Capstone Exam 1 Review
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1. Define the con- A firm's theory about how to gain sustainable competitive advantage - exploit
cept of strategy core competencies, formulating, implementing, and evaluating cross-functional
decisions that enable an organization to achieve its objectives, "game plan" to
achieve organizational objectives, conduct operations, compete successfully
The art of creating value. It provides the intellectual frameworks, conceptual mod-
els, and governing ideas that allow a company's managers to identify opportunities
for bringing value to customers and for delivering that value at a profit. In this
respect, strategy is the way a company defines its business and links together the
only resources that really matter in today's economy: knowledge and relationships
or an organization's competencies and customers.
Historical Focuses for business strategy: a way to influence market forces and the
competitive environment and challenge of allocating limited resources across the
entire economy
Original statement of corporate and competitive strategy - introduced concepts
such as corporate vision, distinctive competencies, SWOT analysis, budgetary plan-
ning, and control
2. What are the key 1. Sustainable competitive advantage
objectives of the 2. Above-average returns
firm?
3. Define and give occurs when a firm implements a value-creating strategy and other companies are
examples of sus- unable to duplicate it or find it too costly to imitate (ex. the ability to create more
tainable competi- economic value than competitors)
tive advantage -The differences between you and your competitors are the basis of your advan-
tages
Apple - They have an interconnected network that permeates many countries,
especially the USA. The aptitude used by so many consumers creates an exclusive
cultures surrounding the service the phone provides.
, Capstone Exam 1 Review
Study online at https://quizlet.com/_8rpv98
4. Define and give are returns in excess of what an investor expects to earn from another investment
examples of with a similar amount of risk
above average
returns Typically relates to external environment and industry structure
Ex. ?
5. What is com- Simply put - this means the firm is generating less value than competitors
petitive disadvan-
tage? Many firms continue to operate even though they do so at a competitive disadvan-
tage in some areas because they usually have some advantage in another area.
Doesn't mean they go out of business.
6. Define and de- Economic Measures: earning an return in excess of the cost of capital
scribe economic
performance (WACC: weighted averaged cost of capital)
A firm with below average Economic Performance over a long period of time will
eventually go out of business. They are earning LESS than the COST of capital. In
time would be unable to attract capital and would be forced to go out of business.
7. Define and de- Accounting Measures: ROA, ROS, ROE, EPS, etc.
scribe account-
ing performance (competitive advantage when these exceed industry average)
Below average accounting performance over a long period of time does NOT mean
the company will go out of business. As long as returns to the owners of the firms
are satisfactory, the firm will remain in business, even if those returns are less than
the industry average.
8. Whats the dif- A company can survive with below average accounting performance for extended
ference between period of time, but cannot with below average economic performance over an
Study online at https://quizlet.com/_8rpv98
1. Define the con- A firm's theory about how to gain sustainable competitive advantage - exploit
cept of strategy core competencies, formulating, implementing, and evaluating cross-functional
decisions that enable an organization to achieve its objectives, "game plan" to
achieve organizational objectives, conduct operations, compete successfully
The art of creating value. It provides the intellectual frameworks, conceptual mod-
els, and governing ideas that allow a company's managers to identify opportunities
for bringing value to customers and for delivering that value at a profit. In this
respect, strategy is the way a company defines its business and links together the
only resources that really matter in today's economy: knowledge and relationships
or an organization's competencies and customers.
Historical Focuses for business strategy: a way to influence market forces and the
competitive environment and challenge of allocating limited resources across the
entire economy
Original statement of corporate and competitive strategy - introduced concepts
such as corporate vision, distinctive competencies, SWOT analysis, budgetary plan-
ning, and control
2. What are the key 1. Sustainable competitive advantage
objectives of the 2. Above-average returns
firm?
3. Define and give occurs when a firm implements a value-creating strategy and other companies are
examples of sus- unable to duplicate it or find it too costly to imitate (ex. the ability to create more
tainable competi- economic value than competitors)
tive advantage -The differences between you and your competitors are the basis of your advan-
tages
Apple - They have an interconnected network that permeates many countries,
especially the USA. The aptitude used by so many consumers creates an exclusive
cultures surrounding the service the phone provides.
, Capstone Exam 1 Review
Study online at https://quizlet.com/_8rpv98
4. Define and give are returns in excess of what an investor expects to earn from another investment
examples of with a similar amount of risk
above average
returns Typically relates to external environment and industry structure
Ex. ?
5. What is com- Simply put - this means the firm is generating less value than competitors
petitive disadvan-
tage? Many firms continue to operate even though they do so at a competitive disadvan-
tage in some areas because they usually have some advantage in another area.
Doesn't mean they go out of business.
6. Define and de- Economic Measures: earning an return in excess of the cost of capital
scribe economic
performance (WACC: weighted averaged cost of capital)
A firm with below average Economic Performance over a long period of time will
eventually go out of business. They are earning LESS than the COST of capital. In
time would be unable to attract capital and would be forced to go out of business.
7. Define and de- Accounting Measures: ROA, ROS, ROE, EPS, etc.
scribe account-
ing performance (competitive advantage when these exceed industry average)
Below average accounting performance over a long period of time does NOT mean
the company will go out of business. As long as returns to the owners of the firms
are satisfactory, the firm will remain in business, even if those returns are less than
the industry average.
8. Whats the dif- A company can survive with below average accounting performance for extended
ference between period of time, but cannot with below average economic performance over an
