Explain the challenge competition plays in creating value in the long run and what this means for the firm that wishes to create value in the long run.

Question

Quizplus · Accepted Answer

The Answer is Competition tends to erode competitive advantages and,with them,returns on invested capital.Therefore,companies must continually seek and exploit new sources of competitive advantage if they are to create long-term value.To that end,managers must resist short-term pressure to take actions that create illusory value quickly at the expense of the real thing in the long term.

Explain the Challenge Competition Plays in Creating Value in the Long