicken, Coke & Pepsi, Nike Ex: Pre-commitment: SWA in Detroit

Foundations of Strategy

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Entry is less likely when ...
1. Entrant faces high sunk costs sunk costs are investments that cannot be