To earn high long-term returns in equities, two key questions need to be answered regarding the companies invested in: (1) Whether – and how long – will the company survive? And (2) How long will it profitably grow?
The Five Forces framework of Michael Porter is ideal to assess the attractiveness of industry structure:
Porter uses “Stuck-in-the-middle” to describe companies which do not seem to have adopted any of the above strategies.
Companies with favourable Industry Structure and favourable strategy tend to enjoy the longest CAP.
Maruti Suzuki
Maruti Suzuki is a classic CAPcum-GAP company.