. In analyzing a company\'s competitive assets, which of the following questions
ID: 1170214 • Letter: #
Question
. In analyzing a company's competitive assets, which of the following questions is most important to ask? A. Does the company have the industry's most efficient and effective value chain? B. What are the company's resources and capabilities, and which are the most competitive? C. Are the company's key success factors more dominant than the key success factors of close rivals? D. Is the company's present strategy better than the strategies of its closest rivals based on such performance measures as earnings per share, ROE, dividend payout ratio, and average annual increase in the common stock price?
Explanation / Answer
In analyzing a company's competitive assets,
A) Value chain starts with procuring raw material to selling the finished good to get revenue, the value chain is one of the efficient ways of being competitive as by successful value chain have low inventory holding times which means inventory is readily converted into cash(revenue) which is a good sign of being competitive in the industry by using our resources effectively and efficiently.
B) Company's resources and capabilities can be different from company to company and industry to industry. For example a Tech. the company has resources such as its engineers doing research in niche technology and found a breakthrough, the capabilities of the same tech company can be manufacturing the said breakthrough technology, trust me the tech. companies require a lot of capital (in billions) to set up manufacturing plants reasons why small startups sell their tech breakthroughs and new tech to these companies. By positioning in this way a company can be competitive. Other competitive traits are market share, the demographic location being some examples.
C) Although this may sound different, usually key success factors of dominant companies and its rivals being exactly same. For ex: Mc Donald's (Macies) and Burger King both have the similar business models up and running and same inventory holding pattern and even the setup of drive concepts are derived from one another. usually, these success factors are shadowed from the dominant company by a close rival and it becomes an industry standard altogether.
D) Usually Dividend payout is not a factor of success and should not be compared to other company as its not a form of comparable unless you are investing in its stock, the sanction of dividend lies with the board of directors and the Chairman, high growth companies don't pay dividends in general. Strategies success lies with whether certain checkpoints are met for which a strategy is deviced. Some of the checkpoints for strategy are
-Market Share increase
-Increase in Goods
-Increase in revenue
The increase in stock price means investors have trust on future of company and nothing to do with strategy, if the company's doing good then price will increase and vice versa
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