The Additional Problem of Economics

No. Date : Getting to management action : The Additional Problem of Economics Even iF we can identify the source of a particular succes or inded the cause of a particular failure, it is a big Jomp to assuming that suitable action can be taken at no cost or even at a cost which IS justified by the sub sequent benefits Whe there fore need to overlacy our notion oF practical significance with one of economic significance : a factor or set of Factors which explain a significant proportion of sucess can also be used at as a decision rule For subsequent SucRssful management action, this is big jump. To reform to the market share / R01 relationship, even IF we conclude that there is a significant correlation between market share and profitability, we have to make two F urthor assumption tojustify an economic role of investing in market shone. First we have to move From the more general notion of coretation or explanation to the much more specific one of cau sation. Second, we have to assume that whatever Its benefits, market shore is somehow underpriced IF our first assumption SiDU CS Dipindai dengan CamScanner

No. Date: 13 correct then broadly it can only be underpriced potential if either our competitors both current and potential have 9 different view or, for some unspecifed reason happen to value the asset (market share) significanty lower then we do. In Fact, in specific situations this latter assumption may be rather less unlikely than it at first appears: our competitors coul indeed value the benefits differently given their differing portofolio of assets and market positions.