Summary: Lecture 6

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• Porter suggests that the firms’ strategies should be tailored, according to the strength of the so-called five forces:

  •The threat of entry
  •The threat of rivalry
  •The threat of substitutes
  •The threat of powerful suppliers
  •The threat of powerful buyers

• So what is non-market theory?

  The application of the conclusions of other fields – which more abstractly point to the significance of institutions – to the study of management and strategy, where the purpose is to gain an advantage.

• The non-market environment is characterised by four ‘I’s:

  1. Issues 2. Institutions 3. Interests 4. Information

• A Non-Market Strategy can be used to…

  1.Create opportunities for self
  2.Alter rival’s current opportunities
  3.Block rival’s opportunities altogether
  4.Reducing threats from rivals
  5.Reducing threats from the state
  6.Mitigating threats
  7.Creating threats and uncertainty
  

• What is an ‘Integrated’ Strategy?

  "Firm performance depends on the ability of the manager to shape their regulatory framework, as well as on their ability to succeed directly in the market place." (Holburn and Vanden Bergh, 2006).
  

• how the non-market shapes business:

  the literature considers the role of:
  1.Fiscal Factors.
  2.Legal Factors
  3.Political Factors
  

• Corporate political strategy

  Involves the activities taken by organizations to acquire, develop, and use power to obtain an advantage.
  

• But what exactly is involved in corporate political activism?

  1.Financial-incentives strategy: businesses provides incentives to influence government policymakers to act.
  2.Constituency-building strategy: businesses seek to gain from other affected organizations to better influence government policymakers to act in a way that helps them.
  3.Information strategy: businesses provide government policymakers with information to influence their actions.

• Soft money (financial incentives) 

  Contributions to the national political parties by individuals or organizations for party-building activities (golden rule of politics: he who has the gold, rules.

• stakeholder coaltions (constituency building strategy)

  Businesses influence politics by mobilizing various stakeholders to support its political agenda.