Must Finance and Strategy Clash?

Marketers and finance people seldom see eye to eye. The marketers say, “This product will open up a whole new market segment.” Finance people respond, “It’s a bad investment. The IRR is only 8%.” Why are they so often in opposition? The financial criteria used to decide if a project will be profitable arc entirely consistent with the tenets of competitive marketing analysis. Correctly applied, good financial analysis complements rather than contra­ dicts good marketing analysis. In practice, though, the analysis usually falls short. That explains why a strate gic investment’s projected returns arc so often out of line with the marketing and strategic logic.