Can Attention to Market Signals Be a Distraction?

Given the subtlety of interpreting market signals, one can take the view that too much attention to them can be a counterproductive distraction. Rather than getting all tangled up second-guessing com-petitors’ words and actions, holds this view, companies should focus their time and energy on competing.

Although situations might be imagined in which top manage-ment become so preoccupied with signals that the important tasks of managing the business and building a strong strategic position were neglected, this hardly justifies abandoning this potentially valuable source of information. Strategy formulation inherently contains some explicit or implicit assumptions about competitors and their motives. Market signals can add greatly to the firm‘s stock of knowl-edge about competitors, and therefore improve the quality of these assumptions. Ignoring them is like ignoring competitors altogether.

Source: Porter Michael E. (1998), Competitive Strategy_ Techniques for Analyzing Industries and Competitors, Free Press; Illustrated edition.

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