Writing Assignment 1 MKTG 601

.docx

School

University of Southern Indiana *

*We aren’t endorsed by this school

Course

601

Subject

Marketing

Date

Jun 27, 2024

Type

docx

Pages

Uploaded by UltraWalrus4371

Writing Assignment 1 MKTG 601 Ren Tachioka 1. Theory of the Firm 1A.Explanation of a specific theory of the firm from the article: According to Slater (1997), one of the theories of the firm mentioned is neoclassical theory. He states that in this theory, "the firm exists to combine labor and capital to produce an end product" with the goal of "profit maximization, which is accomplished by setting output at the point where marginal costs equal marginal revenues" (Slater, 1997, p. 162). The neoclassical view makes assumptions of perfect competition, homogeneous demand, perfect and costless information for firms and consumers (Slater, 1997, p. 162). Slater criticizes this theory, noting that "on examining the neoclassical theory, 'one finds a theory of production masquerading as a theory of the firm'" (Slater, 1997, p. 162). 1B.Two ways a customer value-based theory of the firm is different from the theory explained in (1A):  Unlike profit maximization, a customer value-based theory considers the firm's ability to create value for customers as the primary objective. As Slater states, "firms exist to provide a product or service because it is neither efficient nor effective for buyers to attempt to satisfy all their needs themselves" (Slater, 1997, p. 164, ).  It accounts for imperfect markets where firms can differentiate themselves through unique capabilities and resource combinations that create customer value, contrasting the neoclassical assumptions of homogeneity. Slater (1997) highlights that " the resource-based view does not include the assumptions of perfect information, homogeneous resources, and resource mobility within industries" (Slater, 1997, p. 163). 2. Virtue Matrix 2A. Explanation and example of strategic action in the frontier Strategic action in the frontier refers to corporate behavior that increases social responsibility while also enhancing shareholder value, even if that benefit to shareholders was not the original motivation. These actions originate from intrinsic motivations by corporate leaders to simply do the right thing, but coincidentally also provide a strategic business advantage.

An example is Prudential Insurance's 1990 introduction of viatical settlements, which allowed people with AIDS to cash in their life insurance policies early to pay for medical expenses. This was initially an intrinsically motivated act to help a vulnerable group access needed funds. However, it generated immense goodwill that provided a strategic business advantage for Prudential. As the article states, "Socially responsible corporate practices in the strategic frontier tend to migrate to the civil foundation as other companies imitate the innovator until the practice becomes the norm" (Martin, 2002, p.71). 2B . Explanation and example of structural action in the frontier Structural actions in the frontier represent corporate behaviors that benefit society but reduce shareholder value or profitability. These actions face structural barriers or disincentives because they are intrinsically motivated to do social good rather than enhance the company's strategic position or bottom line. An example of a structural frontier action is a chemical company investing heavily in reducing greenhouse gas emissions from its operations. While this aims to provide an environmental benefit to society, if the company's competitors do not follow suit, it puts the company at a cost disadvantage that erodes its competitiveness. As the article states, "Unless widely adopted, are both detrimental to shareholders and ineffectual in establishing socially beneficial norms" (Martin, 2002, p.71). The article uses the hypothetical case of a company significantly reducing emissions at great expense: "If the producer's rivals refuse to follow suit, the company may undermine its own cost-competitiveness without significantly lowering overall greenhouse-gas emissions" (Martin, 2002, p.71). This highlights the structural barrier faced by environmental leadership that does not align with shareholder interests unless it becomes a widespread practice. Reference: Slater, S. F. (1997). Developing a Customer Value-Based Theory of the Firm. Journal of the Academy of Marketing Science , 25 (2), 162 . https://doi- org.univsouthin.idm.oclc.org/10.1007/BF02894352 Martin, R. (2002). The Virtue Matrix: Calculating the Return on Corporate Responsibility. Harvard Business Review, 80(3), 68–75.

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version