Capstone Exam 1 Review 2023 with 100% correct answers
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Course
Capstone
Institution
Capstone
Capstone Exam 1 Review 2023
Define the concept of strategy - ANSWER-A firm's theory about how to gain sustainable competitive advantage - exploit core competencies, formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives, "game...
Define the concept of strategy - ANSWER-A firm's theory about how to gain sustainable competitive
advantage - exploit 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 models, 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 planning, and control
What are the key objectives of the firm? - ANSWER-1. Sustainable competitive advantage
2. Above-average returns
Define and give examples of sustainable competitive advantage - ANSWER-occurs when a firm
implements a value-creating strategy and other companies are unable to duplicate it or find it too costly
to imitate (ex. the ability to create more economic value than competitors)
-The differences between you and your competitors are the basis of your advantages
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.
, Define and give examples of above average returns - ANSWER-are returns in excess of what an investor
expects to earn from another investment with a similar amount of risk
Typically relates to external environment and industry structure
Ex. ?
What is competitive disadvantage? - ANSWER-Simply put - this means the firm is generating less value
than competitors
Many firms continue to operate even though they do so at a competitive disadvantage in some areas
because they usually have some advantage in another area.
Doesn't mean they go out of business.
Define and describe economic performance - ANSWER-Economic Measures: earning an return in excess
of the cost of capital
(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.
Define and describe accounting performance - ANSWER-Accounting Measures: ROA, ROS, ROE, EPS, etc.
(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.
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