Measurement of Competitive Advantages and Market Attractiveness for Strategic Controlling

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 consider- ations 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