【正文】 setting, it is important to consider economies of scale ? The history of the industrial revolution was one of economies of scale. ? In markets where consumers are price sensitive, larger firms can use their cost advantage to gain an appreciable advantage over smaller firms. ? In the US, it has been shown that firm size is positively correlated with profitability. ? However, cause and effect are not wellestablished. ? Also, larger shares for some, mean lower shares for others. 2020/7/6 William A. Fischer 12 In such a classical market setting, it is important to consider economies of scale ? The history of the industrial revolution was one of economies of scale. ? But even in such a nonplex setting, bigger was not always better. – In fact, in studies in the US, midcentury, minimum optimal plant/firm size appeared to be small relative to market size [singledigit]. 2020/7/6 13 The Centrality of Scale Economies ? The Economics of the Industrial Revolution Static Economies Dynamic Economies Cost per Unit Rated Capacity of Facility Cost per Unit Cumulative Production of A Standardized Item Theoretical amp。 they are no longer classical nor simple 2020/7/6 William A. Fischer 19 The History of Competition was marked by successive Industrial Revolutions C r af t /H o u se h o ld B u si n es se sIn d u st r ia lR ev o lu t io n S ci en t if icM an ag em en tF u n ct io n alP r o f es si o n al ismK no w leg e In t en si ve O r gsM anagem e ntPer f or m ance2020/7/6 William A. Fischer 20 Tomorrow抯 Markets will be characterized by: ? * Increasingly demanding customers ? * An emerging global arena ? * An amalgamation of markets and resource pools [EU, NAFTA, etc.] ? * The appearance of adversarial trade ? * NeoKondratieffian technology changes ? * The quickening of the product lifecycle ? * The emergence of the knowledgebased information economy ? * An acceptance of new anizational formats [Alliances, jvs, wofes, etc.] 2020/7/6 William A. Fischer 21 The Death of Firms A dying pany does not lead。 Waterman 2020/7/6 William A. Fischer 25 More recent findings from Europe Excellent European firms are characterized by (among other things): Devolving leadership (without losing control or direction) Driving radical change (in the entire corporate system, not just in its parts) Reshaping culture Dividing to rule (winning the rewards of smallness while staying or growing large) Keeping the petitive edge (in a world where the old ways of winning no longer work) Achieving constant renewal Robert Heller 2020/7/6 William A. Fischer 26 Determinants of Financial Performance ? peting in relatively concentrated markets with higher market share ? peting in growing markets ? high investment in developing new products amp。D budgets are highly vertically integrated have little diversification have low debt highly specialized in their