Transcript THE NONMARKET ENVIRONMENT OF MANAGEMENT Introduction

THE NONMARKET
ENVIRONMENT OF
MANAGEMENT
Introduction
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Sources of Market Power
Effective product-market strategies
and tactics
 Special knowledge about product or
production techniques that enables
you to make a better product that
other firms cannot imitate or to make
it at a lower cost

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 Collusion
with other
organizations in the market
 Government
protection
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Success in games of strategy =
market power
Market management is concerned
primarily with the product-market
arena
 Nonmarket management is
concerned with getting and defeating
government protection, creating and
overcoming government imposed
handicap, collusion and overcoming
collusion

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Managers are responsible for the
formulation and execution of
nonmarket as well as market
strategies.
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Effects of Government Function are
PERVASIVE
EVERY ACTION of GOVERNMENT
affects the LEVEL and
DISTRIBUTION of WEALTH in
SOCIETY
POLITICAL PARTICIPATION is
driven primarily by SELF INTEREST
SELF INTEREST is driven primarily by
DISTRIBUTIONAL concerns
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Individuals & Organizations
exchange assets for political
influence
• Knowledge/Information
• Organization/Time
• Personal relationships
• Money
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Individuals & Organizations
often exchange political
influence for other assets
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2 of the 4 Is.
INSTITUTIONS and
INTERESTS
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We can talk about
Institutions three ways:
• Structure
• Function
• Process
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Structure

Government/Nongovernment
• Level of Government
– Subnational
– National
– Transnational
• Branch of Government
– Legislatures
– Regulatory and Administrative Agencies
– Judiciaries
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Functions
–Spending
–Taxing
–Regulating
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How Government Affects the
INTERESTS of ORGANIZATIONS
• SPECIFICALLY
• by CHANGING their
COMPETITIVE POSITION
(the tax code specifies nominal incidence,
supply and demand real incidence)
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Processes
–Decision-Making Processes
• Voting Procedures
• Adversarial Due Process
• Administrative Due Process
• Administrative Discretion
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Voting
Majority Rule has a
distinctive
equilibrium
MEDIAN VOTER
 Preferences must
be “single peaked”

• single dimension
• coherent
preferences
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Agenda Control
 Reversion
point (Status Quo?)
 Voting rule
• Pairwise comparison, plurality, or
unanimity?
• Order in which alternatives are
considered
• Sidepayments?
• Single site or multiple sites?
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Committee and Individual
Power
 Committee
•
•
•
•
Power
Policy Jurisdiction
Expertise
Agenda Control
Bargaining, Vote Trading, Coalition
Building
 Individual
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