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Lecture 2: Some concepts and business strategy analysis - Coggle Diagram
Lecture 2: Some concepts and business strategy analysis
Efficient Market Hypothesis
presumption: stock prices will
fully reflect
relevant information,
abnormal returns
can be made from exploiting the "
inefficiency
"
semi- strong form
publicly information
weak form
including past prices
strong form
all information
Information Asymmetry
one party will
have access to privileged information
not available to others
adverse selection
moral hazard
agency problem
Agency Theory
: the analysis of the relationship between agents (management) and principals (shareholders) - two parties may have
divergent objectives
Signaling
: pass information to others by their actions, very
costly
(voluntary disclosures -
good firm
has incentive to signal their quality to the public)
The players
Management
Investment analysts: seek to
stimulate trading
& attract corporate finance business
Fund Managers: want to beat the market & minimize costs
Investors: maximize returns & minimize risks
Competitive Strategy Analysis
Cost leadership
Efficient production
Lower input costs
Economies of scale and scope
Low- cost distribution
Tight cost control system
Product/ service differentiation
Superior product quality
Superior product variety
Superior customer service
Investment in brand image
Control system focus on creativity and innovation
resources
and
capabilities
to implement strategies
Corporate Strategy Analysis
factors to analyze
transaction costs
specific benefits to operating under one corporate umbrella (for
multiple business segments
)
multiple business segments
: how the separate segments are managed within the corporate governance structure
Goals
identify company's profits and risks drivers
industry future profitability/ potentials
company future profitability/ potentials