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8 strategy implementation occurs when a firm adopts

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8.Strategy implementationoccurs when a firm adopts organizational policies and practices that areconsistent with its strategy.Three specific organizational policies and practices: a firm's formalorganizational structure, its formal and informal management control systems, and employee compensationpolicies.
9.A firm has aCompetitive Advantagewhen it is able to generate more economic value than rival firms. Atemporary competitive advantage is a competitive advantage that lasts a very short period of time while asustained competitive advantage lasts much longer.Economic value is simply the difference between whatcustomers are willing to pay for a firm’s products or services and the total cost of producing these productsor services. Thus, the size of a firm’s competitive advantage is the difference between the economic value afirm can create and the economic value its rivals can create.10. Figure 1.3Types ofCompetitive Advantage11. Figure 1.4Organizing Framework12.Thetwo approaches to estimating a firm's competitive advantageare measuring accountingperformance and measuring economic performance.A firm's accounting performanceis a measure of its
competitive advantage calculated using information from a firm's published profit and loss and balancesheets. A firm's accounting performance is determined by comparing a firm's accounting ratios with otherfirms in the industry. The ration can be grouped into four categories: (1) profitability ratios, (2) liquidityrations, (3) leverage ratios, (4) activity ratios. The greatest advantage of accounting measures of competitiveadvantage is that they are relatively easy to compute. The most significant drawback to accounting measuresis that they do not consider a firm's cost of capital. Additionally, accounting measures can be difficult tocompare across countries.Economic performancemeasures of competitive advantage compare a firm's level of return to its cost ofcapital instead of to the average level of return in the industry. The primary benefit of economic measures isthat if a firm earns at least its cost of capital, it is satisfying two of its important stakeholders, debt holdersand equity holders. Disadvantages of economic measures include that it can be difficult to calculate a firm'scost of capital, especially for privately held firms, and economic measures may overstate the importance ofdebt and equity holders.13.Theresidual claimants viewis that equity holders only receive payment on their investment in a firmafter all legitimate claims by a firm's other stakeholders are satisfied.14.Intended Strategiescan best be described as a firm's theories of how to gain a competitive advantagethat are developed as a result of the strategic management process. Intended strategies are developed whenfirms choose and implement their strategies exactly as described by the strategic management process.

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Term
Spring
Professor
JungChinShen
Tags
firm s strategies

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