Revisiting the Concept of a Competitive 'Cash Advantage'

Strategy & Leadership, Vol. 43, No. 4, pp. 38-46, 2015

Posted: 6 Jul 2015

See all articles by Joseph Calandro, Jr.

Joseph Calandro, Jr.

Fordham University - Gabelli Center for Global Security Analysis

Date Written: July 5, 2015

Abstract

Purpose of this paper: This paper profiles how ample cash holdings can serve as a competitive advantage by first mitigating the risk of becoming a forced seller during periods of distress, and then positioning a firm to take strategic advantage of forced selling and other forms of distress-generated opportunities.

Design/methodology/approach: This paper profiles the changing role of cash over time in corporate strategy, and how inadequate/strong cash positions have caused or contributed to corporate failures/successes.

Findings: The findings of this paper, which are supported by historical and contemporary examples, are that ample cash reserves can be a powerful source of competitive advantage for certain firms. Research & Practical limitations/implications: This article supports earlier work published in Strategy & Leadership that shows how Graham and Dodd-based analysis is a viable avenue of academic research and a viable method with which to assess and formulate corporate strategic initiatives such as mergers and acquisitions, share buy-backs, risk management and, in this case, the strategic uses of cash.

What is original/value of paper: This paper offers leaders and financial executives a practical explanation of how ample cash holdings can serve as a competitive advantage.

Keywords: Competitive Advantage, Cash Management, Strategic Analysis

JEL Classification: D21, L10, L20

Suggested Citation

Calandro, Jr., Joseph, Revisiting the Concept of a Competitive 'Cash Advantage' (July 5, 2015). Strategy & Leadership, Vol. 43, No. 4, pp. 38-46, 2015 . Available at SSRN: https://ssrn.com/abstract=2626926

Joseph Calandro, Jr. (Contact Author)

Fordham University - Gabelli Center for Global Security Analysis ( email )

531 Hughes Hall
441 E. Fordham Rd
Bronx, NY 10458
United States

HOME PAGE: http://www.linkedin.com/in/josephcalandro/

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