Chapter 8

Chapter 7 & 8 Strategic Management Model Competitive Methods S2 P2 P3 S3 P1 S1

Competitive Methods as Combinations of Goods and Services Products/Services Competitive Methods P1 P2 Competitive Methods One Cash Flow to Shareholders P4 P3 Environmental Events S1 S2 Competitive Methods Two S3 S4

Organization Life Cycle Growth Industry Life Cycle Transition Inception Growth Maturity Decline Time

Industry, Organization, and Competitive Method Life Cycles Growth Industry Life Cycle Competitive Methods Life Cycle Firm Life Cycle Time

A comparison of NPV and investment requirements of CSFs and CMs Investments in CSFs NPV $ Investment required $ Investments in CM CSF1 10,000 50,000 CM1 5,000 25,000 CSF2 100,000 40,000 CM2 20,000 150,000 CSF3 1,500,000 800,000 CM3 6,000,000 3,400,000 Total $1,610,000 $890,000 $6,025,000 $3,575,000

Market Value of Firm as Estimated by Aggregating NPVs of CMs Unexplainable portion of the firm’s value Total market value of the firm in $ Explainable portion of the firm’s value

Political instability Relationship of Value Drivers Making Up a Force Driving Change and Competitive Methods Chosen with Subsequent Impact on the Cash Flow Stream of the Firm Competitive Method External Value Drivers Greater security Face recognition Crime Rate Internal Value Drivers Outbreak of food borne illness Cost of capital Demand Security and health policy Terrorism events Natural disasters Political instability Industry Critical Success Factors