Final answer:
Companies that excel in innovation and focus on their core competencies are typically the ones that earn above-average returns by attracting consumers with cost-effective or distinctive products.
Step-by-step explanation:
In today's competitive landscape, only companies capable of innovation and focusing on their core competency typically earn above-average returns. Profitable businesses achieve this by either producing products more cost-effectively or by creating offerings with desired features that meet consumer demand. The notion of core competency highlights the advantage of specializing in a limited range of products, which can lead to more successful outcomes compared to companies with a broader, less focused product range.
An example can be seen through the lens of companies like Samsung, where the CEO Gregory Lee emphasizes the significance of continuous innovation. Such a strategy provides these firms with a temporary competitive edge, allowing them to enjoy above-normal profits before their competitors have the opportunity to catch up.