Exam 2: Goals, Values and Performance

Building-in flexibility is a very important and valuable element in the corporate arena because investments can be halted but rarely reversed and strategic behaviors are very hard to alter.

Commerce creates value by:

EVA stands for:

Accounting Profit can be defined as:

Viewing strategy as a portfolio of options rather than a portfolio of investments relies upon the central idea that:

The set of shared values of the firm:

To measure performance, economic profit appears superior to accounting profit because:

One of the two ways of creating value from the firm is the so-called "Commerce" activity, which transforms raw material and intermediate products into final products

Economic profit is a better indicator of firms' performance than accounting profit because economic profit takes into account the normal expected return to capital.

The DuPont formula is useful to diagnose reasons for poor performance by disaggregating the return on capital to identify the key "drivers of value"

For product development, a "phases and gates" approach means that:

Corporate Social Responsibility is:

Is it possible for managers to manipulate their firm's value for stakeholders' interests or for self-serving reasons?

What happens if the Key success factors of an industry are misunderstood? Does the disaggregation of the profit into components allow analysts to capture the causes of the misunderstanding and to fix it?

The Discounted Cash Flow method is function of three variables. Which are these three variables?

The pursuit of profit above all else is likely to inspire all employees from the janitor to the CEO to work in co-operation and achieve the highest level of financial performance and shareholder value

Although free cash flow is theoretically the best and most appropriate measure of net present value of the firm, in practice economic profit may be a better indicator of performance. Why?

Different profitability measures can lead to different performance ranking of firms. In particular, the following may affect the measure and ranking:

A firm's vision and mission statement should be:

Theory explains that corporate strategy and corporate social responsibility must be aligned for better performance and long term success within all the firm's constituencies. Do situations exist where they absolutely conflict in a win-loose game?