• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Valize
  • Subscribe
  • Contact
Rita McGrath Group

Rita McGrath

Author. Speaker. Consultant.

  • Home
  • Learn About Rita
  • Work with Rita
  • Rita’s Work
    • Podcast
    • Books
    • Videos
    • Articles
    • Press
  • Thought Sparks
  • Events

September 5, 2013

Investing In An Age Of Transient Competitive Advantages: A Book Review

John Mason of SeekingAlpha.com reviewed The End of Competitive Advantage, by Rita Gunther McGrath, published by the Harvard Business Review Press in 2013.

I like to think of myself as a “value investor.” That is, I believe that I invest in quality companies that are underpriced.  In terms of the quality of the organizations I like to invest in, I look for firms that have established a competitive advantage in their industries and are earning at least a 15% return on equity, after taxes. To judge the quality of management and its staying power, I look for those organizations that have a sustainable competitive advantage, defined as earning a 15% return on equity, after taxes, for a period of five to eight years. And, to capture the fact that a stock may be underpriced, I look for a low price/earnings ratio.

Other factors that have been important in my analysis are the industry share the company achieves and protects and the stability of this share over time. Of course, these are the quantitative factors and must be supplemented by other factors, such as an examination of management, industry make-up, and governmental factors that might contribute to firm performance.

Well, starting right here, Dr. McGrath starts to eat away at this picture. For one, she argues that industry boundaries are no longer that important. She argues that “arenas” are more crucial in the modern environment. The important thing in today’s world is that there are connections between “the outcomes that particular customers want (the jobs to be done)” and “the alternative ways those outcomes might be met” (page 10). Industry lines are not the determinants of what products one should be producing and what markets they should be sold in. Thus, don’t just look to the competitors that fit nicely into the definitions of what a particular industry does.   To read the entire review, click here, and register on the site.

Filed Under: Uncategorized

Primary Sidebar

Previous Sparks

  • 2023
    • March
    • February
    • January
  • 2022
    • December
    • November
    • October
    • September
    • August
    • July
    • June
    • May
    • April
    • March
    • February
    • January
  • 2021
    • December
    • November
    • October
    • September
    • August
    • July
    • June
    • May
    • April
    • March
    • February
    • January
  • 2020
    • December
    • November
    • October
    • September
    • July
    • June
    • May
    • April
    • March
    • February
    • January
  • 2019
    • December
    • November
    • October
    • September
    • August
    • July
    • June
    • May
    • April
    • March
    • February
    • January
  • 2018
    • November
    • October
    • September
    • July
    • June
    • April
    • March
  • 2017
    • July
    • June
    • May
    • March
    • January
  • 2016
    • December
    • October
    • August
    • July
    • June
    • May
    • March
    • February
    • January
  • 2015
    • November
    • October
    • September
    • June
    • April
    • March
    • February
  • 2014
    • December
    • November
    • October
    • August
    • July
    • June
    • May
    • April
    • March
    • February
    • January
  • 2013
    • December
    • November
    • October
    • September
    • August
    • July
    • May
    • April
    • March
    • February
  • 2012
    • December
    • November
    • October
    • September
    • August
    • July
    • June
    • May
    • April
    • March
    • February
    • January
  • 2011
    • December
    • November
    • October
    • September
    • August
    • July
    • June
    • May
    • April
    • March
    • February
    • January
  • 2010
    • December
    • November
    • October
    • September
    • August
    • July
    • June
    • May
    • April
    • March
    • February
    • January
  • 2009
    • December
    • November
    • October
    • September
    • August
    • July
    • June
    • May
    • April
    • March
    • February
    • January
  • 2008
    • December
    • November
    • October
    • September
    • August
    • July
    • June
    • May
    • April
    • March
    • February
    • January
  • 2007
    • December
    • November
    • October
    • September
    • August
    • June
    • May
    • April
    • March
    • February
    • January
  • 2006
    • November
    • October
    • September
    • August
    • July
    • June
    • May
    • April
    • March
    • February
    • January
  • 2005
    • December
    • November
    • October
    • September
    • August
    • July
    • April
    • March

Topics

  • Academic Concerns
  • Articles
  • Business School
  • Business Start Ups / Entrepreneurship
  • Business Strategy
  • Careers
  • Case Studies and Applications
  • Checkpoints
  • Competition
  • Complexity
  • Customer insight
  • Digital
  • Discovery Driven Planning
  • Event Announcements
  • Executive Education
  • Friday Fireside Chat
  • Fun
  • Growth
  • Growth Options / Real Options
  • Individuals
  • Innovation
  • Innovation Flops
  • Innovation Maturity Scale
  • Insights and ideas
  • Jobs
  • Leadership
  • News Archives
  • Opportunities
  • Profitable Organic Growth
  • Reviews
  • Seeing Around Corners
  • Strategy Dynamics
  • Strategy Execution
  • Technology
  • Thought Sparks
  • Tools
  • Transient Advantage
  • Uncategorized
  • Valize
  • Videos
  • Women's leadership

Footer

For Subscribers

  • Opportunity Portfolio Toolkit
  • Seeing Around Corners Workshop Guide
  • Get Premium Content with Thought Sparks!

Connect with Rita

Rita McGrath Group
P.O. Box 7286
Princeton, NJ 08543

  • © Copyright 2004-2023 Rita McGrath Group. All Rights Reserved.
  • • Privacy Policy
  • Created with ✨ by Moxie Design Studios
This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish.Accept Reject Privacy Policy
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT
Scroll Up