Profitability or growth?

Much of what we know about strategy comes from research into why some firms are more profitable than others – but investors value growth in cash flows [see chapter 1 of Strategic Management Dynamics]. An article in McKinsey Quarterly ‘How to choose between growth and ROIC‘ [return on invested capital] confirms the importance of this issue and shows how investors benefit from growth, depending on companies’ profitability.

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  1. [...] Published by Kim Warren March 23rd, 2009 in Strategy Tags: . I made a strong case in a previous post that strategy research should have been asking how strong firms grow cash flows, not deliver profit [...]



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