| Summary: | The research explores the. causal relationship between
market share and profitability arid is specifically aimed
at understanding the factors that affect the "strength of
this relationship, and the mechanisms that cause the
relationship. %
The research initially utilised a data base of over 100
South African SBUs with information in the "PIMS Limited
5 Information, Model" format. The relationship between
market share and profitability was explored using
ordinary least squares regression analysis and the slope
of the line was found to be significantly lower than that
of the quoted PIMS studies. Cluster analysis was used on
the environmental variables to produce clusters of
similar environments and regression analysis again done
on market share and profitability to test whether the
correlation between profitability and market share was
stronger or weaker i n ; the different environmental
\ settings. _ Significant differences wOre found in, the
correlations and one particular environment was found to
exhibit a : relationship between market share rind
profitability that was significantly stronger than all
other environmental settings. A fine grained methodology
was developed to determine the cause of the correlation
for this environment. This initial study led to the
causal relationship between market share and
profitability being explained for the SBUs concerned.
The results of the initial study were then extended using
intuition, logic and some accepted concepts from the
literature into a new generalised theory, and some
working hypotheses were formulated. A methodology for
testing the hypotheses using the remaining SBUs in the
data base was developed. The results supported the
~ hypotheses and hence the theory. \ \
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