Bargaining power of buyers

A pre-condition for bargaining power is that the buyers are price-sensitive. This post will look into the structural factors that make a buyer price sensitive. As a result, corporate buyers can have low to high bargaining power, while consumers can only have low and medium bargaining power.

This is post seven in a series on industry analysis.

US bailouts of companies during 2008-09

This post will only look at the direct costs related to the USD 606B bailout during 2008-09 financial crisis. So far 40% of this amount has been paid back. Propublica is tracking the repayment of the bailouts (here). Here is a summary of all the bailouts and how much has been repaid.

Book review: "The lords of strategy"

Kiechel published The Lords of Strategy in 2010. This is a fun reading if you would like to know more about the history of management consulting. My last book review was about a book published in 1994 (here). I argued that one should consider that book as management consulting history too. The current book is actually taking a historical focus and roughly covers the formative years from 1965 to 1985.

The book is well-written and I give it four out of five stars.

Restore the role of owners in the capitalist system

A quite interesting article about corporate governance in Sweden from Financial Times (here, probably behind pay wall). The article has this to say about the Anglo-Saxon model:

[T]he Anglo-American model where dispersed ownership among thousands of investors means shareholders usually have little power, with votes at annual meetings often resembling Soviet-era elections

License to print money through bargaining power

I am reading in Straits Times how Visa is putting pressure on the taxi operator ComfortDelgro to stop charging a 10% surplus for Visa payments (here). I am impressed by Visa's public relations department. They make Comfort look like the bad guy and Visa seems to be on the consumer's side.

Vietnam and Sweden

I recently visited Vietnam and growing up in Sweden I was aware that Sweden was very generous in economic help to the Socialist Republic of Vietnam in the 1970s and 1980s. At least that is what I was proudly told by my school teachers. Investigating the question a bit further I found a long self-congratulatory report written by SIDA, the Swedish Government Foreign Aid Agency, which administers all foreign aid.

Industry rivalry

The most destructive kind of competition for an industry is price competition. Several structural factors influence the likelihood that the industry will be characterised by price competition.

This is post six in a series on industry analysis.

Social entrepreneurship is good for society

My blog is really about business strategy, but I have given my view on corporate social responsibility so I thought I should also balance the discussion by commenting on social entrepreneurship, which is something totally different.

Corporate social responsibility is bad for society

One of the most trendy topics in management research is corporate social responsibility. Trendy topics attract a lot of muddled thinking and muddled thinking can be dangerous. I think the focus on corporate social responsibility is outright bad.

Threat of substitutes

Substitutes to the products and services offered by the focal industry can be a serious threat to profitability or, in some cases, even the survival of the focal industry. Customers buy products to fulfil their needs. A product can satisfy a need, but so can the substitutes to the product. It is important to understand the needs a product fulfils before the full range of substitutes can be identified. This was first noted by Ted Levitt in a classic article:

The railroads did not stop growing because the need for passenger and freight transportation declined. That grew. The railroads are in trouble today not because that need was filled by others (cars, trucks, airplanes, and even telephones) but because it was not filled by the railroads themselves. They let others take customers away from them because they assumed themselves to be in the railroad business rather than in the transportation business. The reason they defined their industry incorrectly was that they were railroad oriented instead of transportation oriented; they were product oriented instead of customer oriented. (Harvard Business Review, 1960)

This is post five in a series on industry analysis.

Groupon - find another company like this and you will be rich

Groupon's CEO Andrew Mason has finally resigned after one of many terrible quarterly reports (here).

After four and a half intense and wonderful years as CEO of Groupon, I've decided that I'd like to spend more time with my family. Just kidding - I was fired.  

The stock market did not like Mason, so the share price might get a boost in the coming weeks. Longer term, the company has already lost almost everything, and it is possible that a new CEO will create a successful new strategy for the company. This post will look at the old strategy of Groupon.

Two groups of student in my Strategy class picked Groupon as a future big loser back in March 2012. After the students' analysis the company is down 77%. My analysis below presents a synthesis of the students' arguments of one year ago.