Economics of Strategy | 
| Authors: David Besanko, David Dranove, Mark Shanley, Scott Schaefer
Publisher: Wiley
Category: Book
Buy Used: $45.00
New (42) Used (27) from $45.00
Rating:  21 reviews
Sales Rank: 174963
Media: Hardcover
Edition: 4
Pages: 632
Number Of Items: 1
Shipping Weight (lbs): 2.6
Dimensions (in): 10.1 x 7.9 x 1.1
ISBN: 0471679453
Dewey Decimal Number: 658.4012
EAN: 9780471679455
ASIN: 0471679453
Publication Date: August 7, 2006
Availability: Usually ships in 1-2 business days
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Product Description
Discover the art of strategic thinking
Revised and updated to reflect the cutting edge of academic thinking about business strategy, the Fourth Edition of Besanko, Dranove, Shanley, and Schaefer's highly acclaimed text offers a solid economic foundation for strategic analysis. By presenting basic concepts of economic theory with ideas in modern strategy literature, the book provides an economic lens for viewing the broad sweep of the strategic activities of the firm.
The book begins by focusing on the boundaries of the firm and examines competitive strategy from the perspective of industrial organization (IO) economics, particularly Porter's Five Forces. It then explores strategic positioning and dynamics as well as topics associated with internal organization, including personnel economics, organization structure, and strategic fit.
Features of the Fourth Edition
* Chapters on human resources management, entry, positioning, dynamics, technological change, and organizational structure are substantially revised.
* An updated chapter on business history covers the recent dot-com bubble.
* Presents economic principles without overemphasizing the math.
* Rigorous treatment of organizational topics such as structure and culture enables you to experience the full scope of strategic thinking.
* The authors use Porter's Five Forces as a tool for organizing industry analysis, building on the coverage of industrial organization and game theory. The text also considers the Value Net, another tool for organizing industry analysis.
* Includes coverage of make or buy decisions (Chapters 2-4) and benefit and cost advantage and sustaining advantage (Chapters 11-13).
* Fascinating examples, including many new to this edition, bring the economic models to life. Many of the examples involve businesses outside of the United States.
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| Customer Reviews: Read 16 more reviews...
 Excellent on strategy January 12, 2008
Alberto Ponsa Talavera (Barcelona)
This 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.
 Good for Basics July 18, 2007
Jeffrey Monroe (Memphis, TN)
1 out of 1 found this review helpful
This 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.
Correction --- See review by L. Skoufa. March 10, 2007
Scott Schaefer
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.
A good update but not 100% correct September 12, 2006
L. Skoufa (Australia)
6 out of 6 found this review helpful
I 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!"
great book January 13, 2006
Nice guy (Boston)
1 out of 6 found this review helpful
Actually, 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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