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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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1. Lecture 4Strategy 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
Qualcomms patents on proprietary technology
Introduce variations on existing products
Proton Perdana Executive
Create product differentiation
Coca-Colaits 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 firms share price should go up.
Sometimes the share market provides negative clues as to a new projects 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