that exceeds the additional cost of differentiation.” This provides the company with a different type of competitive advantage‚ either cost or differentiation. To attain cost advantage‚ a firm must aim to be a cost leader‚ and minimise expenses and outlays at every stage within the value chain. Porter (1985) wrote that to achieve differentiation advantage‚ a firm must “provide something unique that is valuable to buyers beyond simply offering a low price” These two strategies form half of Porter’s (1985)
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Porter’s Five Forces- Threat of New Entrants Since its introduction in 1979‚ Porter’s Five Forces has become the de facto framework for industry analysis. The five forces measure the competitiveness of the market deriving its attractiveness. The analyst uses conclusions derived from the analysis to determine the company’s risk from in its industry (current or potential). The five forces are (1) Threat of New Entrants‚ (2) Threat of Substitute Products or Services‚ (3) Bargaining Power of Buyers
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Chapter #19‚ Quizz Quizz‚ Chapter 19 1.Calculate the weighted-average cost of capital (WACC) for Federated Junkyards of America‚ using the following information: • Debt: $75‚000‚000 book value outstanding. The debt is trading at 90 percent of par. The yield to maturity is 9 percent. • Equity: 2‚500‚000 shares selling at $42 per share. Assume the expected rate of return on Federated’s stock is 18 percent. • Taxes: Federated’s marginal tax rate is Tc = .35 What are the key assumptions
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Essentially our goal by the end of the first three years is to each have total compensation in the neighborhood of $500‚000 between salary‚ benefits‚ share in the company‚ and any up front payments. This will add up to an outlay of approximately $1‚000‚000 for the merger during the initial three year
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The CAU Art Gallery has a collection of comprised of 1‚200 works of art in three major categories which are Contemporary American‚ African American‚ and African art. In these collections are paintings‚ murals‚ sculptures‚ works on paper and ethnographical artifacts acquired through purchases and donations. The growth and continuation of the Clark Atlanta University Collection of American art report the role of black artists in the history of American art‚ between the years of 1942 and 1970. CAU’s
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methords of 1.0 Client Brief We have been approached by a large supermarket firm to advice on the suitability of various Modern Methods of Construction systems for the use on a potential flagship store. The initial brief from the client is that the new store must be sustainable‚ energy efficient and carry low maintenance / operation costs. The proposal is to construct a large retail space of approximately 5‚000 m2 for sale of food and household goods. It is intended to be highly energy efficient
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discretionary cash outlays in 2014: an investment in PPE‚ the repayment of a large amount of debt and the payment of a dividend to shareholders. The board member wants to know where the funds will be coming from to enable these outlays to be made. Using the information from your forecast‚ provide a response to the board member. The investment in PPE has indicated that perhaps if we extended out the accounts for a few years we would be able to show the depreciation against this CAPEX outlay. We tend to
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inflow minus outflow) at time t (for educational purposes‚ R0 is commonly placed to the left of the sum to emphasize its role as (minus the) investment. The result of this formula if multiplied with the Annual Net cash in-flows and reduced by Initial Cash outlay will be the present value but in case where the cash flows are not equal in amount then the previous formula will be used to determine the present value of each cash flow separately. Any
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flows; a discount rate or rate of return selected to demonstrate a project ’s risk; and finally‚ the present value of cash inflows minus the present value of cash outflows. When evaluating The Super Project‚ the relevant cash flows included the initial outlay for building modifications of $80‚000 and the $120‚000 for machinery and equipment. An additional outflow of $453‚000 is considered due to the loss of building and agglomerator use to the Jell-O project. Estimated sales figures were provided
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Sample Questions Ch. 10 1- The possibility that errors in projected cash flows can lead to incorrect NPV estimates is called: A) Forecasting risk. B) Projection risk. C) Scenario risk. D) Monte Carlo risk. E) Accounting risk 2- An analysis of what happens to NPV estimates when we ask what-if questions is called: A) Forecasting analysis. B) Scenario analysis. C) Sensitivity analysis. D) Simulation analysis. E) Break-even analysis 3- An analysis of what happens to NPV estimates
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