OR??? When you think of Social Media, what comes to mind?

Creating Shareholder Value

“Effective Strategies to Grow Business Can Increase a firm’s profitability and thus its stock price.” (Rothaermel, 2013, p. 121 Spot the SweeTango interactive map and giveaway: A consumer-driven digital promotion to spur retail awareness and in-store visits Social media: Contests, promotions and giveaways via SweeTango social channels SweeTango.com assets: Recipes, apple news, retail availability, multimedia content and more Traditional retail tools: In-store sampling, recipe cards and signage, giveaways, tastings and more around the country ( Sweet Spot Campaign

Shareholder Value Creation Shareholders – legal owners of public firms Shareholders – legal owners of public firms Total return to shareholders Total return to shareholders Return on risk capital + dividends Return on risk capital + dividends External performance metric External performance metric Efficient-market hypothesis Efficient-market hypothesis All available information is embedded in the stock price All available information is embedded in the stock price SEC requires all public firms to submit shareholder returns SEC requires all public firms to submit shareholder returns Stock price based on expectations of performance Stock price based on expectations of performance Nucor (steel) slow growth Nucor (steel) slow growth Dell (computer) faster growth Dell (computer) faster growth 5-5

How is Sweetango Creating Share Value, and Competitive Advantage? Shareholders include the University of Minnesota, Retailers, and The Next Big Thing Co-Op They have a vested interest in the financial success of the apple and cannot recoup their funding if the apple stops selling, just as shareholders in publicly traded companies cannot recoup if the company goes bankrupt The exclusivity of the Sweetango apple creates an image of prestige Only grown through members of the Co-Op and only sold through select retailers, similar to companies having limited number of shares Compare sales similar to how publicly traded companies compare to benchmarks in the industry Sweetango sales are expected to be good, if sales decline, price may also decline Stocks that are expected to grow fast, but instead underperform, usually results in lower stock price

EXHIBIT 5.8 Comparing Google and Microsoft Using ROE & ROA Microsoft outperforms Google in 2010 based on this accounting data 5-7

Google vs. Microsoft, Continued Accounting perspective shows Microsoft with an advantage over Google. Accounting perspective shows Microsoft with an advantage over Google. But both firms have large intangible assets. But both firms have large intangible assets. BUT shareholder value favors Google over Microsoft! BUT shareholder value favors Google over Microsoft! Microsoft stock is flat while Google is up 200%. Microsoft stock is flat while Google is up 200%. 5-8

EXHIBIT 5.9 Normalized Stock Returns 2005–2010 Google is enjoying a sustained competitive advantage over Microsoft based on shareholder value. 5-9

Drawbacks to Shareholder Value as CA Stock prices can be highly volatile, which makes it difficult to assess firm performance (at least in the short term) Stock prices can be highly volatile, which makes it difficult to assess firm performance (at least in the short term) Macro economic factors (e.g., unemployment rate, economic growth or contraction, interest rate and exchange rates…) all have a direct bearing on stock prices Macro economic factors (e.g., unemployment rate, economic growth or contraction, interest rate and exchange rates…) all have a direct bearing on stock prices Stock prices frequently reflect the psychological mood of the investors, which can be at times irrational Stock prices frequently reflect the psychological mood of the investors, which can be at times irrational “Irrational exuberance” Alan Greenspan, former Federal Reserve Chair “Irrational exuberance” Alan Greenspan, former Federal Reserve Chair Dan Ariely Video 5-10

Implications for the Strategist Both quantitative AND qualitative performance dimensions matter. Both quantitative AND qualitative performance dimensions matter. Managers need to have a holistic view Managers need to have a holistic view Competitive advantage is best by criteria, reflecting overall company performance Competitive advantage is best by criteria, reflecting overall company performance Metrics aggregate upward, useful to gauge firm's strategy Metrics aggregate upward, useful to gauge firm's strategy Only better strategy is our goal. Only better strategy is our goal. No best strategy exists No best strategy exists Strategic performance metrics must be relative Strategic performance metrics must be relative 5-11

EXHIBIT 5.12 How Do We Measure Competitive Advantage? 5-12