Does the stock market put pressure on companies to reduce R&D?

The field of finance used to be very dogmatic regarding the efficiency of financial markets. Kuhn (The Structure of Scientific Revolutions) said that new paradigms only surface when the older generation of researchers die. The generation of arrogant, efficient-market fundamentalists in finance is now largely gone. Younger researchers document many interesting phenomena. There is not yet a new paradigm, though. This post looks at how companies' R&D effort change when they are subject to stock market pressure.

What is an entry barrier?

New entry into an industry will increase the number of competitors, which in turn will increase rivalry in subsequent time periods. It is possible to estimate the likelihood that new entry will happen by assessing the size of the barriers to entry.

This is post nine in a series on industry analysis.

JC Penney share price back on 1986 levels

JC Penney just fired Ron Johnson, its less than competent CEO (good article here). His tenure is a classic example of how to destroy a company by bad strategy and bad management. None of this analysis is based on hindsight, but on a student report from March 2012. Since the student report, the company has underperformed index with 74%.

Will Facebook Home increase Facebook's revenue?

Facebook has just introduced the Facebook Home application for a selected set of Android smartphones from Samsung and HTC. Is this a good idea?

Book review: "Good strategy bad strategy"

Dick Rumelt was my prof in Strategy when I did my MBA at INSEAD. I was quite impressed by him, but always wondered why he did not write a book. Now he has written that book. It is a good, but only for a niche audience.

Corporate government advice from Singapore

Can the government of Singapore have something to teach the world of corporate governance in large listed companies? I think so. It used to be the case that the retiring Prime Minister became Senior Minister.

In defense of "Built to Last"

Jim Collins and Jerry Porras wrote Built to last: successful habits of visionary companies back in 1994. The book has sold millions of copies. It identified 18 great companies and compared them to 18 merely good companies. Based on this research, the authors identified a number of management principles. I would not recommend reading the book today, but I want to defend the book in this posting.

Bargaining power of suppliers

Each supplying industry has to be evaluated separately. The first focus should be on supplying industries that represent a large portion of total cost for the focal industry. This posting will highlight the main drivers of supplier power.

This is post eight in a series on industry analysis.