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Economics of Strategy
by: David Besanko, David Dranove, Mark Shanley, Scott Schaefer |
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Binding: Hardcover Dewey Decimal Number: 658.4012 EAN: 9780471679455 Edition: 4 ISBN: 0471679453 Label: Wiley Manufacturer: Wiley Number Of Items: 1 Number Of Pages: 632 Publication Date: August 07, 2006 Publisher: Wiley Studio: Wiley
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| Customer Reviews | ||
  - Excellent on strategyThis is an excellent MBA first book through strategy. It covers not only the classic facts on competition, markets and so forth but also the economics of gambling, acquisitions and marketing strategy. It is ever full of examples, and very easy to read. It is used in most of the best MBA courses in US. Rating:  - Good for BasicsThis was the text used in a graduate Economic Strategy course I took. The text provides a decent overview of economic strategy and is only slightly more advanced than what I learned as an undergraduate. The math involved was elementary. The text attempts to cover a very broad range of topics and does not go into any single topic very deeply. For example, only 3-4 pages are used to cover Game Theory; pricing is another area that's covered at a very high level, with not much at all about price optimization, an area growing in importance in industry. I did think Porter's Five Forces were covered sufficiently, and the watch-outs of such an approach were reviewed which is important in a class where the students were asked to test many of the topics empirically. In all, a good text to provide a broad overview of many sub-topics, but don't count on it for a rigorous review. Rating: - Correction --- See review by L. Skoufa.The reviewer L. Skoufa is correct; there's an error on pages 20-21 of the first printing of this text. We're fixing it in subsequent printings. Sorry for the mistake, and thanks for pointing it out. The paragraph should read as follows: As discussed earlier, an important cost excluded from a firm's accounting costs is the opportunity cost of its capital assets, such as its plant and equipment. When a firm's accounting earnings do not cover this opportunity cost, the firm will earn a positive accounting profit but a negative economic profit. For example, in 2002 McDonald's had a positive accounting income of more than $2 billion, but it had a negative economic profit of $124 million. (Table P.3. shows McDonald's economic profit, and that for other selected food and beverage chains, between 1997 and 2004.) What does this negative $124 million mean? Just as with the owner of our software firm, a negative accounting profit indicates that McDonald's assets, when liquidated and deployed elsewhere, would have earned $124 million more in income for its owners than McDonald's earned in 2002. In this sense, in 2002 McDonald's "destroyed" $124 million of its owners' wealth because its owners could have earned $124 million more that year by deploying the funds they had invested in Starbucks in their best alternative use. Not all firms, of course, make a negative economic profit. In 2004, Starbucks earned an accounting profit of slightly over $390 million and a positive economic profit of $151 million. This positive econoimc profit means Starbucks created $151 million more in income for its owners than its sources would have created for themselves if they liquidated Starbucks assets and invested them in their best alternative use. In this sense, Starbucks "created" an additional $151 million in wealth for its owners that they could not have gotten elsewhere. Rating: - A good update but not 100% correctI teach strategic management to undergraduates at an Australian university and have used the 2nd and 3rd editions of this book in the past three years to supplement the theory from our prescribed texts. It is heavy going in some places for the students but I like the book's rigour. The only criticism I have is that the 4th edition I just received has some minor errors. For example, pages 20-21 in the "Economic Profit versus Acccounting Profit" section has errors in the figures quoted for economic profit for McDonalds and Starbucks. I think this has occured because the 3rd edition figures have been carried over to the 4th edition without a proper proof-reading. Another minor mistake is that Table 10.2 (page 329) should read "Five-Forces Analysis of the Commercial Aciation Industry" and not "Five-Forces Analysis of the Chicago Hospital Market". Sorry to be pedantic but I guess these things can detract from the perceived quality of an otherwise top-quality text. Please note I will be buying your next edition in a couple of years. Cheers from "DownUnder Australia!" Rating: - great bookActually, this book is used as a text book in Competitive Strategy courses at U. of Chicago. Kudos to Dr. Besanko for writing such an interesting well-grounded book. Kellogg may not appreciate his writing and use this book and his other book as textbook, however, here at U. of Chicago, we do. I have enjoyed reading this book and his other book of Economics. |
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