WPC 480 Question and answers 2023 verified

WPC 480 Question and answers 2023 verified SSP Sustained superior performance Firm-based performance measure ROA, ROE, NI, etc. only valuable as direct comparison to similar firm Capital market measures stock return, market to book, eps, p/e P/E growth EPS dilution/accretion External Analysis lead to O and T General External Environment PEST Industry Environment Porter's Five Forces Porter's Five Forces threat of substitutes, treat of new entrants, power of suppliers, power of buyers, rivalry Herfindahl Index HHI= sum of (market share)^2, the larger the number the higher the concentration Stick to the lowest level of analysis strategic group or segment Internal Analysis lead to S and W Resources to capabilities to competencies can be both tangible and intangible VRIN valuable, rare, costly to imitate, nonsubstitutable different permutations lead to varying levels of performance 3 types of business strategies cost leader, product differentiater, integrator EVC economic value created good way to quantify strategy evc= (value-price)+(price-cost) provides a roadmap to competitive advantage competitive behavior set of actions by a firm multimarket competitions competing in more than one market competitive dynamics total set of actions and responses by all firms MMC as mmc increases, likelihood of attack in a given market decreases mutual forbearance competitive dynamics often require firms to reconfigure strategy may move away from vrin and swot resources/activities market cycle is strong factor of competitive dynamics pros and cons with first second third mover Benefits of diversification scope of industries may creates synergies, value of units must be greater together than apart, diversifying risk is not a good reason by itself types of diversification related contrained ( 70% of revenue from single business, remainder support, related linked, unrelated (less than 70% from single business, remainder unrelated) BCG matrix 2x2 to evaluate each business unit, growth by market share, cash cow, dog, question mark, and star Acquisition draws increased power, overcoming entry barriers Acquisition drawbacks integration difficulties, inability to synergize types of acquisitions horizontal integration (increase scope) and vertical integration (buy firms in the value chain) ABC Test attractiveness (external analysis of target's segment), better-off financials, cost of entry of alternative modes of entry (opportunity cost)