Tuesday, August 26, 2008

Marketing myopia

John Kay takes Theodore Levitt on

Penn Central could have taken to the skies, and the buggy whip manufacturers might have made air filters, but there is no reason to think that they would have been any good at these activities: no reason to think that they would have performed better than any other firm which saw airlines or automobile components as a new market opportunity.

Postscript: The implicit assumption behind Levitt's theory is that firms should at all times try to grow or at least survive. At the same time, I think he would argue that firms should try and maximize shareholder value. I think John's thesis is based on the contradiction between the two.

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