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Strategists analyze market forces—great strategists also look beyond the market
Traditionally, corporate strategists define industry structure, competitive positions, resources, and knowledge flows as the key sources of competitive advantage. Within these sources, they look for areas of opportunity in the market that can lead to above-market returns.
But this market-based approach is not enough to ensure extraordinary financial performance, according to Felix Oberholzer-Gee, the Andreas Andresen Professor of Business Administration and Senior Associate Dean, Chair, MBA Program. He has defined a broader approach that involves looking beyond the market to the actions of government and interest groups that also seek market imperfections and try to fix them through legal or social means.
"These non-market forces can affect the 'rules' of competition: think of Google's continued deliberations with US and EU competition and consumer protection authorities or Walmart's stumbles in dealing with public opposition," says Oberholzer-Gee.
He and HBS collaborator Dennis Yao, the Lawrence E. Fouraker Professor of Business Administration, have developed a diagnostic tool to help companies assess the value that a given strategy offers, the intrinsic market imperfections, and the potential effect of non-market forces on these imperfections.
(Published April 2014)
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