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As discussed in class, only part of the variation in profitability across firms is explained by industry effects in other words, we see a lot of variation in profitability even across firms within the same industry, and industry analysis is limited in its usefulness in explaining this phenomenon. One of my colleagues at the Strategy department here at Anderson, Richard Rumelt, was one of the early thought leaders in helping to establish the importance of firm strategies in determining variation in firm performance.

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