Large capital investments are a suspect mechanism for improving your competitive position. It’s a crutch for the weak. The data shows that among industries with different capital intensities, high capital intensity is associated with low Return on Investment. This relationship also holds true when comparing different companies within the same industry. In fact the differences in capital intensity are often even greater between competitors within the same industry than they are between industries. Generate competitive advantage by keeping your capital investment below that of your competitors.
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