THE NONMARKET ENVIRONMENT OF MANAGEMENT

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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

3

• Collusion with other organizations in the market
• Government protection

4
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.

6

• 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

8

• 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