The fundamentals of our approach to strategy

A fundamental cornerstone of micro-economics, dating back to the economist David Ricardo in the 19th century, is that profits are created by scarcity. What this means is that if a company has something - a patent, skills, know-how, machinery, location, and so on - which enables it to produce something people want to buy, it can turn a healthy profit without rival companies competing your prices, and profits, back down.

Suppose, on the other hand, what a company does is easy for other companies to copy, as in a commodity business. Then, no matter how many people want to buy its products and services, as soon as it makes high profits (typically in excess of your cost of capital) sooner or later other companies will notice. There's nothing to stop them entering the company's market and competing with it - usually resulting in falling prices and profitability for everyone involved.

The trick, then, is to understand the real source of economic scarcity in your business - if there is any - protect it, and nurture it. Economics is the ideal - the only - approach to doing this in a robust and systematic way.

The Frontier strategy team is highly experienced in helping clients to do just that.

In addition, we also benefit from many years of experience in competition policy cases and providing regulatory advice to clients, where the evidence and conditions relating market entry and exit are investigated in great detail.

All of this work, like our strategy work, has to be robust, be based on detailed factual evidence and stand up to detailed scrutiny (we are used to having our views on competition cross-examined). This approach is ingrained into our company's culture. Consequently, everything we do yields results that are built on solid foundations. This focus on the detail of competitive strategy, based on our expertise in economics, distinguishes Frontier from other corporate advisers.