Provide examples of businesses where network effects would or would not apply.
Answer to relevant QuestionsWhat more could be done by boards of directors and shareholders to ensure that managers pursue long-term value creation? Which type of business, a software company or an electric utility, would benefit more from improving ROIC than from increasing growth? Why? What is the expectations treadmill and how does it affect managers’ ability to deliver above-average TRS over long periods of time? Why are competitive advantages based on brands, as in the consumer goods industry, often more important for long-term value creation than advantages based on product quality or innovation? If growth fromgaining market share through product promotion and pricing rarely creates much value, why do most consumer goods companies put so much effort into it?
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