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When Your Competitors~ Cash Seems Free

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Executive Summary

The financial experts' responses - such as "Capital is never free," "You just have to be more cost effective," and "Life's unfair" - are not helpful. Nor are impenetrable analyses of the weighted average cost of capital (WACC). These calculations can't solve a pricing problem in Des Moines or Toronto or Stuttgart, where executives complain that their competitors are "Giving the product away." Many of these competitors - because of their very newness - start with an advantage over incumbents. Fresh with new equipment and new processes, they are often more efficient and benefit from lower overall costs - and not just those related to capital.

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