Mgt 449 Chp 5
From an investor's or shareholder's perspective, the measure of competitive advantage that matters most is the
Return on risk capital (money they provide in return for an equity share)
Balanced Scorecard
-Helps managers achieve their strategic objectives more effectively -Uses internal and external performance metrics -Balances both financial and strategic goals
Triple Bottom Line
A business strategy that includes social, economic, and environmental criteria.
Frameworks to assess firm performance
Accounting profitability, shareholder value creation, economic value creation
Accounting Profitability
Accurately assesses firm performance Compares firm performance to competitors / industry average Limitations: focuses mainly on tangible assets, backward looking
The translation of strategy into action primarily takes place in a firm's
Business model
A managers only responsibility is to monitor and assess the performance of his or her firm T or F?
False
A sustainable strategy is one that produces a competitive advantage that can be maintained over time. T or F?
False
Which of the following expressions accurately describes market cap?
It is the product of the number of outstanding shares and the share price
Which of the following is a disadvantage of measuring firm performance through total return to shareholders and firm market capitalization?
Market volatility makes it difficult to assess firm performance through these measures, particularly in the short-term
_____ are best described as the value of the best forgone alternative of the resources employed
Opportunity costs
Market Capitalization
The total value of a company's issued shares
The management team for Volcanic Batteries came up with the following vision statement: "Volcanic Batteries will conscientiously track its financial performance to ensure profits for its investors, enhance its community through employment and supporting charities, and dispose of waste in a manner that will not harm the environment."This vision statement is most likely based on the
Triple bottom line approach
Economic value creation is best expressed as
consumer surplus plus firm profit
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
Agency Business Model
the producer relies on an agent or retailer to sell the product, at a predetermined percentage commission
Shareholder Value Creation
total return to shareholders as a return on risk capital that includes stock price appreciation plus dividends received over a specific period of time