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competitive strategy

John McGee


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There can be great differences between the abilities of firms to succeed – there are fundamental inequalities between most competitors. This contrasts with the conventional economics textbook view of perfect competition, which holds that firms are essentially similar, if not the same, and that over time their performances will converge on a minimum rate of return on capital. Less efficient firms will be obliged to exit and the more efficient firms will be subject to imitation. But the competitive strategy view of the firm is that understanding and manipulating the factors that cause these inequalities, so as to give the firm a sustainable competitive advantage, largely governs long‐term business success. These factors vary widely; so different businesses, even within the same industry, often need to be doing different things. Thus, there are many strategies open to firms. The usual starting point is to recognize that strategy is the outcome of the resolution of several different, conflicting forces. These are summarized in figure 1 . Figure 1  An overview of the influences on competitive strategy Society has expectations of its business organizations. Owners, managers, and other implementers of strategy have their own personal values and ambitions. The company has strengths and weaknesses, and the industry context offers opportunities and threats. The traditional top‐down view ... log in or subscribe to read full text

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