Lecture 3 Flashcards
(20 cards)
What are the three main purposes of corporate strategy evaluation?
Corporate Advantage, Portfolio and Parenting Effectiveness, Sustainability Alignment
What are the two main perspectives in corporate strategy evaluation?
Synthetic Evaluation and Analytical Evaluation
What are the three logics considered in synthetic evaluation?
Accounting Logic, Value Logic, ESG Logic
What does Accounting Logic assess?
Financial performance and stability of a company
What does Value Logic assess?
Creation of economic and market value
What does ESG Logic assess?
Company’s sustainability practices and regulatory alignment
What are key profitability ratios in Accounting Logic?
ROE, ROI, ROS, EBITDA Margin
What are key liquidity ratios in Accounting Logic?
Current Ratio, Quick Ratio
What is Economic Value Added (EVA)?
Net Operating Profit After Tax (NOPAT) - Cost of Capital
What does the Best Alternative Test (BAT) assess?
If corporate headquarters create more value than alternative owners
What is the Business Impact Maturity Model (BIM)?
A framework for evaluating corporate sustainability maturity
What are the three stages of corporate sustainability initiatives?
Advocacy, Preparation, Transformation
What does the Fair Value Matrix compare?
Market price vs. intrinsic fair value of a business
What does the Business Attractiveness Matrix analyze?
Industry attractiveness vs. competitive advantage
What are the four key tests in Analytical Evaluation?
Better-Off Test, Best Alternative Test, Capital Markets Test, Business Logic Test
What is the purpose of Portfolio Matrices?
Analyzing business configuration, investment prioritization, and resource allocation
What are potential causes of business mispricing in capital markets?
Market inefficiencies, investor sentiment, information availability
What does the Added Value Matrix assess?
Contribution of corporate headquarters to business performance
What is the main goal of the Sustainability Test?
Evaluate how well ESG factors are embedded in strategy
What does the Business Logic Test evaluate?
The existence and sustainability of competitive advantage in a portfolio
