Published by:
MIT Sloan School of Management
Length: 13 pages
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https://casecent.re/p/6548
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Abstract
Does the strategy of linking market share to profits really work? This investigation argues that there is simply no causal relationship between market share and profits. In highly volatile industries, market-share-based strategies can be misleading. The authors provide evidence from two studies, one using the FTC Line of Business data and the other employing data on the performance of sixty-three companies in three countries. In the first case, companies that maintained stable operations were more profitable than those that maintained stable market shares. In the latter, Japanese companies in a wide variety of industries had more stable operations than comparable US firms.
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Abstract
Does the strategy of linking market share to profits really work? This investigation argues that there is simply no causal relationship between market share and profits. In highly volatile industries, market-share-based strategies can be misleading. The authors provide evidence from two studies, one using the FTC Line of Business data and the other employing data on the performance of sixty-three companies in three countries. In the first case, companies that maintained stable operations were more profitable than those that maintained stable market shares. In the latter, Japanese companies in a wide variety of industries had more stable operations than comparable US firms.