106 Harvard Business Review January-February 1975 Balancing costs and benefits Evidence from the PIMS study strongly supports the proposition that market share is positively related to the rate of return on investment earned by a busi- ness. Recognition of this relationship will affect how managers decide whether to make or buy to decrease purchasing costs, whether to advertise in certain media, or whether to alter the price or quality of a product. Also, recognizing that emphasis on market share varies considerably among industries and types of market situations, decisions concerning product and customer are likely to be influenced. For in- stance, a small competitor selling frequently pur hased, differentiated consumer products can achieve satisfactory results with a small share of the market Under other conditions, it would be virtually im possible to earn satisfactory profits with a small share (e.g., infrequently purchased products sold to large, powerful buyers Finally, choices among the three basic market share strategies also involve a careful analysis of the im- portance of market share in a given situation. Be- yond this, strategic choice requires a balancing of short-term and long-term costs and benefits. Neither the PIMs study nor any other empirical research can lead to a formula"for these strategic choices But we hope that the findings presented here will at least provide some useful insights into the probable consequences of managers'choices ize by itself has major sources for a much longer impact on strategy. And time, for instance, to strategy, in turn, has long-term research major impact on size. The projects which are beyond small organization can do the staying power of the things the large ones small business. The ques- cannot do. Its simpli tion"What strategies befit city and its small size different sizes? is thus of should give it fast re crucial importance to ponse, agility, and the op management. ability to focus its sources. But the large From the book organIzation, in turn, also can do things the small organization cannot do. It can commit re- ublish