Strategy Non Market Environments

Strategic Management in Non-market Environments 05/11 06/11. Cheetah / Hyena video ? Analogues to business world o elucidate kill, but screw you hold when scavengers come o Eat fast if youre a cheetah ? Value Creation o Economic use ? Value Capture o Power, Leverage Companies you do (value you create) must be cognizant of game to come (value capture) Boeing ? Site distribution throughout US, most congressional districts o Helps when applying / bidding for contracts o Decision making process in Congress ? If only worried to the highest degree capturing an antelope (market environment), wouldnt design locations for supply image this way ?Recognizing hyenas (non-market environment effects) o How to ensure capture value o Spread out across country (multiple congressional districts) o Helps with getting livelihood (congressionally directed contracts) ? GM locations are more concentrated o Operationally limits more sense, politics werent controlling decision making o However, when GM needs something from Government, may be in worse position than Boeing Wal-Mart ? Not in bigger cities o Local players (protected), politics can block main course o How negotiate, work around? Market vs.Nonmarket Environment ? Market transactions are typically consensual and bilateral o Voluntary, fundamental 11 (bilateral negotiations between parties) ? Nonmarket transactions are rarely consensual and are almost always multilateral ? Market environment focuses on economics ? Nonmarket environment combines policy-making science, psychology and ethics. Integrated, Managerial Strategy ? Goal as a Manager is to integrate Market and Non-market strategy Four Is (way to analyze situation) ? Issues ? Interests ? Institutions ? cultivation Diebold Case ?Risks (reputational, new technology) o Can we create Ballot Security service arm, to help solve problem and also create profitability for degenerate? ? Quality issues ? Communication / marketing plan ? Reach out to political parties, special interest groups ? Diebold should reach known Bev Harris, taken her call ? Diebold files suit on a lower floor DMCA (may not have been best idea in non-market environment) o Protecting access to information becomes worldwide cause ? Politics is unstable o stupefy to be farsighted o Can not be myopic, take short term view ? Pays to set the genda (want to be the one who makes theproposal) o suggestion helps define the winners and losers o Want to be the agenda setter Observations on Nonmarket Strategy & Analysis ? Issues generate nonmarket competition ? Market rivals can be nonmarket assort coalitions can be effective ? Your choice of objectives determines who is aligned with and against you ? Alignments of interests are often issue- specialised ? Business can represent those who would otherwise be unrepresented ? Institutional features matter e. g. , federal versus State jurisdiction ?When attempting to stop an issue, proposing better alternatives is often effective o Br ing other interests into play ? If there is a problem for you at the play along level (e. g. , appearance of corruption), then form coalitions and work on behalf of coalition o J&J partner with other pharmaceutical, healthcare orgs, activist groups (help determine people are not acting in corrupt fashion, but for greater public good) o Can expand to not just specific industry, but all businesses in area (e. g. , chamber of commerce), etc. ? When thinking about coalitions ask who benefits from my success on this issue?Goal of Course ? get intot accept that rules are fixed (rules are not fixed) o But think about is there a way that we can change the rules to benefit the company o Dont miss opportunity to change b/c have not considered ? Politics is about public good, but also fundamentally about redistribution o How can set strategy to affect positively for our organization ? Complication of Politics o People are motivated to go to voting booth on moral concerns along with economi c o Sometimes issues that can be astronomical motivators may not have as large an impact as other concernsLuxury Tax Case ? 1990 Tax was introduced on luxury items o spacious political fight, tiny revenue generator (not important in context of trying to balance the federal budget) ? Why was the evaluate introduced if allow for not have large impact? ? May have just been for the perception create impression that care about fairness in way that doesnt create large new taxes for parties ? Core constituents feel that they care about values they run on ? May have been to help reelection problem ?Opposed to tax consumers of luxury goods, manufacturers of luxury items, retailers of foreign luxury items ? Supporters of Luxury Tax foreign manufacturers of boats, people who dont buy luxury items, domestic manufacturers of luxury cars, manufacturers of substitutes for luxury items, some NGOs (anti-fur, anti-diamong) o Not an accident that bill does not apply to GM (b/c GM was on committee working on bill) ? When make predictions in the political arena, are going to ask o Who are important interest groups, who will have power on the issue ? astronomical number of voters ? Wealth / contributions / participation of group ? Do you have connections with key members of Congress? ? Distribution of voters ? Ability to get media attention (celebrities, experts) ? Is the group organized? o Who has power, who has incentives? ? Can go a long way to making predictions once have the details of the situation ? What determines the incentives for action? o Magnitude of benefits will meet ? As a group ? As individuals (per capita) ? Substitutes and Opportunity cost ? How does this compare to other issues ?Expected Return on Effort ? (how much work will take / what is expected impact) ? Potential reputational costs ? Luxury Tax Coalition ? Yachts Not as many manufacturers, not as well distributed (concentrated in states ilk Rhode Island, smaller state) ? Foreign manufacturers are n ot voters poor position when entering country ? Cross of manufacturers (Horizontal across Rent Chains) Airplanes, Boats o Distributed Politics Spreadsheet, Cemex case ? ? ? watch spreadsheet for Distributed Politics notes Modified Lowi Matrix Cemex case notes on handouts