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Measurement of competitive advantages and market attractiveness for strategic controlling

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Abstract

Knowledge about the existence or extension of competitive advantages and a comprehensive picture of a target market are important inputs for strategic planning and control. These two factors determine, among other things, the yield and risk of a strategic business unit. Higher market attractiveness and more competitive advantages result, ceteris paribus, in higher success. A valid measurement of these two dimensions should be crucial for strategic controlling. Based on theoretical considerations of the market-based and the resource-based view of strategy, and in addition, on a brief overview of empirical studies measuring these constructs, we present our own analysis showing the extent to which the core of these earlier findings can be confirmed. Summing up, we examine whether these two dimensions can be understood as latent variables and whether they can be measured with a few individual indicators using several empirical data sets from the field of industrial goods research. Finally we apply these findings in a case study.

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Notes

  1. On other success potentials and success factors, see Breid (1994), p. 37.

  2. Additional interesting success factor investigations for German companies may be taken from Daschmann (1994) and Simon (1990).

  3. The ROI is the ratio between operating results (pre-tax-profit and interest on outside capital) and the sum of investment capital (at book value) as well as stocks and accounts receivable arising from supplies and payments (“Working Capital”), minus liabilities arising from supplies and payments and payments received.

  4. A more detailed overview may be found in Gleißner (2000), p. 40–46.

  5. The equation shown above, which arrives at conclusions relating to the profitability of a business area based on the values of the six individual criteria, is a heuristic function ascertained by means of static analysis supplemented by expert estimations (regression analysis). Based on the limited availability of data and the concomitant lack of clarity of the forecast (which can be quantified based on the disturbance variable), such a function can only be indicated as an orientation value of profitability; in this regard, the function is to be understood as consolidated knowledge based on experience and expert know-how possessed by the company with regards to the relationships between market attractiveness and competitive advantage with regards to attainable profitability.

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Authors and Affiliations

  1. CEO FutureValue Group AG, 70771, Leinfelden-Echterdingen, Germany

    Werner Gleißner

  2. Chair of Strategic Industrial Marketing, University of Regensburg, Regensburg, Germany

    Roland Helm

  3. Chair of Marketing, Friedrich-Schiller-University Jena, Jena, Germany

    Susanne Kreiter

Authors
  1. Werner Gleißner
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  2. Roland Helm
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  3. Susanne Kreiter
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Correspondence to Roland Helm.

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Gleißner, W., Helm, R. & Kreiter, S. Measurement of competitive advantages and market attractiveness for strategic controlling. J Manag Control 24, 53–75 (2013). https://doi.org/10.1007/s00187-013-0167-1

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