Chapter MC, Problem 5.2DQ

Summary Introduction

Case summary:

Company A is the first company which has crossed the stock market valuation of $800 billion thresholds. Company M has invested $150 million in Company A, otherwise, Company A would have gone bankrupt. The major cause for their success is their strategy. In 2001, they have introduced their portable digital music player and they have opened their first retail outlet

Later, they entered the smartphone market, online stores, and the tablet computer industry. They enjoyed dramatic increases in their profits, revenues, and stock market valuation due to the combination of intellectual property, iconic brand value, and tremendous brainpower. The three elements that are important for the good strategy are diagnosing the competitive challenges, guiding policy to address the challenge, and the actions to implement the guiding policy.

To determine: Whether the success of Company A is attributable to industry effects,firm effects, or both.