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Is There an Optimal Strategic Approach in Gaining Superior Financial Performance in a Hypercompetitive Environment?

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Cand. Merc. IMM INTERNATIONAL MARKETING AND MANAGEMENT

“Is there an optimal strategic approach in gaining superior financial performance in a hypercompetitive environment?”

Topic no. 2

Authors: Kristofer Edholm Alexandra Johansen

Advisor: Magdalena Dobrajska

Date of Hand-in: 19/12 – 2012

“IS THERE AN OPTIMAL STRATEGIC APPROACH IN GAINING SUPERIOR FINANCIAL PERFORMANCE IN A HYPERCOMPETITIVE ENVIRONMENT?”

ABSTRACT
Hypercompetition has made competition more aggressive, and effective strategies have become vital in order for companies to remain competitive in the vigorous marketplace. The paper will study the two most commonly used theories within strategic planning, the Industrial Analysis and the Resource-Based View, to see which is more effective in order to increase financial performance in a hypercompetitive environment. The paper will first look at the overall effect of hypercompetition on the marketplace. Secondly, the Industrial Analysis effect on financial performance in hypercompetition will be examined, and thirdly, the effect the Resource-Based View has on financial performance considering hypercompetitive challenges. Finally, the paper ends by concluding that a strategy based on RBV will have greater effect on financial performance in a hypercompetitive environment, which suggests that managers' should spend more resources concerning companies' internal environment than the external in order to increase their return on investments.

2

INTRODUCTION
Globalisation has been identified as a key driver of hypercompetition which has transformed the marketplace by higher degree of uncertainty, rapid technological changes and price wars (Harvey, Novicevic, & Kiessling, 2001). Hypercompetition has toughened competition, forcing firms to respond with better ideas at a faster pace and leaving less room for mistakes. In order to achieve

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