A natural monopoly occurs when an industry gives the best social outcome if it is run by a single firm. For instance, building two railways lines to a small town wastes resources. the two lines, therefore, don’t increase public welfare. What can we say about natural monopoly and the Beer Store? The Problem Of Monopoly…
Category: Competition
Simplification, Oversimplification, And Competitive Advantage
There are many ideas to learn in strategy. It is helpful to convey them in a clear and easy-to-understand manner. Yet I have concerns about oversimplification and competitive advantage. Simplifying Competition Bruce Greenwald‘s and Judd Kahn’s book has great cases and it is easy to see why managers might find the certainty they communicate useful. They suggest simplifying…
David, Goliath And Malcolm
It seems fashionable to denigrate Malcolm Gladwell. Academics moan; “he is conceptually loose and borrows ideas from other people”. It reminds me of Louis in Casablanca. People seem shocked to hear that gambling is going on. What were the critics expecting? Of course, Gladwell popularizes other people’s ideas. (For the record he can borrow and…
Confusopoly
In the UK the agency responsible for promoting competition and generally getting consumers a good deal was the Office of Fair Trading, the OFT. (Written a few years ago this UK regulators have since changed). Interestingly this government agency used a concept from Scott Adams (of Dilbert fame) to illustrate a major problem in competition….
Good And Bad Profits
Fred Reichheld is best known for his (over) exuberant advocacy of the Net Promoter Score. Introducing Net Promoter he suggests a difference between good and bad profits; an interesting, though theoretically imprecise, idea. Are All Dollars In The Same? Short of outright fraud, isn’t one dollar of earnings as good as another? Certainly, accountants can’t…
Measuring Competition 2: The Bendle Panda Index
The Herfindahl Index covered in the prior post is an excellent way of measuring competition. Sadly it involves squaring market shares. This seems too much math so in the spirit of simple metrics I’m suggesting a new measure of competitiveness; the BPI or The Bendle Panda Index. It makes Net Promoter look complex and Gigerenzer…
Measuring Competiton 1 The Herfindahl Index
The competitiveness of any industry matters. One way to measure competitiveness is the Herfindahl Index, also known as the Herfindahl-Hirschman Index. Competition Changes Market Outcomes Consumers usually get a bad deal in “concentrated” markets. This is because markets with fewer significant players usually mean less competition. This matters to managers too. If you are considering entering…
Winning And Political Marketing
Winning and political marketing go together like curry and naan. You can have one without the other but it isn’t ideal. As a former political party Finance Director I would have cried if someone had suggested deliberately not using the best techniques we could to win. (More robust staff would probably have washed the person’s…
Surviving Paranoia
I don’t like Paranoia. Excessive fear of other people is a major social problem and encouraging it is just plain wrong. We need to concentrate on getting past it, surviving paranoia. Do Only The Paranoid Survive? Thus I’m not a fan of Andy Grove’s “Only the Paranoid Survive” (Grove 1996). It is not that there…
Marketing And The Republican Autopsy
The Republican’s recently issued an interesting competitive analysis of how the party’s marketing operations stack up. [Published in 2013]. The Growth and Opportunity Project has been dubbed the “Republican Autopsy”. This basically accepted that the 2012 national elections were a disaster for the party. So what can we learn from marketing and the Republican autopsy? Criticism…
