Any businessman who can answer certain basic questions better than his competitors has a major strategic advantage. Most of these questions are asked constantly., in one form or another, in virtually every company:
- What are my competitor’s costs?
- Why do I make so much money on one product but lose money on an equally good one?
- How shall I price this new product?
- How much is more market share worth for a given product? Alternatively, what are all the costs of losing market share?
- Should I lower prices? When? By how much?
- How much capacity shall I add? When?
- What will prices be next year? Five years from now?
- Why have my prices broken so sharply? Where will the decline stop?
All these issues are part of a single fundamental question: Why does one competitor outperform another (assuming comparable management skills and resources)? Are there basic rules for success?
From the introduction to Perspectives on Experience by The Boston Consulting Group, 1968