During Which Step of Value Chain Analysis Will the Company

question 24

Multiple Choice

During which step of value chain analysis will the company discover whether or not it has a cost advantage, and why?

• A)During the first step, when the value-chain activities are identified.
• B)During the first step, when the cost driver(s) are identified.
• C)During the second step, when the firm develops a competitive advantage by either reducing cost or adding value.
• D)The entire purpose of value chain analysis is to determine if the company has a cost advantage; therefore, it occurs in all steps.
• E)In the third step, when the company adopts and implements the balanced scorecard

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Definitions:

Required Return

The minimum rate of return on an investment that investors expect to compensate them for the level of risk.

Beta

A measure of a stock's volatility relative to the overall market, indicating its risk compared to the market average.

Risk-free Rate

The return on investment with no risk of financial loss, often represented by the yield on government securities.

CAPM

Capital Asset Pricing Model; a financial model that describes the relationship between systematic risk and expected return for assets, particularly stocks.