Lessons

from

CompetitveExperiencesW.A.

FischerCEIBS,

ShanghaiFebruary

1,

1999William

A.

Fischer第一頁(yè)，共四十二頁(yè)。12/17/20231Understanding

Rivalry:The

Heart

of

the

CompetitiveEquationWilliamA.Fischer第二頁(yè),共四十二頁(yè)。12/17/20232The

Nature

of

Economic

Inquiry?thefocusofeconomics[fromaWestern,market-orientedperspective]haslargelybeenonhowwellaneconomyallocatesresources,givenpreferencesandtechnologies.RichardR.NelsonespeciallywherefirmsaretheprincipalallocatingagentsWilliamA.Fischer 3第三頁(yè),共四十二頁(yè)。12/17/2023The

Nature

of

the

Players?economists

tend

to

see

firms

asplayers

in

a

multi-actor

economic

game...RichardR.NelsonWilliamA.Fischer第四頁(yè),共四十二頁(yè)。12/17/20234The

Nature

of

RivalryThe

essence

of

rivalry

is

a

strivingfor

potentially

incompatible

positions?FredericM.Scherer?the

jockeying

for

share

byfirms

within

a

market.Besanko,

Dranove

&

ShanleyWilliamA.Fischer第五頁(yè),共四十二頁(yè)。12/17/20235Who

are

these揻irms?and

whatare

their

roles?Some

fundamental

assumptions搮an

entity

run

by

agents

of

thecapital-owning

principals

with

thesole

objective

of

maximizing

theprofits

of

the

latter厰Ronald

Dorethus,in搈odern?market

economy,we

can

separatemanagement

from

ownership...WilliamA.Fischer第六頁(yè),共四十二頁(yè)。12/17/20236Other

Underlying

Assumptions

profits

[surpluses]

being

s

en

as

a

signal

of

performancein

a

market

a

faith

in

market

a

location

of

resources

in

complexsituations

over

government

a

location

-

because

thecustomer

is

voting

with

their

purchases

the

maximization

of

the

overa

l

social

welfare

functionby

the

a

cumulation

of

numerous

personal

decisions

-the

customer

being

s

en

as

being

in

the

best

position

todetermine

what

they

wantWilliamA.Fischer第七頁(yè),共四十二頁(yè)。12/17/20237Establishing

the

Arena[A

market

is]

that

set

of

suppliers

andemanders

whose

trading

establishesthe

price

of

a

good.George

Stigler

&

Robert

SherwinCustomersSuppliersRivalryWilliamA.Fischer第八頁(yè),共四十二頁(yè)。12/17/20238In

such

a

classical

market

settinit

is

important

to

considereconomies

of

scale

The

history

of

the

industrial

revolution

waone

of

economies

of

scale.WilliamA.Fischer第九頁(yè),共四十二頁(yè)。12/17/20239The

Centrality

of

ScaleEconomiesStatic

EconomiesDynamic

EconomiesCost

perUnitRated

Capacity

of

FacilityCost

perUnitCumulative

Production

ofA

Standardized

ItemThe

Economics

of

the

Industrial

RevolutionTheoretical12/17/202310第十頁(yè),共四十二頁(yè)。In

such

a

classical

market

settingit

is

important

to

considereconomies

of

scaleThe

history

of

the

industrial

revolution

was

one

ofeconomies

of

scale.

In

markets

where

consumers

are

price

sensitive,

larger

firmscan

use

their

cost

advantage

to

gain

an

appreciable

advantageover

smaller

firms.

In

the

US,

it

has

been

shown

that

firm

size

is

positivelycorrelated

with

profitability.However,

cause

and

effect

are

not

well-established.Also,

larger

shares

for

some,

mean

lower

shares

for

others.WilliamA.Fischer第十一頁(yè),共四十二頁(yè)。12/17/202311In

such

a

classical

market

settingit

is

important

to

considereconomies

of

scaleThe

history

of

the

industrial

revolution

waone

of

economies

of

scale.But

even

in

such

a

non-complex

setting,bigger

was

not

always

better.–

In

fact,

in

studies

in

the

US,

mid-century,

minimum

optimalplant/firm

size

appeared

to

be

small

relative

to

market

size[single-digit].WilliamA.Fischer第十二頁(yè),共四十二頁(yè)。12/17/202312The

Centrality

of

ScaleEconomiesCost

perUnitRated

Capacity

of

FacilityCost

perUnitCumulative

Production

ofA

Standardized

ItemThe

Economics

of

the

Industrial

RevolutionTheoretical

&

EmpiricalStatic

Economies

Dynamic

Economies12/17/202313第十三頁(yè),共四十二頁(yè)。In

such

a

classical

market

settingit

is

important

to

considereconomies

of

scaleBut

even

in

such

a

non-complex

setting,bigger

was

not

always

better.

One

of

the

lessons

of

the

Japanesemanufacuring

triumphs

of

the

last

threedecades

has

been

the

importance

oflearning,

through

repetitive

manufacturingwhich

is

different

than

just

being

bigger

orsmarter.WilliamA.Fischer 14第十四頁(yè),共四十二頁(yè)。12/17/2023The

Centrality

of

ScaleEconomiesCost

perUnitRated

Capacity

of

FacilityCost

perUnitCumulative

Production

ofA

Standardized

ItemThe

Economics

of

the

Industrial

RevolutionTheoretical

&

EmpiricalStatic

Economies

Dynamic

Economies12/17/202315第十五頁(yè),共四十二頁(yè)。In

such

a

classical

market

settingit

important

to

considereconomies

of

scaleOne

of

the

lessons

of

the

Japanesemanufacuring

triumphs

of

the

last

threedecades

has

been

the

importance

oflearning,

through

repetitive

manufacturing

Yet,

learning,

especially

when

based

onrepetition,

comes

with

the

risk

of

rigiditythe

focus

is

too-much

on

consistent

cost-reduction.WilliamA.Fischer 16第十六頁(yè),共四十二頁(yè)。12/17/2023The

Importance

of

MarketMaturityempiricalresearchon113USmanufacturingfirmsbyCEIBSfaculty?nearlyonehalfoftherevenuesgeneratedbythe11mostsuccessfulfirms?camefrommaturemarkets.However,77percentofrevenuesfor15oftheleastsuccessfulfirmscamefrommaturemarkets.Capon,

Farley

&

HoenigWilliamA.Fischer第十七頁(yè),共四十二頁(yè)。12/17/202317but,

markets

are

changing;they

are

no

longer

classical

norsimpleWilliamA.Fischer第十八頁(yè),共四十二頁(yè)。12/17/202318The

History

of

Competition

was

marked

bysuccessiveIndustrialRevolutionsWilliamA.Fischer第十九頁(yè),共四十二頁(yè)。12/17/202319Tomorrow抯Marketswill

be

characterized

by:*

Increasingly

demanding

customers*

An

emergingglobal

arena

*

An

amalgamation

of

markets

and

resource

pools[EU,

NAFTA,

etc.]*

The

appearance

of

adversarial

trade*

Neo-Kondratieffian

technology

changes*

The

quickening

of

the

product

life-cycle

*

The

emergence

of

the

knowledge-based

informationeconomy

*

An

acceptance

of

new

organizational

formats[Alliances,

jvs,

wofes,

etc.]WilliamA.Fischer第二十頁(yè),共四十二頁(yè)。12/17/202320The

Death

of

FirmsTomVollmann:Adyingcompanydoesnotlead;itfollows.Itislosingmarketshare,itislosingcapabilities,ithasthewrongsetofcompetencies,itisdemoralized,itsactivitieshavelittleimpact.Infact,allarounduswecanobservecompaniesthatareinastateworsethandeath-theyhavejoinedthelivingdead,aware(ornot)thatwhatevertheydomakeslittledifferencetotheirsituation,andyettheyfeelcompelledtokeeponacting,producing,carryingon.Deathismostoftenalongdrawnoutaffair.Evenwithineptmanagement,itstilltakesalongtimetodestryalargecompanywithoncestrong,ifcurrentlyobsoletecapabilities.Deathisnostrangertotheranksofoncepowerfulmanufacturingcompanies.Everyindustryhasitsshareofthedead,aswellastheterminallyillandthewalkingwounded.WilliamA.Fischer第二十一頁(yè),共四十二頁(yè)。12/17/202321Death

Signals

of

the

non-competitivestaying

level

of

falling

behind

the

competitionrisk

aversionbureaucracylosing

capabilitieserosion

of

what

were

once

distinctive

competenciesinternal

focusing

of

corporate

attentionlimited

knowledge

of

the

customerpanic

decisions

to

reduce

short-run

costsnot

developing

people?Tom

VollmannWilliamA.Fischer第二十二頁(yè),共四十二頁(yè)。12/17/202322In

Hyper-competitive

MarketsSuchasthosecharacterizingglobalmarketsinthelate20thcentury,thatarefiledwith搒urprises?theabilitytonavigatefromoneproductgenerationtoanotheristhebasisforsustainedcompetitiveadvantage.ThinkaboutWang!greatorganizationsarenecessarytoproducegreatproducts(morethanonce),whilegreatproductsdonotguaranteegreatorganizations.揌ighreturnsarenotsustainableinaparticularmarket,buttheprocessofgeneratinghighreturnscanbesustainabllastquoteisfrom:Capon,Farley&HoenigWilliamA.Fischer第二十三頁(yè),共四十二頁(yè)。12/17/202323Early

Lessons

from

In

Search

ofExcellenceExcellent

firms

are

characterized

by

(among

otherthings:Bias

for

ActionClose

to

the

CustomerAutonomy

&

EntrepreneurshipFocusSimple

form,

Lean

staffPeters

&

WatermanWilliamA.Fischer第二十四頁(yè),共四十二頁(yè)。12/17/202324More

recent

findings

from

EuropeExcellent

European

firms

are

characterized

by

(among

otherthings):Devolving

leadership

(without

losing

control

or

direction)Driving

radical

change

(in

the

entire

corporate

system,

notjust

in

its

parts)Reshaping

cultureDividing

to

rule

(winning

the

rewards

of

smallness

whilestaying

or

growing

large)Keeping

the

competitive

edge

(in

a

world

where

the

old

waysof

winning

no

longer

work)Achieving

constant

renewalRobert

HellerWilliamA.Fischer第二十五頁(yè),共四十二頁(yè)。12/17/202325Determinants

of

FinancialPerformanceempirical

research

on

113

US

manufacturing

firms

by

CEIBS

faculty

competing

in

relatively

concentrated

markets

withhigher

market

sharecompeting

in

growing

markets

high

investment

in

developing

new

products

&serviceshigh

involvements

in

markets

outside

of

USlow

debt

levelsan

entreprenurial

atmosphereCapon,

Farley

&

Hoenig26WilliamA.Fischer第二十六頁(yè),共四十二頁(yè)。12/17/2023Comparing

High

&

LowPerformersempirical

research

on

113

US

manufacturing

firms

by

CEIBS

facultyHigh-Performing

High-Share

Focused

Innovatorsconcentrate

capital

investment

in

growing

international

marketsgenerate

new

products

from

high

R&D

budgetsare

highly

vertically

integrated

have

little

diversificationhighly

specialized

in

their

organizationhave

low

debtHigh-Performing

Focused

World

Consumeristsfocus

less

internationally

spend

heavily

on

advertisinghave

low

debt

diversification

almost

nonexistentCapon,

Farley

&

HoenigWilliamA.Fischer第二十七頁(yè),共四十二頁(yè)。12/17/202327Comparing

High

&

LowPerformersempirical

research

on

113

US

manufacturing

firms

by

CEIBS

facultyLow-Performing

Diversified

Indentured

Industrialistsspend

little

on

R&Dwere

frequently

involved

in

mergers

conducted

under

duressare

highly

diversifiedhave

high

debtonly

average

on

international

investmentCapon,

Farley

&

HoenigWilliamA.Fischer第二十八頁(yè),共四十二頁(yè)。12/17/202328Navigating

Resources

&InformationInformationComplexityHighLowResource

ScarcityLowHighLawrence

&

DyerDevelopment

Paths

fora

Typical

IndustryWilliamA.Fischer第二十九頁(yè),共四十二頁(yè)。12/17/202329this

will

mean

changing

the

waysin

which

we

do

businessWilliamA.Fischer第三十頁(yè),共四十二頁(yè)。12/17/202330Dimensions

of

TransformationSpeedFastSlowScopeBroadNarrowDoingDifferentThingsDoing

theSameThingsBetterTurnaroundTransformationReengineeringContinuousImprovementSource:

Tom

VollmannWilliamA.Fischer第三十一頁(yè),共四十二頁(yè)。12/17/202331and,

changing

the

businesses

wedoWilliamA.Fischer第三十二頁(yè),共四十二頁(yè)。12/17/202332Industry

Restructuring

as

ValueMigrationMarketValueisameasureofthepowerofabusinessdesigntocreateandcapturevalue.AdrianJ.SlywotzkyCustomersmakechoicesbasedontheirpriorities.Thosechoicesdeveloppotentialvalueforthebusinessesfromwhichtheybuy.Atanygiventime,thepatternofthosechoicesallocatesvaluetovariousbusinessdesigns.Ascustomers?prioritieschangeandnewdesignspresentcustomerswithnewoptions,theymakenewchoices.Theyreallocatevalue.Thesechangingpriorities,andthewayinwhichtheyinteractwithnewcompetitors?offerings,arewhattrigger,enable,orfacilitatetheValueMigrationprocess. AdrianJ.SlywotzkyWilliamA.Fischer第三十三頁(yè),共四十二頁(yè)。12/17/202333Value

Migration

today

inChina?.. ThefirmsthatarewinningintheChinamarketarethosethatcontroltheirvalue-chains,especiallydown-streamfrommanufacturing! Buildingbrandsmakesthedifferenceincompetingonfactorsotherthanprice:brand&customerservicerequirevalue-chaindiscipline.Nationalbrandsarebeingbuilttoday,asinthepast,byvalue-chaincontrol.WilliamA.Fischer第三十四頁(yè),共四十二頁(yè)。12/17/202334in

China,

value

migration

resultsin

...

Focusing

solely

on

transport

costs

mayignore

75%

of

the

distribution

costs.

In

China,

nearly

2/3

of

distribution

costscomes

in

product

loss

&

damage,

and

theassociated

inventory

costs.

Customer

service

&

accounts

receivableboth

benefit

from

value-chain

control.BusinessChina12/07/98WilliamA.Fischer第三十五頁(yè),共四十二頁(yè)。12/17/202335Industry

Restructuring

&

ValueMigrationValueMigrationisnotnew.ValuemigratedawayFord抯verticallyintegrated,single-car-focusedbusinessdesigntowardGM抯price-ladderedbusinessdesigninthe1920s.Itmovedfromgrocerystorechainstosupermarketsinthe1930s,fromfragmentedmerchandiserstonationalcataloguesalesinthe1890s(Sears),andtonationalmerchandisechainsinthe1920s(Searsagain).AdrianJ.SlywotzkyTherearealwayswinnersandlosersintheValueMigrationprocess.WilliamA.Fischer第三十六頁(yè),共四十二頁(yè)。12/17/202336We

Must

Re-etablish

the

Arena[there

is

a

big

difference

between]definingcompetitors

as搕hose

companies

that

do

the

same

thingthat

we

do厯[and]defining

them

[instead]as

those

businesdesigns

that

customers

can

choose

from

in

satisfying

their

prioritAdrianJ.Slywotzky[Where]abusinessdesignisthetotalityofhowacompanyselectsitscustomers,defines&differentiatesitsofferings,definesthetasksitwillperform?configuresitsresources,goestomarket,createsutilityforitscustomersandearningaprofitfromthatactivity.WilliamA.Fischer 37第三十七頁(yè),共四十二頁(yè)。12/17/2023The

Broader

Version

of

RivalryCustomersSuppliersRivalryThreat

of

New

Entrantsmore

of搕hose

companies

that

dothe

same

thing

that

we