Summary of Collaborative Advantage

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  • Innovative


Jeffrey Dyer, an accomplished scholar and management teacher, has developed a cogent and sophisticated theory of extended enterprise management based on a wealth of empirical data from the history of Toyota in Japan and from his six-year study of Chrysler Corp. before its merger with Daimler-Benz. Beyond being a detailed and rigorous case study of the automobile manufacturing industry, Dyer’s book presents an extremely valuable model for vertical integration. His model can be applied to other complex product industries, though he is honest about the limits of its applicability. This book provides a clear, effective blueprint for achieving value-chain collaboration. getAbstract recommends it to consultants, executives in complex product industries and leaders in firms that supply components or materials. If you always suspected you were part of a greater whole, now you can be sure.

About the Author

Jeffrey H. Dyer is an associate professor and holds the Donald Staheli Term/Chair in international strategy, organizational leadership & strategy at Brigham Young University. He has worked as a consultant and manager for Bain & Co.



Competition and Collaboration

How companies achieve competitive advantage is a fundamental question in strategic management. The two traditional answers are either the "industry structure" approach, which views the industry itself as the most important factor, or the "resource-based" view, which says that competitive advantage resides in a firm’s differentiated, value-added resources and capabilities. Both answers omit the competitive value of the production network, or value chain. Traditionally, a company manages its value chain in one of three ways:

  1. Vertical integration: Bring production in-house - Transaction cost theory generally suggests customization and dedicated asset utilization as the criteria for vertical integration (that is, bringing functions in-house). General Motors, for example, produces 65% to 70% of its own components. Over time, though, problems become apparent. Vertical integration entails little competition (because the buyer wouldn’t go elsewhere), limited access to customers (such as competing manufacturers), increased labor costs (because large automakers tend to be unionized), and created a larger, less flexible...

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