Ross School of Business
University of Michigan
701 Tappan Street
Ann Arbor, Michigan 48109
In Thomas G. Cummings (Ed.) Handbook of Organizational Development, (pages 429-445) Thousand Oaks, CA: Sage Publishing.
A Process for Changing Organizational Culture
University of Michigan
Much of the current scholarly literature argues that successful companies--those with sustained profitability and above-normal financial returns--are characterized by certain well-defined external conditions. These conditions include having (1) high barriers to entry (e.g., the difficulty of other firms entering the market, so few, if any, competitors exist), (2) non-substitutable products (e.g., others cannot duplicate the firm’s product, and few, if any, alternatives exist), (3) a large market share (e.g., the firm can capitalize on economies of scale and efficiencies by dominating the market), (4) buyers with low bargaining power (e.g., purchasers of the firm’s products become dependent on the firm because they have no other alternative sources) (5) suppliers with low bargaining power (e.g., suppliers to the firm become dependent because they have no other alternative customers), (6) rivalry among competitors (e.g., incentives to improve are a product of rigorous competition), and (7) rare products or services (e.g., offering something that no other company provides) (Porter, 1980; Barney, 1991). Unquestionably, these are desirable features that clearly should enhance financial success. A substantial amount of research supports the importance of these factors. However, what is remarkable is that several of the most successful U.S. firms in the last 20 years have had none of these competitive advantages. The top five performers in the last two decades of the twentieth century—before the dot.com
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