Investing in Competitive Methods

Investing in
Co
mpetitive Methods
Chapter 7

OBJECTIVES
Upon completion of this chapter, you will be able to:
1. understand the role of the manager in adding value to the firm.
2. develop an understanding of the investor’s requirements for return on invested capital.

3. relate the estimation of cash flows, cost of capital, risk, and investment to the responsibility of adding value.

4. relate the use of the net present value (NPV) discounted cash flow technique to the adding value imperative of all managers.

5. apply the concepts of this chapter to the case study.

The Role of the Manager in Adding Value to the Firm

• In the past few chapters you have learned the

mportance of first scanning your environment.

i

• This chapter will introduce the second step in the c oalignment theory, strategy choice.

• Making the right strategic choices requires

managers to invest in CMs that create lasting economic value for the firm and its investors.
◦ Read pages 205-208 in your book

The Role of the Manager in Adding Value to the Firm

• In the Strategic Management Model the environment and strategy choice construct come together in a synthesis of s trategic management thinking and financial management.

• It is important that managers consider their competitive

m

ethod via the mix of products and services they offer.

• Putting together the best possible mix can add tremendous value to the firm.
◦ Visit the Strategic Management Model again; it is present on the next slide. Strategic Management Model

Competitive Methods
P1

S1

P2

S2

S3

P3

The Role of the Manager in Adding Value to the Firm

• Hospitality managers must capitalize on opportunities that arise, as a means of possibly adding value to their firm.

• One new booming niche in the hospitality industry i s group travel. Read about how different firms are utilizing this new niche as

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