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Lecture 4 Strategy and Analysis Using NPV RWJ Chp8

Introduce new productsApple Corporation and the mouseDevelop core technologyHonda and small enginesCreate barrier to entryQualcomm's patents on proprietary technologyIntroduce variations on existing productsProton Perdana ExecutiveCreate product differentiationCoca-Cola

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Lecture 4 Strategy and Analysis Using NPV RWJ Chp8

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    1. Lecture 4 Strategy and Analysis Using NPV RWJ Chp8

    2. Introduce new products Apple Corporation and the mouse Develop core technology Honda and small engines Create barrier to entry Qualcomm’s patents on proprietary technology Introduce variations on existing products Proton Perdana Executive Create product differentiation Coca-Cola—it’s the real thing Utilize organizational innovation Motorola just-in-time inventory management Exploit a new technology Yahoo!’s use of banner advertisements on the web Corporate Strategy and Positive NPV

    3. Corporate Strategy and the Share Market There should be a connection between the share market and capital budgeting. If the firm invests in a positive NPV projects, the firm’s share price should go up. Sometimes the share market provides negative clues as to a new project’s NPV. Consider the recent surge in Oil and Gas counters in the share market.

    4. Decision Trees Allow us to graphically represent the alternatives available to us in each period and the likely consequences of our actions.

    5. Example of Decision Tree

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