MIE 480 Chapter Notes - Chapter 1: Scenario Planning, Net Profit, Confirmation Bias
20 Jul 2020
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Document Summary
A set of related actions that managers take to increase their company"s performance. If a company"s strategies result in superior performance, it is said to have a competitive advantage. Creating competitive advantage through effective management of the strategy-making process. Selecting strategies based on analysis of an organization"s external and internal environment. Returns that shareholders earn from purchasing shares in a company. Capital appreciation in the value of a company"s shares. Maximizing shareholder value is the ultimate goal of profit-making companies. Shareholders provide a company with the risk capital that enables managers to buy the resources needed to produce and sell goods and services. Risk capital equity capital invested with no guarantee that stockholders will recoup their cash or earn a decent return. Shareholders are the legal owners of a corporation, and their shares therefore represent a claim on the profits generated by a company. Thus, managers have an obligation to invest those profits in ways that maximize shareholder value.
