1

Question 1

What drives corporate value?

Answer 1

The sources of corporate value.

Question 2

What are the sources of corporate value?

Answer 2

• market based assets
• firm based assets
  The organisation’s leverages this assets with its dynamic capabilities via strategies.

Question 3

The disciplines of marketing and finance are mainly concerned with what?

Answer 3

Market-based assets.

Question 4

The disciplines of management, accounting, hrm, and operations management are mainly concerned with what?

Answer 4

Firm based assets.

Question 5

What must marketing do to maximise corporate value?

Answer 5

• marketing must recognise the true indicators of corporate value
• marketing must effectively link itself to those indicators

Question 6

What are the true indicators of corporate value?

Answer 6

The discounted future cash flow of a business unit.

Question 7

Why are the true indicators of corporate value discounted cash flows?

Answer 7

Because cash can earn interest.
Cash received today is worth more than the same amount received a year or more in the future.

Question 8

Where is discounted future cash flow reflected?

Answer 8

It is reflected in the corporation’s market value.

Question 9

Why not focus on traditional accounting measures?

Answer 9

The assets of accounting are tangible assets.
The focus of accounting is on past performance.

Question 10

How can marketing link itself to the indicators of corporate value?

Answer 10

• By shifting the business towards the most attractive markets.
• By building a sustainable value proposition.

Question 11

Why shift the business to the most attractive markets?

Answer 11

Because only there can a firm hope to ever maximise its corporate value.

Question 12

Why build a sustainable value proposition?

Answer 12

Because corporate value is created only when cash flow is positive. And this will only occur when there is a cost or differentiation advantage. And if the cost or differentiation advantage is not unique/sustainable, competition will drive profits down the cost of capital.

Question 13

What does shareholder value analysis determine?

Answer 13

The value of the firm.

Question 14

What is corporate value?

Answer 14

Corporate value is the sum of all the firm’s anticipated future cash flows, adjusted by an interest rate known as the cost of capital.

Question 15

What are the four operating factors that affect a firm’s cash flow?

Answer 15

• level
• timing
• sustainability
• riskiness

Question 16

What must happen for the strategy to be comprehensive and meaningful?

Answer 16

The four operating factors must be affected by the marketing strategy.

Question 17

What are the principles of organizing markets?

Answer 17

• To view markets dynamically, not statically
• To serve customers selectively

Question 18

What are the implications of a dynamic market view?

Answer 18

A company must structure its portfolio dynamically into:
- today’s business
- tomorrow’s business
- options for business growth
Eventually, an organization must be in all three of business listed immediately above.

Question 19

What are the implications of a customer selection view?

Answer 19

One cannot, and should not, desire all possible customers.

Question 20

What are the principles of managing markets?

Answer 20

• To provide a reason why customers should buy from your organization in the first place.
• To provide a reason why customers should buy from your organization repeatedly.

Question 21

What are the implications of providing a reason for why customers should buy from your organization in the first place?

Answer 21

The organziation needs a competitive advantage.

Question 22

What are the implications of providing a reason for why customers should buy from your organization repeatedly?

Answer 22

The organization needs a sustainable competitive advantage.

Question 23

Must an organization be competent in delivering all types of competitive advantages?

Answer 23

Naturally not! But an organization must excel in at least one type, while not neglecting other types.

Question 24

What are the basic means of every competitive advantage?

Answer 24

• product
• price
• place
• promotion