The authors discuss how the strategic framework discussed in the book applies to M&A activities, venture capital and brand extensions.
M&A should only be done when a sustainable competitive advantage is being purchased. Otherwise, the acquirer is likely overpaying. (The authors back this up with empirical data.) Managements often cite cost savings and revenue opportunities as justification for acquisitions, but only where there are barriers to entry can these be sustainably exploited.
By definition, venture capitalists are working in undeveloped segments. As such, customers and technologies are all up for grabs, leaving not much in the way of competitive advantage at the start. Only where there are barriers to entry can a competitive advantage exist, and in a new industry this is hard to achieve. Most successful ventures rely on management execution, and only garner competitive advantages later.
Brand extensions offer added value only as far as they offer sustainable competitive advantages, and this happens more rarely than is believed. Brands by themselves are not advantages. They are assets, requiring initial investment, and re-investment as they depreciate. Brand extensions can be used to strengthen competitive advantages (e.g. Microsoft Office increases the switching cost away from Microsoft Windows) but more often than not they do not (e.g. Microsoft's XBox does not extend or create any advantage simply by being associated with Microsoft).