Strategic Management 2e Chapter 5

Balanced scorecard
strategy implementation tool that harnesses multiple internal and external performance metrics in order to balance financial and strategic goals.
Business model
organizational plan that details the firm’s competitive tactics and initiatives, in short, how the firm intends to make money
consumer surplus
difference between the value a consumer attaches to a good or service and what he or she paid for it
A process in which a group of people voluntarily performs tasks that were traditionally completed by a firm’s employees.
economic value created
difference between value and cost, sometimes also called economic contribution.
market capitalization
A firm performance metric that captures the total dollar market value of all of a company’s outstanding shares at any given point in time. (market cap= number of outstanding shares X share price)
opportunity costs
the value of the best forgone alternative use of the resources employed
profit (or producer surplus)
difference between price charged and the cost to produce
risk capital
the money provided by shareholders in exchange for an equity share in a company. It cannot be recovered if the firm goes bankrupt
individuals or organizations that own one or more shares of stock in a public company. They are the legal owners of public companies
total return to shareholders
return on risk capital that includes stock price appreciation plus dividends received over a specific period
triple bottom line
combination of economic, social, and ecological concerns that can lead to a sustainable strategy
the dollar amount a consumer would attach to a good or service, the consumer’s maximum willingness to pay, sometimes also called reservation price
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