Week 6: reading reflection

Week 6's reading reminded me of a paper I had to write in macroeconomics about market models--oligopoly, monopoly, monopolistic competition, perfect competition. The basis of the article is something most business students know, the five forces that shape strategy, but there is valuable information beyond the concepts this article reinforces.

Being nit-picky, on the profitability of selected U.S. industries chart, does the second to last industry say catalog, mail-order houses? I gather that means mail-order catalogs sent to houses NOT houses ordered from catalogs. They may want to reword that. And why were knitting mills selected for the list? And men’s and boys’ clothing but not women’s?

I particularly like the quote, “substitutes are always present, but they are easy to overlook because they may appear to be very different from the industry’s product.” Out of everything in the article, I think the section about substitutes was most interesting to me because Porter is right, substitutes could be elusive. How do you create strategy to combat the unknown, speculation? It's delicate and requires a hefty combination of research and intuition. The more I read, the more strategists seem like magicians. Industry analysis, and avoiding things like undermining one's own success by accidentally shifting the power to someone else, intrigues me.

Oh, and the notion that “video rental outlets are struggling with the emergence of cable and satellite video-on-demand services, online video rental services such as Netflix and the rise of internet video sites like Google’s YouTube.” Excuse me, struggling? Can you find a video rental store? I wanted a movie the other night that I could have only gotten from Blockbuster; my combined resources of Redbox, Netflix, HBO NOW and the Internet failed me (for immediate watching, at least). I’d have to disagree that video rental stores are struggling; they’ve died.

I would like more information about selecting appropriate time horizons and how lead time affects entrepreneurs. I've never envisioned entrepreneurs planning far in advance (i.e. decades), which comes as a surprise to me. Why do I hear entrepreneur and venture and think of a slapdash trip down the rabbit hole, fast and furious? I suppose it's because there is strong emphasis on innovation and beating others to the finish line. 

Agreed that understanding industry structure and what shapes it is important for investors and managers alike.