WPC 480 Ch. 5

Subscription-based

users pay for access to a product or service whether they use the product or service during the payment term or not.

Crowdsourcing

A process in which a group of people voluntarily performs tasks that were traditionally completed by a firm's employees.

Market capitalization

A performance metric that captures the total dollar market value of all of a company's outstanding shares at any given point in time (Market cap= number of outstanding shares x share price).

Triple bottom line

combination of economic, social, and ecological concerns that can lead to a sustainable strategy.

Profit (producer surplus)

difference between price charged (P) and the cost to produce (C), or (P-C).

Consumer surplus

difference between the value the consumer attaches to a good or service (V) and what he or she paid for it (P), or (V-P).

Economic value created

difference between value (V) and cost (C), or (V-C); sometimes also called economic contribution.

Balanced scorecard key questions (4)

how to customers view us? How do we create value? What core competencies do we need? How do shareholders view us?

Shareholders

individuals or organizations that own one or more shares of stock in a public company. They are the legal owners of public companies.

razor-razor-blade

initial product is often sold at a loss or given away for free in order to drive demand for complementary goods.

Business model

organizational plan the details the firm's competitive tactics and initiatives; in short, how the firm intends to make money.

Total return to shareholders

return on risk capital that includes stock price appreciation plus dividends received over a specific period.

Balanced scorecard

strategy implementation tool that harnesses multiple internal and external performance metrics in order to balance financial and strategic goals.

Freemium

the basic features of a product or service are provided free of charge, but the user must pay for premium services such as advanced features or add-ons.

Value

the dollar amount (V) a consumer would attach to a good or service; the consumer's maximum willingness to pay; sometimes also called reservation price.

Risk capital

the money provided by shareholders in exchange for an equity share in a company; it cannot be recovered if the firm goes bankrupt

Pay-as-you-go

the user pays for only the services he or she consumes

Opportunity costs

the value of the best forgone alternative use of the resources employed.