Financial Flexibility and Opportunity Capture: Bridging the Gap Between Finance and Strategy

Stephen V. Arbogast, Dr. Praveen Kumar

Classic Competitive Strategy theory assumes that advantage comes from operational superiority—that is, practices, processes, technologies and positioning that result in lower unit costs and/or superior product qualities. Attractive investment opportunities arise from these operating advantages. Cost or product quality advantages are the means to achieve competitive advantage. That implies, though, that the strategic horizon around such prescription is open ended; the opportunities are generic. Such conventional strategy theory does not sufficiently acknowledge the constraints impacting opportunity capture.