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SWOT framework - note
- synthesize the results of external and internal analysis
- use it to formulate strategic options, but doesn't tell which option is optimal
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3 ways to measure competitive advantage
- accounting profitability
- shareholder value creation (stock price capital gain, dividend yield, mkt cap)
- economic value added
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measure competitive advantage - accounting profitability - pros and cons
- easily accessible, standardized, verifiable
- backward looking, doesn't consider off-BS items, focuses mainly on tangibles
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measure competitive advantage - shareholder value creation- pros and cons
- easily accessible, transparent, comparable, captures what investors care about
- backward looking, high volatility>difficult to evaluate, susceptible to macro factors and sentiment, focusing too much can hurt company
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measure competitive advantage- economic value added - pros and cons
- forward looking,
- at the heart of competitive advantage;
- determining value to consumer is costly, inexact and subjective
- value to customers changes based on circumstances
- difficult to apply to heterogeneous product offerings
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balanced scorecard - dimensions
- consumer perception (related to max WTP)
- shareholders perception (stock price and books)
- how we create value (how appropriate is the current resources)
- investment in new competency
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balanced scorecard- pros and cons
- communicates clearly the firm's strategic vision and focus
- translates vision into actionable and measurable goals
- provide at-a-glance feedback on how's implementation going
- forward looking;
- for implementation, not for formulation
- performance metrics need to be directly linked to strategic objectives
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triple bottom line approach - dimensions
- economic
- social (CSR)
- ecological
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stakeholder strategy - who are internal stakeholders
employee and investors
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stakeholder strategy - 3 characteristics of stakeholders
power, legitimacy, urgency
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gap between WTP, price and cost
- WTP, price>consumer surplus
- price, cost>firm profits
- WTP, cost>economic value added
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