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VALUATION: MEASURING AND MANAGING THE VALUE OF COMPANIES, UNIVERS case of industries that enjoy relatively long product life cycles. Unfortunately, the converse is also true: if a company earns a low ROIC, that is likely to persist as well do you expect to sustain a high ROIC for a longer time? 3. Why do companies operating within the pharmaceutical and biotechnology industries typically sustain higher ROICs than firms in the hardware and equipment industries? Review Questions 1. From a value-creation perspective, 4. Why are competitive advantages is it more important for a company to know where to compete or how to compete? That is, is it more important to play in the right markets or to be the best player in vour current markets? based on brands, as in the consumer goods industry, often more important for long-term value creation than advantages based on product quality or innovation:? 5. Discuss potential explanations for 2. Identify and discuss real examples of companies with a competitive advantage based on customer lock- in as opposed to product innovation. Which type of competitive advantage the increase in median ROIC and the widening of the distribution of ROICs across all companies over recent decades Learning reading speed 16