Strategic Management Ch. 5

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  1. How do we measure accounting profitability
    We use standard metrics derived from publically available accounting data
  2. What are some commonly used profitability metrics in strategic management
    • Return on assets (ROA)
    • Return on equity (ROE)
    • Return on invested captical (ROIC)
    • Return on revenue (ROR)
  3. What is the problem with looking at accounting data
    • It's all historical and thus backward-looking
    • Mainly focuses on tangible assets, do not consider intangibles that are hard/impossible to measure and quantify
  4. External performance metric, it indicates how the market views all publically available information about a firm's past, current state, and expected future performance
    Total return to shareholders
  5. Stock pricecs can be highly
    Volatile, which makes it difficult to assess firm performance
  6. is a better measure of competittive advantage over the long term due to the "noise" introduced by market volatilty, external factors and investor sentiment
    Shareholder value creation
  7. Three components that are critical in evaluating any good or service
    • Value (V)
    • Price (P)
    • Cost (C)
    • In this perspective cost includes opportunity costs
  8. The difference between a buyer's willingness to pa for a good or service and the firm's cost to produce it
    Economic value created (V-C)
  9. A firm has competitive advantage when it is able to create more ___________ than it's rivals
    Economic value
  10. Attempts to provide a more integrative view of competitive advantage
    Balanced-scorecard approach
  11. What is the goal of the balanced score card approach
    To harness multiple internal and external performance dimensions to balance financial and strategic goals
  12. Managers develop strategic objectives for the balanced scorecard by answering four key questions
    • How do customers view us
    • How do we create value
    • What core competencies do we need
    • How do shareholders view us
  13. Managers are frequently asked to maintain and improve not only the firm's economic performance but also its
    social and ecological performance
  14. The triple bottomline, achieving positive results in all three areas an lead to a sustainable strategy
    • Economic
    • Social
    • Ecological
  15. The triple-bottom line framework is realted to ______________, an approach to understanding a firm as embedded in a network of internal and external constituencies that each make contributions and expect consideration in return
    Stakeholder theory
  16. Details how the firm conducts its business with its buyers, suppliers, and partners
    Business Model
  17. This is important in gaining and sustaining a competitive advantage as what thye do
    How companie do business
  18. Difference between the value a consumer attaches to a good or service (V) and what he or she paid for it (P)
    Consumer surplus V-P
  19. A process in which a group of people voluntarily performs tasks that were traditionally completed by a firm's employees
  20. A firm performance metric that captures the valu eof all a company's outstanding shares at any given point in time
    • Market capitalization
    • Number of outstanding shares * share price
  21. How do you measure competitive advantage
    • Assess firm performance
    • Benchmark to the industry average / other competitors
  22. Total perceived consumer benefits, comsumers maximum willingness to pay
  23. The money provided by shareholders in exchange for an equity share in a company; it cannot be recovered if the firm goes bankrupt
    Risk capital
  24. In anticipation of government regulation - proactively addressing social or ecological issues
    Extended producer responsibility
  25. What is the goal of strategic management
    Integrate and align each business function and activity to obtain overall superior performance
Card Set:
Strategic Management Ch. 5
2017-02-20 21:18:16

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