Surviving the Bulls and the Bears: Robust Strategies and Shareholder Wealth

This paper raises the issue of robustness of strategy over financial market cycles. Using an inductive approach, it examines the performance of companies in term of relative value creation or destruction over a bull and bear market cycle. The sample for this research consists of 54 large US firms fr...

Full description

Saved in:
Bibliographic Details
Published in:Long range planning 2003-02, Vol.36 (1), p.13-35
Main Authors: Alessandri, Todd M., Bettis, Richard A.
Format: Article
Language:English
Subjects:
Investment plans
Securities markets
Studies
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:This paper raises the issue of robustness of strategy over financial market cycles. Using an inductive approach, it examines the performance of companies in term of relative value creation or destruction over a bull and bear market cycle. The sample for this research consists of 54 large US firms from seven industries (airlines, banking, computers, network equipment, pharmaceuticals, retail, and semiconductors). The findings demonstrate that few firms performed well in both the bull and bear markets but those that did achieve superior performance over the market cycle employed innovative strategies that competitors struggled to imitate. These superior strategies resulted in lower cost structures and/or the ability to charge premium prices. It concludes by offering lessons that managers should integrate into their business models to obtain similar competitive advantage that is robust to drastically changing market conditions.
ISSN:0024-6301
1873-1872
DOI:10.1016/S0024-6301(02)00207-8