Frank T. Rothaermel — Strategic Management 3e — Chapter 5 – Flashcards
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shareholders
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Individuals or organizations that own one or more shares of stock in a public company.
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risk capital
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The money provided by shareholders in exchange for an equity share in a company; it cannot be recovered if the firm goes bankrupt.
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total return to shareholders
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Return on risk capital that includes stock price appreciation plus dividends received over a specific period.
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market cap
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A firm performance metric that captures the total dollar market value of a company's total outstanding shares at any given point in time.
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economic value created
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Difference between value (V ) and cost (C), or (V - C).
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reservation price
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The maximum price a consumer is willing to pay for a product or service based on the total perceived consumer benefits.
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value
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The dollar amount (V ) a consumer attaches to a good or service; the consumer's maximum willingness to pay; also called reservation price.
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profit
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Difference between price charged (P ) and the cost to produce (C ), or (P - C); also called producer surplus.
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producer surplus
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Another term for profit, the difference between price charged (P) and the cost to produce (C ), or (P - C ); also called profit.
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consumer surplus
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Difference between the value a consumer attaches to a good or service (V ) and what he or she paid for it (P), or (V-P).
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opportunity costs
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The value of the best forgone alternative use of the resources employed.
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balanced scorecard
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Strategy implementation tool that harnesses multiple internal and external performance metrics in order to balance financial and strategic goals.
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triple bottom line
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Combination of economic, social, and ecological concerns—or profits, people, and planet—that can lead to a sustainable strategy.
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sustainable strategy
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A strategy along the economic, social, and ecological dimensions that can be pursued over time without detrimental effects on people or the planet.
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business model
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A firm's plan that details how it intends to make money.
