Night Thoughts of a Strategy Instructor
| Steven Postrel |
1. Exactly what is accomplished by teaching (present or future) managers the five forces framework? It’s useful for investment and diversification decisions, but otherwise isn’t very actionable, unless you’re engaged in cartel management.
2. It’s a good bet that the term “barriers to entry” adds zero (or worse) to student understanding of when an incumbent has advantage over a new player (and when the anticipation of that advantage deters entry). Also, students are rightly confused about the distinction between entry and rivalry because realized entry contributes to future rivalry. At least in logical terms, I can avoid this confusion by stressing the “threat of entry” as a force separate from rivalry, but then we’re supposing individual firms coordinate their price and capacity decisions to keep out entrants, a view of industry collaboration and statesmanship that was musty in the 1980s (and often involves incredible threats). Maybe it would be better just to talk about the elasticity of long-run supply and not worry too much about whether new capacity comes from incumbents or from entrants.
3. Is it a good idea to teach positioning analysis using cost drivers without having a cost function that combines all the drivers together? Scale, learning, scope, product features, etc. — shouldn’t we worry a lot more about how they reinforce or conflict with one another in a given case?
4. Does it matter that it’s really hard to find good examples that fit the technical definition of economies of scope? Is it OK if I just keep passing off multiproduct scale as if it were scope since the students don’t know the difference?
5. Am I just getting old and curmudgeonly, or does it seem like the newer Harvard cases are more pre-digested than the classics? What’s up with constructing all the pro forma tables for the students instead of scattering the information around in the text and exhibits?
6. Will I be able to teach effectively tomorrow if I don’t fall asleep soon?