MGT 3830 Chapter Notes - Chapter 5: Organizational Learning, Economic Surplus, Opportunity Cost
Document Summary
5. 1- conduct firm profitability analysis using accounting data to assess and evaluate competitive advantage. 5. 2- apply shareholder value creation to assess and evaluate competitive advantage. 5. 3- explain economic value creation to assess and evaluate competitive advantage. 5. 4- apply a balanced scorecard to assess and evaluate competitive advantage. 5. 5- apply a triple bottom line to assess and evaluate competitive advantage. 5. 6- outline how business models put strategy into action. Accounting profitability: accurately assess performance, compare and benchmark to competitors or industry average. Look at roic, roe, roa, and ror. Roic used to evaluate profitability because net profit is divided by investment capital, which includes shareholder equity and interest bearing debt: the greater the cost of capital, the greater value it generates. Return on revenue can be measured by: cogs/revenue, r&d expense/revenue, sg&a expense/revenue. Intangibles are much more important to competitive advantage today. Accounting ratios act as assessment starting point.
